Status of Women Committee on Nov. 5th, 2009

[James Pierlot]

I actually work in the area of pension division on marriage breakdown. The way it is in Canada is that all provinces permit the division of pension benefits on marriage breakdown; Manitoba requires it. Usually there's a limit, such that only 50% of the pension benefits can be transferred from the plan of the spouse to the other spouse.

The difficulty many spouses run into is that if the money is transferred from the pension plan, it usually goes into a personal RRSP. Typically that means, especially if it's coming from a defined benefit plan, that it goes into the personal RRSP and then the non-member spouse has to manage it. That's where value is often lost, because if people don't manage their investments very well, it's not surprising: investing is very difficult. There's a lot of loss of value there, when this happens.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

There is a new factor that has existed for a short time. That is tax-free savings accounts. TFSAs, as they're called, are they now included in your retirement savings calculation?

[James Pierlot]

The tax-free savings accounts you are referring to are not taken into account for purposes of the pension division rules. They would, under provincial property law, be taken into account for purposes of determining the family assets subject to division.

What's interesting about the tax-free savings accounts is that they can be helpful for lower-income people saving. It's not a really good idea for very low-income people or people who don't have a taxable income to be contributing to an RRSP, because RRSPs become effective only if your income is, say, above $40,000 or $50,000. The TFSA can provide a helpful retirement savings vehicle for people who have lower income if they have money to save--which is, of course, a big “if”.

[The Acting Chair, Conservative, Dave Van Kesteren]

That's right on five minutes.

Madam Faille.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you, Mr. Chair. I am replacing my colleague Ms. Demers. As well, I have worked for quite a long time with the immigrant population. I also sat on the Standing Committee on Citizenship and Immigration.

Recently, the Auditor General voiced a criticism of certain choices the government has made regarding immigration policy. I think one aspect of the study should be about the government's choices regarding immigration policy, about immigrant women's earnings and the way they contribute to pension plans. The residence criterion does have an impact on women's pension incomes. Do you share that view?

Does someone want to answer my question?

[Edward Whitehouse]

One of us should talk.

James, do you want to say something?

[James Pierlot]

Sure.

I think your question raises a couple of issues. First of all, if you're an immigrant, you have to be in Canada for a certain period of time to qualify for old age security benefits. Those are the government income support benefits.

On the other part of the question, it is certainly the case that retirement saving for immigrants is more difficult than for people who are born in Canada. There was a Statistics Canada study done on that. It revealed that immigrants are retiring later; they're significantly more concerned about their retirement income security than the Canadian-born; they have saved less.

The retirement income system we have in Canada actually penalizes immigrants, because if you come to Canada mid-career, you don't have any built-up RRSP savings room from before you came to Canada. So it's actually impossible to catch up. Even if an immigrant worker saves to the maximum permitted, most typically will not be able to achieve an adequate retirement income at the same age as other Canadians.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

There is a statistic I don't have at hand, but it seems that women are having children later and staying out of the workforce for a shorter period of time. I am a Quebecker and I have had the benefit of the family policy system. Should measures like implementing Quebec's family policy be encouraged everywhere in Canada? Should the government fund an initiative like that to provide better support for women, who will be able to choose to stay out of the workforce for as short a time as possible, and thus increase their retirement income and their immediate income?

[Edward Whitehouse]

As a general point, our research at OECD, where we have looked in great detail at fertility rates and the numbers of babies women are having, has clearly shown that it is the countries that most easily enable women to combine a career with having children that have the highest birth rates. Within Europe the birth rates are higher in Sweden, France, and the U.K. than they are in Italy, Spain, and Germany, for example. In those countries it is very difficult, for various reasons; in some cases the reasons are social. In the case of Germany, it is for the physical reason that the school day ends at lunchtime, which makes it much more difficult to work than in other countries. We also see Japan as another country where it is very, very difficult for women to have a career and have children.

If you draw a graph, it gives a very clear picture that across OECD countries, the higher the participation of women in paid work, the higher the number of children they have. For some people, that sounds rather the wrong way round; you would expect that women would have more children in countries where they didn't work so much, but in fact that is not the case. There's a very clear pattern.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you.

[Beverley Smith]

It's Beverley Smith here.

