Status of Women Committee on Nov. 19th, 2009

[The Clerk of the Committee, Ms. Angela Crandall]

I have been advised that the Chair will not be able to attend today. We do not have a Vice-Chair either.

We don't have our chair or our vice-chair. Is it the will of the committee to proceed to elect an acting chair for the meeting?

Madame Zarac?

I have a nomination for Madame Boucher. Are there any other nominations?

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

I don't think I can act as Chair because I am Parliamentary Secretary. So, I think you should ask someone else.

[Alice Wong, Conservative, Richmond, BC]

How about Mr. McCallum? He has a lot of experience in chairing, right?

[John McCallum, Liberal, Markham—Unionville, ON]

Yes. Are we allowed to decline a nomination? I'm not a regular member of the committee.

[Alice Wong, Conservative, Richmond, BC]

For chairing, it doesn't matter. It's a procedural thing, right? You have the most experience.

[An hon. member]

There is Dave Van Kesteren.

[The Clerk]

Let's deal with one motion at the time.

I have a motion for Mr. McCallum to be acting chair....

[An hon. member]

[Inaudible--Editor]

[The Clerk]

Mr. Van Kesteren will take the chair.

[The Acting Chair, Conservative, Dave Van Kesteren]

Okay. I'd like to call this meeting to order. This is meeting 41 of the Standing Committee on the Status of Women, and we are continuing our study of women and pension security.

Before I continue, I'd like to acknowledge and welcome our Russian delegation from the presidential administration from Russia. Welcome.

I understand that you are a public administration reform program on a gender study tour. Welcome. We're very pleased to have you with us, and we're very glad that these issues are being taken seriously not only here in this country but in your country as well. I hope your stay here is very pleasant, and I hope we can mutually learn from each other.

We are also very pleased to have witnesses from the Confédération des syndicats nationaux—did I say that right? They're on the video, so that's Madame Claudette Carbonneau and Nathalie Joncas, the actuary.

As well, from the Fédération des travailleurs et travailleuses du Québec, we have Danielle Casara. Welcome. We have Marie-Josée Naud, the union adviser for the education department.

We would ask that you give your presentation. We also ask that you give us about ten minutes. Try to keep it within that timeframe, and then we will begin our first round. Who would like to begin?

We'll have the video conference folks start first, s'il vous plaît.

Go ahead.

[Claudette Carbonneau, President, Confédération des syndicats nationaux (CSN)]

First of all, I want to thank you for giving us this chance to appear. We would like to share our views on women and pensions, and also suggest a number of possible improvements. In preparing our presentation, we looked at this issue in terms of, first of all, private or supplemental pension plans, and second, public plans.

As regards supplemental private pension plans, it is clear to us that the best pension plans are defined benefit plans. Large corporations, particularly in the industrial, public and parapublic sectors, generally have this type of plan.

Women have a significant presence in the public and parapublic sectors. In the private sector, however, they often hold jobs in small service companies, which are not large enough and have too few employees for a defined benefit plan to be feasible, even though this type of plan is better, in our opinion.

The legislative framework that applies to defined benefit plans is extremely complex. A small business has neither the means nor the resources to create such a plan. Thus a majority of women working in the private sector are covered by defined contribution plans—or no supplemental pension plan of any kind.

Current laws make it difficult to introduce industry-wide plans. Indeed, the federal government held consultations on that issue last March, and we were asked what our interest was in inter-enterprise plans. I would like to give you an overview of the representations we made at the time.

We pointed out that, at our last convention, we undertook a review of pension systems, the idea being to reflect on ways of ensuring that our members had an adequate level of retirement income. Inter-enterprise plans were identified as one very promising solution. They allow a large number of small companies to get together to create a sufficient critical mass for economies of scale with respect to management and administration costs. Furthermore, it is then possible to introduce defined benefit plans in circumstances where it would otherwise be extremely difficult to do so.

Day care services and centres provide an extremely interesting example of that in Quebec. They were able to introduce a plan that covers 1,400 small companies, each of which has about 30 employees, thereby making it possible to set up a very attractive pension plan for 50,000 women workers, since the vast majority of them are women.

Before the introduction of that plan, there were only a handful of plans in place in these companies that were building up capital. By bringing all of the companies operating in that industry under a single plan, it was possible to set up a “final earnings” type of defined benefit plan. Even though women workers may have to change employers in the course of their career, they very often stay in the same industry. Ultimately, they are able to retain their accumulated benefits. This was possible in particular because the government of Quebec has lifted certain restrictions under the Quebec Supplemental Pension Plan Act to make this type of plan feasible. In my opinion, this is an option you may want to look at.

Furthermore, our major proposal in this area is that there be mandatory retirement plans, with employers being obligated to contribute. I would remind you that, as things now stand in Canada, there is no law forcing employers to set up a pension plan. Despite considerable effort on the part of unions at the bargaining table, the percentage of workers covered by pension plans has never exceeded 40%.

We also know that other OECD countries have better systems of protection—systems that are far more generalized. Although steps could be taken to increase the number of company plans or set up industry-wide plans, it is clear, in our opinion, that a major change is needed in the structure of pension plans, as was the case in Australia, and soon will be, in England.

