A new registered savings plan for workers without a company pension increases the choice of retirement-savings vehicles. However, it fails to ensure retirement security for millions of Canadian workers, a concern that still needs to be addressed.

Federal Finance Minister Jim Flaherty and his provincial counterparts, meeting in Kananaskis this week, agreed on introducing a Pooled Registered Pension Plan but have deferred further discussions on major pension reform, including an enhanced Canada Pension Plan.

A coalition of six provinces wants a modest, phased-in, fully funded expansion of the mandatory CPP, that would be affordable for workers and employers, who fully fund the plan by equally splitting the financing of the premiums.

The federal government shifted its position from supporting that option to pushing for a new, privately run pension plan that pools savings of members -- self-employed and other workers who don't have access to a company pension plan. About 11 million Canadians fall into that category.

While PRPPs are an important vehicle, they don't replace the need to expand the CPP.

The PRPP will be a defined contribution plan, which defines the amount of the premium but, like RRSPs, not the benefit. The payout amount is entirely dependent on how well the fund has been invested. The CPP, on the other hand, is a defined benefit program that promises to pay employees a specific monthly benefit for life, indexed to inflation and beginning at retirement.

The CPP costs taxpayers nothing (since it's fully funded by workers and employers), is fully portable and financially sound, spreading the risks and management fees among its 17 million members. The only problem is the benefit is capped, at what amounts to a maximum this year of $11,000.

If that's the main source of income for pensioners, they will spend their retirement in deep poverty and will require taxpayer assistance through Old Age Security and the Guaranteed Income Supplement. And if the government doesn't soon address the need for CPP to represent a bigger chunk of a person's retirement income, today's middle-class earners will be tomorrow's seniors in poverty. Far better to force today's workforce to save for their own retirements, since such a large portion do not.

The global financial meltdown not only eroded personal savings, it has shattered the public trust in mutual funds and the private wealth management industry. Today, many people would be more comfortable putting their savings in the CPP than in their own RRSPs.

What guarantee will the PRPP, managed by the private sector, include the same level of protection as the CPP? Privately managed workplace pension plans have also been known to fail, the example being Nortel's underfunded defined-benefit pension plan. Nortel employees only fully realized they had all their eggs in one basket when Nortel filed for bankruptcy protection in January 2009, and declared a pension deficit of between $2.5 billion and $2.8 billion.

Nor will another voluntary savings plan result in the discipline to save appropriately for the future. It's been two years since Canada introduced its Tax Free Savings Accounts, yet the uptake has been minimal. As of November, only slightly more than a third of Canadians had opened an account, according to a Bank of Montreal survey. The accounts are only worthwhile if the savings are invested in equity, in which case the returns have to be large enough to offset the management and broker fees, which are way too high in Canada.

Flaherty is wise to be mindful that the economy is still fragile. CPP premiums for employers are another cost of doing business. Once the economy strengthens and labour becomes more competitive, there will be a natural adjustment that occurs in salaries and other benefits. Companies would be in a better position at that point to absorb a future increase.

But there's no rule saying employers have to match employees' contributions dollar for dollar going forward if CPP is enhanced. A perfect compromise that would get Canadians closer to their retirement goals would be to increase the employee share of the CPP premiums, but leave the employer portion alone, at least for now. Even the Canadian Federation of Independent Business can support that option, calling it a "simple yet effective compromise," in a recent opinion piece published in the Herald.

The reality is Canadian workers, through their own failure to save and that of the private wealth management sector to deliver, need to make up for lost time. Increasing the worker's share of CPP premiums ensures the income will be there at retirement. And it forces all Canadians to follow the simple yet effective personal-finance strategy: Pay yourself first.