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Thank you, Ms. Smith.

[Beverley Smith]

I was just going to say that the highest birth rates in the world are in sub-Saharan Africa, and they don't do anything to help women do paid work, so there are other factors involved. I believe that you have to look at what Quebec is doing right, which is to value caregiving plus career.

What you're doing wrong is having national day care as your only option, because a lot of women do not want or cannot use day care. If you had a policy that supported paid work with pay equity and whatever, and also supported the care role with benefits that flow with the child, then you could purchase day home care, day care, nanny care, sitters, grandparents, dad or mom telecommuting, and whatever. Quebec had to delink its EI program from the federal one in order to get birth rates to bounce back at all; the day care alone did not do it.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

Mr. Dewar, you're up next, sir.

[Paul Dewar, NDP, Ottawa Centre, ON]

I just wanted to give our other guests a chance to respond to some of the points I made about possible changes to our system. I mentioned the income supplement, doubling of the CPP, and insurance for pensions.

[Steve Bonnar]

Let me take those in reverse order, actually, because I think it's a little easier that way around.

I would be very cautious about any form of pension insurance providing for additional security. I don't think the objective of additional pension security is a bad objective; I think it's a very good objective. However, in the jurisdictions in which pension insurance exists--Ontario, the U.S., the U.K.--it has not been financially effective. I think a more likely avenue for better security for employment pensions is through the priority and bankruptcy provisions. There are issues with respect to that approach as well, but I think it's a better route to go.

With respect to CPP doubling, however you do it--whether you double the wage base or whether you double the proportion applied to the current wage base--there are a couple of cautions I would give. One is that we currently have a contribution for CPP that's slightly under 10% for employee and employer combined. The caution I would have on doubling that is whether you would limit the creation or existence of jobs as a result. I don't know the answer, but that's one caution I would provide.

The other caution I would provide is that in the CPP right now, in essence current workers largely pay for current pensioners--not completely, but largely. As we age as a society, we're going to have fewer workers paying for more pensioners, so you have the potential for intergenerational inequity in a partially funded arrangement, which is what CPP is. Again, there are ways to deal with that, but not in a partially funded arrangement.

Your first question was the third that I wanted to answer. I probably put it that way because I don't have a very good answer to it, but could you repeat it?

[Paul Dewar, NDP, Ottawa Centre, ON]

It was the idea of seniors' poverty, such as it exists, and I was going to ask how recent the data are that people are providing. Notwithstanding that we have a smaller rate of seniors' poverty than other jurisdictions, if you're one of the 4%, it doesn't really matter to you; you're poor.

One of the ways of dealing with that poverty is by looking at increasing the guaranteed income supplement by approximately $700 million, just to get more money into that system to help people. It is getting at income directly by looking at how much people have and then supplementing it.

I'm just wondering if you thought that was a good way to get at poverty and get at, obviously, when we're talking about seniors' poverty, women who are suffering in that category.

[Steve Bonnar]

There are a number of different elements in there. One is that by using GIS, you're targeting the money--

[Paul Dewar, NDP, Ottawa Centre, ON]

Absolutely.

[Steve Bonnar]

--and I think that's the better way to go. If what you're trying to do is focus on the 4%, you don't want to provide something that also goes to the 96%.

[Paul Dewar, NDP, Ottawa Centre, ON]

Correct.

[Steve Bonnar]

The question I have is whether that's the right target. I'm not saying that because I think a different target is appropriate, but as we heard, the definition of poverty is relatively arbitrary.

It may well be the best target, but that question should be asked and answered. I don't have the answer for that, unfortunately.

[The Acting Chair, Conservative, Dave Van Kesteren]

Go ahead, Mr. Whitehouse.

[Edward Whitehouse]

I agree with you on the targeting issue.

I just looked at the international numbers. We have compared the GIS safety net retirement income level with average earnings across OECD countries, and Canada is the seventh-highest of the 30 OECD countries. According to the way that we measure average earnings, the GIS is currently worth 31% of average earnings and the OECD average is 27%, so the GIS, I think, is already at quite a good level.

However, I would fully agree with my fellow witness here that if you do want to put more money into the pension system, the GIS is the way to do it.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you, Mr. Whitehouse.

Go ahead, Mrs. Wong.