Companies must be forced to contribute towards retirement for workers, male and female. That requirement could take the form of mandatory industry-wide plans, or provincial plans that allow employers with equivalent or better plans to opt out.

In that regard, the CSN believes that the government of Canada should pass legislation recognizing the right of all wage earners to be covered by a pension plan, and requiring that all employers make a minimal contribution. The parameters of such an approach could be determined jointly by union organizations, employers and governments. Those are some of our suggestions with respect to private plans.

In terms of public plans, a number of observations are in order. Overall, women have less coverage under private plans. In addition, on average, they have less income than men; they derive more income from public plans. For people 65 years of age and over, public plans provide 47% of their total retirement income. However, that income represents 56% of women's total income at retirement, compared to 39% for men.

If we are talking about women in retirement, we clearly need to look at the public plans, including Old Age Security, the Guaranteed Income Supplement or the federal CPP. We support the suggestion that the Guaranteed Income Supplement be increased. That would be one way of improving the situation of women in retirement. It would particularly help the poorest women, who may not be in a position to benefit from an industry-wide plan.

As regards the public plans, it's important to remember that women have periods of work interspersed with other events. Private retirement plans, like public plans, do not reflect that reality. On average, women retire when they're older, because they have not accumulated adequate retirement income.

In that regard, a number of corrective measures should be considered, particularly ones that will reflect changes in family structure. We are no longer dealing with traditional families. Fathers take a more active role in caring for children. We believe that public plans should consider the way the new generations decide to structure their family and personal lives. The calculation of the pension benefit should take into account periods where parents are caring for their children. And that consideration should not relate solely to the birth of a child, but also be extended to other periods, such as when a child is ill or when older parents require care, and so on.

I also want to point out that, even though women have a greater presence in the labour market, they continue to be the ones with the greatest responsibility for caring for sick children and aging parents. Adjustments are definitely required in that area.

Our final suggestion with respect to public plans would be that benefits paid out to surviving spouses actually be paid to the right person. As far as we are concerned, the right person is not the last legal spouse, but rather, the person who is responsible for the children. The current structure must be brought up to date in that regard. Today's families no longer resemble the ones that existed 20 or 30 years ago. Thought must be given to this new reality.

We will be able to provide further clarification on these points during the question period, with the help of Ms. Joncas, who is an actuary.

That completes my presentation.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you very much.

We have a new arrival. We're very pleased to see Monica Townson here. However, we will continue in the order we intended.

We'll go to Fédération des travailleurs et travailleuses du Québec. Whoever would like to begin, please do.

[Danielle Casara, Vice-President, Fédération des travailleurs et travailleuses du Québec]

First of all, the FTQ would like to thank the Committee for giving it this opportunity to appear today to express our views on women and pension security.

The FTQ is the largest central union body in Quebec, with more than half a million members, one third of whom are women. As a result, the FTQ represents the largest number of unionized women workers in Quebec. It is also the most representative union body, in that our members work across the full spectrum of economic sectors, including for the federal government. Together we have developed expertise in the area of pension plans, both public and private. We have been part of every single one of the struggles that resulted in improvements to pension plans in Quebec.

Over the years, the FTQ has become more and more active in this area, holding meetings with affiliated unions and training sessions, in order to mobilize our members around this important issue. The FTQ is also involved at the political level and regularly makes its views known by presenting briefs at parliamentary committees or lobbying politicians on this issue.

The FTQ is appearing today to reflect our view that public plans must be maintained and enhanced, rather than cut back, given that they are already too modest. The FTQ noted with dismay that Bill C-51 passed with lightning speed. We can only deplore the lack of extensive public consultations on the proposed changes and the insidious manner in which cuts to the Canada Pension Plan, or CPP, were slipped into a budgetary type of bill.

Furthermore, now that Bill C-51 has passed, there is a greater probability that the Quebec government will also start cutting the Quebec Pension Plan, especially in relation to people who retire between the age of 60 and 65. We think it is important to highlight the fact that the financial status of the Quebec plan seems to be even more precarious, as a result of demographics and a less robust labour market than in the rest of Canada, which means that the Quebec government may have to increase contributions in order to ensure its viability.

As stated by the Minister of Finance last May, as part of the triennial review of the plan, the CPP “[...] remains on a sound financial footing”. That is why they “[...] agreed that the contribution rate would remain unchanged at 9.9% of pensionable earnings”.

In light of that, we are extremely concerned about the lack of transparency surrounding the work led by Mr. Jack Mintz, who is to present his report at the next annual meeting of the Finance Ministers in December in Whitehorse. That group has the mandate—and you know this better than we do—to propose a new vision to Finance Ministers of what the Canadian retirement system should look like based on the current reality. We would therefore like to use our remaining time to share our thoughts on what the Canadian retirement system should look like, particularly from the standpoint of women.

In terms of goals, the Canadian retirement income system should ensure that all women have a decent minimum income, that they are able to maintain their standard of living during retirement and that this income will be protected from inflation, particularly considering the fact that, as a result of their family responsibilities, women more often end up leaving the labour market or slowing down. In any case, women already earn less than men do right from the outset.

