Pouring scorn on the British Columbia government's renegade proposal for reform of the Canada Pension Plan, Liberal MP David Walker spluttered that the idea was "almost like a Ponzi scheme." Well, yes. But then, the same could be said of the CPP itself, which the federal and provincial governments are doing their best to preserve intact.

The federal government can be excused some irritation at B.C.'s last-minute raft of proposed changes to the CPP, coming as they do barely two weeks before a meeting of the the country's finance ministers where final arrangements for reform of the plan were to be agreed upon. In substance, however, the B.C. amendments are little different than the package of changes the federal government is pushing.

What everyone agrees is that the days of the CPP as a "pay-as-you-go" plan are over. It was that arrangement that earned the CPP the "Ponzi" label: like any pyramid scheme, the plan paid past contributors not out of the earnings on their own investments, but from the arrival each year of a fresh new group of pigeons -- er, contributors.

That worked well enough so long as the numbers of retirees was not too large, and the wage gains of workers not too small, as to overwhelm the capacity of the latter to pay for the former. But demographics and economics, with a few large dollops of mismanagement thrown in for good measure, have combined to put the plan, barely 30 years after it began, irretrievably in the red.

It isn't just that the Plan has incurred obligations to pay current and future retirees that exceed its assets to the tune of $570-billion: the so-called "unfunded liability." That might be put down to the impending retirement of the baby boomers. But even on a year-to-year basis, payouts now exceed contributions by about 50 per cent -- now, when the boomers are in their peak earning years. The pay-as-you-go plan isn't even paying-as-it-goes.

But while it was obvious years ago that contribution rates were set too low, finance ministers dithered. And while the CPP investment fund -- the plan is supposed to maintain an account equal to two years of benefits, for contingencies -- might have earned a return sufficient to stave off, at least for a time, the CPP's swelling fiscal crisis, it was instead lent to the provinces, all of it, at below-market interest rates.

Whatever the finance ministers agree to, it will not change the Plan much in its essentials. The consensus is that contribution rates will be raised from the current 5.6 per cent to 10 per cent within the next six to eight years -- in order to forestall a rise to 15 per cent or more in succeeding decades. That is enough to put the plan on a partially funded footing, no more. In addition, there will be some retrenching of benefits: a year or two tacked onto the retirement age, some tightening of the fraud-ridden CPP disability plan. But there the consensus breaks down.

B.C.'s suggested changes, in the overall scheme of things, seem trivial. In the main, they concern the earnings base on which CPP contributions and benefits are assessed: between the Basic Exemption of $3,500 and the Maximum Pensionable Earnings, set at around $34,500. B.C. objects to federal plans to de-index the basic exemption, and rightly so: if social benefits are to be cut, they should be cut openly and honestly, by statute, not by inflation.At that, it would be more progressive to dispense with the Basic Exemption altogether, in favour of a targeted tax credit. Why should upper- income contributors get the same tax holiday as the poor?

The province's suggestions for raising the earnings ceiling are more tenuous.

Where the federal plan would merely double annual CPP contributions for middle-income workers, the B.C. version would almost triple them. It is no good suggesting, as several provinces have, that Ottawa offset rising CPP rates with a cut in Employment Insurance (or is that Unemployment Uninsurance?) premiums. In case anyone hasn't noticed, the EI surplus has already been spent: it's all part of general revenues. The B.C. proposal would do little but transfer part of the CPP's fiscal woes onto the federal government's books.

Making future retirees pay more now may help to alleviate some of the unfairness to future generations. But it will still leave us with a plan that is part funded, part Ponzi -- and prone to the same political meddling and partisan bickering that produced the current crisis. Indeed, with the CPP fund likely to balloon in size in coming years, the possibilities are truly frightening. If we are agreed that henceforth workers will have to save more toward their own pensions, perhaps we might now consider giving them more say in how their savings are invested.