Finance Minister Jim Flaherty said Monday the federal deficit will be "substantially more" than the government projected in January's 2009-2010 budget.

The initial deficit forecast was $34 billion. But Flaherty said that government revenues have been hit harder by the recession than expected.

"We will run a larger deficit in this year than anticipated in January, and I'll report further on that when the government reports to the people of Canada and Parliament in June with our update," he said.

The government has also forecast a $30-billion deficit for 2010-2011, and more deficits in the following three years.

Flaherty's comments came after a meeting with his provincial counterparts in Chelsea, Que., as the provinces push for more money from Ottawa to help them cope with the financial downturn.

The ministers decided to form a study group that will examine Canada's private pension plan system. Flaherty's parliamentary secretary, Ted Menzies, will oversee the group.

Ontario Finance Minister Dwight Duncan and other provincial ministers had called on the federal government to focus on the lack of retirement savings among Canadians, as the recession erodes people's bank accounts.

"We need to look at the question of pension adequacy," Duncan told CTV's Power Play. "In Ontario -- and I think the number is comparable across the country -- only about 30 per cent of people have a private pension."

He also said many of those with pension plans are not maximizing their savings with the various tax incentives, and that increasing longevity is also having an impact.

"We're living longer," he said. "The costs associated with getting older, like heavier medical needs and heavier long-term care needs, mean that our costs are going to be higher than I think many of us are anticipating."

Ontario Premier Dalton McGuinty said on Monday he personally asked Prime Minister Stephen Harper to host a national summit to develop polices that will maintain a decent retirement income for seniors.

McGuinty rejected a call from Ontario's New Democrats on Monday to establish a provincial pension plan for the two-thirds of people who don't have a workplace pension. But he told the legislature if the federal government fails to act, it's something he would consider.

McGuinty said that most premiers agree the issue needs to be dealt with at the national level even though British Columbia and Alberta mulled over the possibility of setting up their own provincial plans.

Demands for Ottawa to act have been increasing as private pension schemes falter and stocks suffer from the recession.

TD Chief Economist Don Drummond said many Canadians have been left with inadequate amounts of savings in their Registered Retirement Savings Plans.

He said the Canadian Pension Plan only replaces about a quarter of one's earnings after retirement and as the baby boomers begin to retire, the system will be put under considerable stress.

"There is an onus on the public policy authorities either to make other alternative plans available voluntarily or perhaps even make it compulsory," he told CTV Newsnet.

Although the Conservatives have introduced incentives for Canadians to save money such as tax-free savings accounts, they have been reluctant to shore up pension savings on a broad scale.

Rather, the government has so far directed its efforts to study how to preserve the small amount of workplace pension plans regulated by Ottawa.

Flaherty said pensions will be a major part of the discussion and agreed with Duncan that the issue needs a national approach, even though only 10 per cent of private pensions are regulated by the federal government

"We're all Canadians, we're all in this together," he said Monday.

Employment insurance

Earlier Monday, Duncan said that Canada should not enter into an election at this time over the contentious issue of reforming employment insurance.

Despite Ontario's criticism of the current EI system, which leaves Ontarians facing tougher eligibility requirements than other Canadians, Duncan said he does not favour an election.

"We prefer not to see an election right now, we prefer to see real change to provide fairness for the unemployed," he said on his way into a meeting with the Jim Flaherty and other provincial finance ministers.

Hit with massive layoffs in the auto sector, Ontarians still need 420 hours of work to qualify for EI, which Duncan said is too many.

"The rules that are in place now were set a time when the economy was very different," he added.

Drummond told CTV Newsnet the EI system is "badly broken," adding that regional differentiations for eligibility are at the heart of the problem.

He said it's harder for workers to qualify for EI in areas with lower unemployment because they are required to have worked more hours to be eligible.

Still, it's difficult to find jobs in these areas, he said, and that's leaving many Canadians who have paid into the system for years without assistance just because of where they live.

Human Resources Minister Diane Finley said Monday that unemployed Canadians would be better served by job training than revamping the EI system.

"Going into this recession, unlike previous ones, we had significant skills shortages right across the country in a wide range of professions," she told Power Play. "We need to encourage people to get those skills for the jobs of the future."

With files from The Canadian Press