For the FTQ, the key to proper coverage for women is improvements to public plans, which alone can attain the objectives cited above, especially considering women's high level of dependency on public plans. Indeed, on average, women derive 54.4% of their retirement income from public sources, compared with 38% for their male counterparts. For additional information, you may wish to look at the table appended to our brief.

In a nutshell, women need public plans. The last 40 years have shown the limitations of a system that relies on the voluntary participation of employers in supplemental pension plans, or on the capacity of all taxpayers, whatever their income level, to save enough for their retirement. In actual fact, according to statistics published by the QPP, the coverage rate of supplemental pension plans in Quebec is stagnant at about 40% of all workers. We know that a very small minority of taxpayers—the most wealthy ones—are alone in claiming the lion's share of the RRSP tax deduction.

The most significant reform that could be introduced would involve increasing the CPP/QPP replacement rate, which is currently 25%, ideally to 50%, as proposed by the Canadian Labour Congress. That change would be capitalized and be implemented gradually over a period of 30 to 40 years.

Because the CPP/QPP coverage rate is almost universal, in the short term, this reform would raise the income level of women in retirement. There is no doubt that current provisions related to the care of children under seven and the non-inclusion of the lowest income years for the purposes of calculating the pension—15% which will soon be 17%—should be maintained and should apply to this new component. The FTQ is also in favour of raising the amount of maximum pensionable earnings from 100% to 125%, or even 150% of the average industrial wage, so that an enhanced CPP would cover a larger proportion of the working population.

Incidentally, the positive effect of this approach would be to significantly enhance income security prospects, on retirement, of workers with non-standard jobs, the majority of whom are women, as you know.

For the FTQ, any expansion of CPP/QPP should involve defined benefits, but certainly not defined contributions, and even less so a voluntary contribution plan. We are of the view that only a public defined benefit plan would guarantee women income security over their lifetime, the risks of which would be assumed by successive cohorts of plan contributors.

On that specific issue, the FTQ shares the opinion of Mr. David Denison, President and Chief Executive Officer of the CPP Investment Board, who recognized the major weaknesses of a defined contribution plan, and I quote:Contributors would be individually subject to market risk during their contributory years, and especially to the prospect of not having enough savings to ensure an adequate level of retirement income if they reach retirement age after a period of poor investment returns, such as we have recently experienced;Likewise, contributors would individually bear the risk of outliving their savings; andThe task of explaining investment options and investment performance to millions of individual account holders would be demanding and could still fail to generate suitable investment choices and outcomes.

Having said that, if it was decided to increase the CPP/QPP replacement rate, the FTQ would, in principle, have fewer objections to the idea of introducing a voluntary contribution component to the CPP/QPP, as a means of complementing the 50% replacement rate that would be guaranteed under CPP.

Beyond the benefits for all working women, we expect that the gradual introduction of this measure would mean less pressure on those employers who sponsor supplemental pension plans, as these plans would play a reduced role in terms of future service at least, because of the higher replacement rate under the public plans.

If the FTQ's preferred option were to be selected, we think it would be necessary to enhance benefits under the basic plans during the transition. For example, the Canadian Labour Congress is recommending that the Guaranteed Income Supplement be increased by 15% so that no senior has to live in poverty. Indeed, the FTQ wants to commend the federal government for raising the income exemption from $500 to $3,500 for GIS. However, we believe that exemption should not be limited to employment income, but rather, apply to all income.

We would also like to point out that, for a Quebec woman taxpayer over the age of 65 with an income of between $17,000 and $21,000, a $1,000 withdrawal from her RRSP currently results in a reduction in the GIS amount and increased taxes and contributions of $800, leaving her only $200 net after all is said and done, which is hardly likely to encourage someone to save for retirement.

In conclusion, the FTQ shares your concern with respect to the importance of ensuring that the Canadian retirement system provide income security and respect the dignity of Canadian workers who retire. We would just reiterate our strong preference for extensive public consultations in Canada with respect to potential solutions, and we resolve to make an active and constructive contribution to that consultation process.

Thank you very much for your kind attention.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you very much.

Ms. Townson.

[Monica Townson, Consultant and Research Associate, Canadian Centre for Policy Alternatives]

I'm sorry I was late. My plane was delayed by fog in Toronto.

[The Acting Chair, Conservative, Dave Van Kesteren]

That's all right.

[Monica Townson]

I was given eight minutes to speak to you. During that time, it would be impossible to give you a comprehensive view of the issue of pension security for women.

Ten minutes? Thank you.

[The Acting Chair, Conservative, Dave Van Kesteren]

Forgive me for interrupting. I should add, before I forget, that the last witness mentioned a chart and apparently that is only in French. The clerk has told me that at the next meeting we'll provide that chart for the rest of the members as well.

Madam Townson, please proceed.

[Monica Townson]

I was just going to say that I have looked at some of the testimony of previous witnesses and I think they have given you a very comprehensive view of both the pension system and the statistics relating to women in particular. So rather than repeat what they have said or give you another version of that, what I'd like to do is concentrate on what I think are the key issues relating to women and pension security.

I should say here that I'm an independent consultant and a researcher on social policy issues. And although I'm a research associate with the Canadian Centre for Policy Alternatives, the CCPA does not take a position on women and pension security, so what I'm going to say represents my own views and not those of the organization.

There are three key reasons why women's concerns about pension security are different from those of men.

First of all, women's average earnings are generally lower than those of men. And that means that pensions that replace a small percentage of earnings are probably not going to be adequate for an income in retirement. For example, as you know, the Canada Pension Plan provides a retirement pension that's equivalent to 25% of the contributor's average annual lifetime earnings, up to a maximum of $908.75 a month. But the average monthly retirement pension being paid to men who retired in May 2009 was $564, and for women it was only $391. In other words, women are getting less than 40% of the maximum benefit. That difference, of course, reflects the fact that many women have spent less time in the paid workforce over their lifetimes than men have, but in particular it shows that women have lower earnings than men.

While it would certainly help women, improving the replacement rate of the CPP--which you've just heard from the FTQ representative and probably from others--would still be an earnings replacement plan. That means that those with lower earnings would receive lower pensions from the plan.

Secondly, women have a different pattern of paid and unpaid work than men do, and this has to be taken into account in the design of retirement income systems. The first tier of the retirement income system—that's OAS and GIS—is intended to do that, but unfortunately, the maximum benefit that an individual can receive from OAS and GIS combined is well below the poverty level.

The objective of this part of the system is to provide pensions for those who have had only limited involvement in paid employment as well as to supplement earnings-related benefits for those who have inadequate employment-related pensions. OAS is paid to individuals. It doesn't depend on labour force participation and it doesn't depend on the earnings of a spouse. It gives women a pension in their own name and it respects women's economic autonomy.

Let me just say here that l'm struck by the fact that some witnesses who have appeared before you have suggested that the way to solve the pension security issue for women is to improve benefits for women in their so-called traditional roles as wives and mothers. In other words, the implication is that women could achieve pension security only through attachment to a man. I think that's a problematic approach.

Some witnesses have suggested giving women higher pensions when their husbands die, and they've proposed that women who don't participate in the paid workforce should somehow be squeezed into the earnings replacement part of the public pension plan, the CPP, even though they don't have any earnings to be replaced.

The so-called “pensions for homemakers” proposal has actually been around for more than 30 years. At the time of the last great national pensions conference in 1981, better pensions for women was a key item on the agenda, pushed at that time by Monique Bégin, who was Minister of Health and then responsible for pensions, and pensions for homemakers was a hot topic then. But the world has changed, as we all know, and I think we need to base proposals on today's reality and not what it might have been 30 years ago.

The reality today is that 82% of women in the main child-bearing years--that is, ages 25 to 44--now work outside their homes. The design of the CPP ensures that women are not penalized if they take time out of the workforce to have children or to remain at home or even to work part-time while their children are young, because the CPP rules allow them to exclude those years when they had a child under the age of seven from the calculation of their average earnings on which their retirement pension will be based. But we need to extend the same consideration to those women who are forced to retire early to care for frail elderly or family members with disabilities. What I think we need here is the implementation of a caregiver dropout, which would accommodate the unpaid work that those women do, because they need better pension security too.

The third point is that women tend to live longer than men. That means that the funds they need to accumulate to provide a lifetime income will be larger than those of men and that inflation indexing to protect them against the erosion of their benefits is particularly important. Some of the proposals that have come up in the past have suggested getting rid of indexing. It would be particularly difficult for women if that were done.

As I think you've heard, only 38% of Canadians—that's 38% of men and 39% of women—belong to a workplace pension plan. As well, only 31% of people who are eligible to contribute to RRSPs actually do so. Currently--these are 2007 figures and slightly different from the ones you heard from the FTQ just now--women seniors get 28% of their income from the first tier of the pension system, which is OAS and GIS. Senior men get 18% of their income from that source. In fact, more than 48% of the income of women aged 65 or older comes from government transfers. Clearly the public pension system is vital for the financial security of women in their old age, and I don't expect that to change.

As we all know, more women than ever before are in paid employment, but perhaps what some of us don't always recognize is that 40% of women's jobs are what we call “non-standard jobs”—that is, they are part-time, contract, and seasonal work, employment through temporary help agencies, self-employment working on their own, or multiple jobs with a series of different employers to make ends meet. Many of these jobs are poorly paid, without benefits such as pensions, and there is little or no job security. Women's lower incomes make it difficult to save for retirement on their own through RRSPs. All of this, of course, is going to be reflected in the kinds of incomes women can expect to get when they finally leave the paid workforce.

So it seems to me that the best hope for improving pension security for women lies in looking at improvements in the first two tiers of the retirement income system—that is, public pensions such as OAS, GIS, and the CPP.

Thank you.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

Our first round will be seven minutes. We'll begin with the Liberal side.

Mr. McCallum, you are first up to bat.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much, Mr. Chair.

I would like to welcome all our witnesses today. Thank you very much for being with us this afternoon.

I could perhaps begin by addressing the point raised by Ms. Carbonneau, which is that the majority of women tend to work in small companies and in the services industry, where there are fewer opportunities to receive a pension and where there is not much chance of saving for retirement. Many Canadians have explored the idea of increased supplements under the Canada Pension Plan and the Quebec Pension Plan.

From a Canadian point of view and particularly from women's point of view, am I right in thinking all of you are in favour of some kind of expansion of the Canada or Quebec Pension Plan? If so, would you think it should be voluntary or compulsory? What scale of increase would you have in mind?

And last, if you don't have subsidization across generations, then any increase in the CPP won't benefit retirees for quite some years to come. So such a change would not benefit very many people who are, say, 50 or 55 plus. Is that the kind of reform you have in mind?

Perhaps I could invite each of our three groups to comment on that series of questions.

Ms. Townson.

[Monica Townson]

I can respond to that question.

As far as I know, there are currently two proposals to expand the CPP, one of which you heard from the FTQ. It has been spearheaded by Bernard Dussault, who was a former chief actuary of the CPP. He's referring to it as a universal pension plan. It would involve expanding the replacement rate of the CPP over a 40-year period, which, of course, as you correctly point out, would not benefit those who are close to retirement now. His proposal is based on the fact that the CPP Act requires any changes to the plan to be fully funded. It would phase in increases in contribution rates over a very long period of time and would eventually provide a benefit that is approximately 70% or so of the person's pre-retirement earnings.

The option that I would personally favour is the one that's being proposed by the CLC, which is to double the replacement rate of the CPP from 25% of average annual earnings to 50%. They're suggesting it be phased in over a seven-year period. People who are currently retired would not benefit, of course, but it would provide a better pension much more quickly than the longer-term version.

CLC argues that people would be prepared to pay a little more into the plan. The contribution rates would have to increase, of course, but the increase would be phased in over time. I think it would be mandatory by definition, because the CPP is a mandatory plan. That's the option I would favour.

[John McCallum, Liberal, Markham—Unionville, ON]

The main difference is a phase-in of over 40 years versus seven years.

[Monica Townson]

I think that's probably a significant difference there. There are other bits that you could tweak, for example, by basing it on a much higher level of earnings than is now the case.

[John McCallum, Liberal, Markham—Unionville, ON]

Right, but I'll focus on the 40 years versus seven years.

Somebody 55 or 59, as I am, would really like the seven-year thing, but does that not mean that if you go with the CLC plan, the younger people, the people in their twenties and thirties, are subsidizing people in their late forties and fifties? They've already done that once in the past. I'm not sure, in terms of fairness, if you want to have a massive transfer of subsidy from the young to the baby boom generation.

[Monica Townson]

The argument about generational equity or intergenerational equity is a familiar one. It was put forward when the reforms to the CPP were made at the end of the 1990s. The point was made that intergenerational cross-subsidization doesn't happen only in pension plans but throughout society. For example, the older generation pays for the education of the younger generation through their taxes, and they are still doing that.

[John McCallum, Liberal, Markham—Unionville, ON]

I'm sorry, but I do want to take the time to question the other witnesses.

Do you have any comments on what we were just discussing?

[Marie-Josée Naud, Union Advisor, Education Department, Fédération des travailleurs et travailleuses du Québec]

Yes. I would actually like to respond to what you said about voluntary contributions. In order to have an idea of who would be likely to benefit from voluntary contributions inside a public plan, it might be worthwhile to look at who currently benefits from RRSP tax exemptions.

It is interesting to note that statistics for 2005, published in 2008, show that people who earn less than $30,000 annually—in other words, low-income people, who represent approximately 60% of Quebec's population—received only 6.3% of tax savings, which is very little.

In terms of a voluntary contribution plan, it is conceivable that individuals earning $70,000 or more annually would benefit. So, again referring to the same statistics, only approximately 8% of taxpayers earn more than $70,000, and yet these same individuals alone receive more than 60% of tax exemptions.

It is partly for that reason that the FTQ is opposed to voluntary contributions, in particular.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

I believe I have one minute left.

Ms. Carbonneau.

[Claudette Carbonneau]

I agree with what has been said in relation to many of the objectives. I think there has to be intervention and obligations when it comes to pension plans.

At the CSN, we have obviously looked at the idea of doing this through the public plan, but what gave us pause were precisely considerations of intergenerational fairness. Increases in contributions were introduced very late, so that a youth entering the labour market now is paying far more than he can expect to receive in benefits. In our opinion, that is utterly unfair.

Furthermore, workers in general, and women in particular, deserve better. That is the reason why we are calling on the government to intervene, to impose the introduction of supplemental defined benefit pension plans, on an industry-wide basis, that employers would be required to sponsor. Of course, for the lowest paid workers, we also see a need for the public plan to be enhanced—for example, by increasing the Guaranteed Income Supplement and making other similar adjustments.

However, doubling the protection provided by the public plan, thinking that this will improve pension security for women and workers as a whole strikes us, unfortunately, as an unfair proposition from an intergenerational standpoint.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, madame.

[The Acting Chair, Conservative, Dave Van Kesteren]

Monsieur Desnoyers is next up to bat.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chairman.

Welcome to all our witnesses.

As you know, this Committee is holding hearings to find solutions to the problem of women living in poverty during retirement. We have heard some interesting things today—indeed, this week. Everyone agrees that older women are living in poverty, and everyone also agrees that women have longer life expectancy, meaning that it costs women more than men. Pension security becomes an important issue in the current crisis.

Both of you—I am referring to our witnesses from the FTQ and the CSN—talked about different ways of enhancing the public plan. I must admit that I was not able to get everything down as I was taking notes. So, I would like to give you a chance to say more about that, because a number of stakeholders have talked a great deal about improvements to the public plan. Indeed, it is the most significant income source for women when they reach retirement age.

So, I would be interested in hearing the views of the FTQ and the CSN.

[Marie-Josée Naud]

Perfect. Thank you, Mr. Desnoyers.

It may be worthwhile to come back to the statistics, which speak for themselves in terms of the public plans and women's dependency on public plans. The CSN referred to this as well. We have pretty well the same figures. In terms of dependency on public sources, we see that, in 2006, almost 55% of women depended on that income. Their other income was far lower than their male counterparts, and only 38% of men were dependent on public pension plans. In our view, that is a clear demonstration of what is important for women in terms of income replacement.

With respect to the QPP, the FTQ is opposed to cuts of any kind. We would obviously like to see the plan enhanced. We are also concerned about the CPP, because any changes there will affect us indirectly. We know that measures passed the day before yesterday are very likely to influence decisions that will be made in Quebec. That is a major concern for us. Furthermore, the Quebec Pension Plan is in worse shape than the CPP for demographic reasons, because of the employment situation, and so on.

What we would like to see is a doubling of current coverage under the plans, from 25% to 50%, similar to what the Canadian Labour Congress has proposed.

While that does pose a problem in terms of intergenerational fairness, as pointed out by the CSN, we believe it is a necessary change in the medium term. It is clearly something to consider, but not on the basis of reduced pensions. In Quebec—and this obviously has less to do with the federal plan—it is being suggested that the rules for calculating the pension amount be tightened up—in other words, a 15% cut, which was already part of that calculation. This is not something being done at the federal level, but there are plans to do it in Quebec.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Ms. Carbonneau.

[Claudette Carbonneau]

Ms. Joncas will take your question.

[Nathalie Joncas, Actuary, Confédération des syndicats nationaux (CSN)]

Good afternoon.

Indeed, women are highly dependent on public plans; you heard the statistics. One of the reasons for that is that they do not have access to defined benefit plans or good plans where they work. Because of the structure of industry, the major pension plans are sponsored mainly by large companies. Even though women have access to public programs, problems persists.

The Canadian system, as it now stands, is built on three pillars: the Guaranteed Income Supplement for the poorest, the Canada Pension Plan—which is a more universal pension plan—and supplemental pension plans. It is not a bad system. It is actually quite an effective system. However, we are now seeing—and this will soon be the case for men—that the private plan pillar is at risk because it was not adapted to meet specific needs. Women do not have access to this type of plan.

At the present time, we are seeing a lot of these plans collapse because they no longer meet needs. Even if people can still access the Canada Pension Plan and the Quebec Pension Plan, the third pillar needs to be reviewed and updated, in any case, to be certain that it is appropriate. The fact is that, unless we consider introducing a plan such as the one that exists in France—a universal plan providing extremely costly universal coverage—we will have no choice but to address the issues around the third pillar in order to enhance retirement protection. This time around, women must have access to that system.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Now that both of you have made reference to private plans, I have a second question. You talked about defined benefits and defined contributions. These are new ideas we are hearing about. The FTQ is talking about the RRFS and the CSN is talking about industry-wide or provincial plans.

How could these systems be set up, and what has to be done to enhance women's access to these kinds of plans?

[Marie-Josée Naud]

Yes, the FTQ has set up a new retirement plan called the Régime de retraite par financement salarial. Changes were made to the Quebec Pension Plan rules to allow such a plan to be introduced. As the representatives of the CSN were saying earlier, this is a multi-employer plan that meets the requirements of the smallest companies, while responding to the need to ensure that people have financial security in retirement. These are defined benefit plans wherein risk management is tightly monitored.

Currently, this plan is only available to companies in Quebec that are provincially regulated. However, discussions are now underway to make the plan available to people working at the federal level, as soon as agreements are signed by the different levels of government.

This is a defined benefit plan for the participant—the beneficiary. However, it is a defined contribution plan for the employer, meaning that the risk is shared jointly by all participants, in terms of potential indexation and contributions. It is a plan that may be a little easier to negotiate now under certain circumstances, and one that is more advantageous than what is currently available in companies where group RRSPs or defined contribution plans have been negotiated.

This is an FTQ initiative, and it was the first to set up such a plan. It is also a plan—I don't know whether you have already submitted a brief—which was subsequently put in place by groups of women. Indeed, 80% of the members are women. Thus it has been possible to increase women's coverage in Quebec.

[The Acting Chair, Conservative, Dave Van Kesteren]

Merci. No, I'm sorry, you're well over your time.

Madame Boucher.

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

Good afternoon, everyone. Thank you for being with us today.

Your comments are very instructive, and we now have a lot of material.

I have a question for Ms. Carbonneau from the CSN. You referred earlier to intergenerational unfairness, as regards the new reforms proposed by the Canadian Labour Congress. I'd like you to expand on that. How do you see that unfairness?

I would also like you to explain—many Committee members are from Quebec, but there are others from other provinces as well—the differences between the provincial, territorial and federal governments? How can we work together to enhance current legislation?

[Claudette Carbonneau]

I'm going to ask Ms. Joncas to answer.

[Nathalie Joncas]

Good afternoon.

In terms of enhancements to the Canada Pension Plan and Quebec Pension Plan, I just want to point out that there is currently a very significant intergenerational transfer. Indeed, young people are paying almost 200% of the value of the benefits they will receive. Often we don't question certain social principles established over the years—for example, the fact that benefits were paid out when the QPP was first set up, or paid to people already close to retirement. Those individuals contributed less to the plan, and contribution rates were much lower. In many cases, their contributions represented only half of the value of the pension they were ultimately going to receive through the Quebec Pension Plan.

We have noted that, over time, there have been different contribution levels for the same benefits. We believe the social consensus around the QPP is still fairly fragile, because young people are contributing a lot more, considering what they will be receiving. We think it would be difficult to make additional enhancements to the plan. It could be done prospectively, but past experience has shown that, as soon as you improve the plan, it becomes very difficult not to include other individuals who have contributed—in other words, not to retroactively improve benefits for people covered by the plan. In our opinion, there are significant intergenerational transfers. Tackling the third pillar might be easier and fairer. There would be no need to question the many social principles that have been established over the years, from one generation to the next.

[Claudette Carbonneau]

Also, we do not feel it is appropriate for companies and the bargaining process alone to affect these realities. We need legislation to require the across-the-board implementation, of defined benefit pension plans. I would just like to add that the model which is strongly promoted by Quebec is one of the most important ones to have been developed in recent years. I refer here to the plan for daycare services. We are talking about 50,000 people who are covered by an actual defined benefit plan. There are risks that the participants are not liable for. The employer is also a stakeholder.

In my opinion, the fact that it was possible to cover 1,400 companies, even though we are talking about small workplaces with fewer than 30 employees, should provide some food for thought. This is a model. This is not utopic, since we have been able to negotiate these conditions. In fact, we are very proud of that. We believe that should serve as inspiration as we attempt to provide better protection to Canadians.

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

Would you like to add something?

[Marie-Josée Naud]

No.

[Danielle Casara]

No, that's fine.

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

I am from Quebec. The other provinces have not necessarily made the same advancements, in certain areas.

CARP is urging the federal government to legislate so that retirees take precedence in cases of bankruptcy and insolvency. What do you think of that idea?

[Marie-Josée Naud]

That's a very good question. The FTQ is currently holding consultations with its affiliates with a view to developing a policy. The CLC currently has its own policy. There is a whole debate going on because of the fact that each of our affiliates has its own views on that issue. It is clear that this will have to be considered carefully, in order to determine what should be done in cases involving bankruptcy.

Should the pensions be protected? As creditors, will pension plans be the first in line? There are several different options. For the time being, we have not taken any position on this, but we should be able to do so in the coming months.

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

Do you think this falls within provincial or federal jurisdiction? At the federal level, it is important to avoid interfering in areas of provincial jurisdiction.

[Marie-Josée Naud]

The legislation is federal, so--

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

Ms. Carbonneau, what do you think?

[Claudette Carbonneau]

I see this as a very serious issue. It's quite true that what happens to retirees when a bankruptcy occurs is absolutely devastating. However, before deciding that they should be preferred creditors in cases of bankruptcy, a great deal more thought has to be given to this.

It is clear to me that this is a serious issue, but we also want to take the time to look at other avenues, as opposed to just believing that this is the magic bullet. There could be significant disadvantages to an approach based solely on the fate of retirees.

In terms of jurisdiction, the whole area of pension funds is closely linked to the tax system. We are currently part and parcel of the federal system. We won't make our constitutional choices within that framework, but we have no choice but to acknowledge that they have always provided guidelines, where the tax system is concerned. In that regard, we cannot just ignore what happens at the federal level. It is an area of great interest to us.

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

Thank you very much.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

We now move to our second round. Oh, I'm sorry, that will be after we finish the first round.

Ms. Ashton.

[Niki Ashton, NDP, Churchill, MB]

I would like to thank you for your presentation on pensions, which was very instructive.

My question is related to the next generation. I am the youngest woman in the House of Commons. The realities of my generation and the challenges we are facing are a concern for us all. The pension issue may not be the ultimate priority for many young people, but if we don't invest properly, we will pay the price later in our lives.

My question is addressed to all of you. It's about

labour market—I'll switch into English—and the labour market changing, especially the issues facing the next generation of people in their twenties and early thirties: increased contract work, decreased work in environments that are not unionized, and certainly a lack of stability in terms of the work they're looking at. Certainly we've heard about the intergenerational piece, but with this changing labour market, I'm interested in knowing what we need to be doing in terms of our pension plans in order to face that reality that people my age—certainly my generation—will face when they get to retirement age. I'd be interested to hear your thoughts specifically in terms of that generation.

[Monica Townson]

I mentioned the number of people who are employed in so-called non-standard jobs, the kind that you've just outlined—contract work, temporary work, and so on. As I said, 40% of women's jobs are now those kinds of jobs, compared with 30% of men's jobs. Most of those jobs have instability built in. They don't have benefits; they don't have pensions. So people who are in those kinds of jobs.... In total, 35% of all employment in Canada is in that kind of work. So they are not likely to have pension plans. They're not likely to develop pension plans, because they don't have permanent full-time long-term employees. This means the public pension plans become even more important.

The CPP does cover those jobs. Part-time workers are covered by the CPP. Self-employed workers are covered by the CPP. Despite some witnesses who have appeared before you saying they weren't, they are. The problem is that they have to pay double contributions. They have to pay the employer part and the employee part. So it becomes very expensive.

Let's say you're somebody working on your own on contract, but technically you're self-employed. If you want to be in the CPP, you must pay 9.9% of your earnings to the plan, whereas if you were working for a big company, the employer would pay half and you'd pay the other half. So it makes it very difficult for younger workers to contribute, even to the CPP.

There is one thing that could be done and I think this would be worth exploring. There is a tax credit for contributions to the CPP. At the end of the 1990s, when discussions on changes to the financing of the plan were going on, it was suggested that changes be made to that tax credit--that it could be improved for lower-income workers and that it might even be adapted to be based on a person's income, so that the lower the income the better the credit would be. Various things like that could be done to make it easier for younger people and people in those unstable jobs to contribute to the plan.

Another possibility would be to regulate temporary health agencies and make them like employers. This comes under labour standards legislation, which is a provincial matter, and also federal for those federally regulated employers. If temporary health agencies were technically employers, then they would have to contribute to the plan on behalf of the people they employ.

So it's a number of things like this that should be explored to make it easier for younger workers like those you describe to do their contributions to the plan, so that they will get pensions from the CPP when they come to retirement.

[Marie-Josée Naud]

With respect to young people, I would just like to say that public plans are completely transferable. Young people often worry about having to hold a number of jobs in their lifetime, and wonder how they will manage both the public and private plans.

For young people, however, the public plans are quite attractive because they are plans that will follow them for the rest of their lives. They are universal plans which are generally well managed, and whose administrative and management costs are much lower than for private plans.

[Niki Ashton, NDP, Churchill, MB]

Thank you.

[Claudette Carbonneau]

In terms of the CSN position, I support many of the comments that have already been made. I believe the first priority is to avoid weakening the public plans, at the very least. She is absolutely right when she says that our plans, be they private or public, are not geared to the new realities of the labour market.

The same applies to temporary help agencies, workers with unstable jobs, and changes in family structure. In that respect, the same also applies to mobility from one company to the next. The only thing I would like to add to what has been proposed—and this is something we strongly support, among other options—would be to bring in industry-wide plans. That would at least enable mobility and, very often, it allows people to continue their career in the same industry.

In that sense, the answer is, to a large extent, to change the system to reflect the realities of the current labour market and the status of young people on that labour market.

[Niki Ashton, NDP, Churchill, MB]

Thank you.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

You've actually got another ten seconds.

[Niki Ashton, NDP, Churchill, MB]

Thank you very much for your feedback.

[The Acting Chair, Conservative, Dave Van Kesteren]

Now we go to the five minutes.

Madam Zarac.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Thank you, Mr. Chair.

I would like to thank all our witnesses for being here this afternoon and assisting us with our study on women and pension security. My first question is for Ms. Carbonneau.

Ms. Carbonneau, your idea of grouping companies, such as daycare centres, strikes me as very innovative. But would it not be complicated to do this? Would it not only affect a small percentage of employees? And who would take the initiative to bring them together under one plan?

[Claudette Carbonneau]

I would like to ask Ms. Joncas, who was the negotiator in this area, to answer your question.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Thank you.

[Nathalie Joncas]

There is no doubt that, in every sector, be it the construction industry in Quebec or daycare centres, when there is a desire to establish an industry-wide plan, there must also be a government desire to set up such a plan, in order to lessen the burden of employers or force them to contribute to a plan based on conditions that are somewhat different from traditional plans—in other words, multi-employer plans. Even if an industry wants to come together and ensure some uniformity, there has to be a willingness on the part of government to make that happen.

However, in some countries, such as the Netherlands, the government has taken the initiative of determining which sectors or industries would be appropriate and setting up plans on an industry-by-industry basis. There can also be--

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Pardon me for interrupting you. Are you saying this system already exists in other countries?

[Nathalie Joncas]

Yes, yes.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Can you give me an example?

[Nathalie Joncas]

Yes, the Netherlands has plans of this type in place, particularly in the industrial sector. They have three major industry-wide plans where the risk is borne by all companies operating in that industry, but the specific sectors are determined by government. So, such plans are already in effect. They are all defined benefit plans as well, but the number or volume is such that there is much better risk management. Those plans came out of the crisis in better shape than many of our major defined benefit plans, because the administration and governance of these large plans is not handled by the companies themselves—it's a model somewhat similar to that of the Ontario Teachers Pension Plan, where the entire education sector is grouped together under an industry-wide model, with governance of the plan being handled completely independently of both employees and employers.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

You say that the private plans are fragile; so, do you not think there should be government intervention to ensure that those plans are safe?

[Nathalie Joncas]

I do think the current model needs to be reviewed. The federal government and many provinces are trying to review their model but, so far, reforms are not significant enough.

It's as though there has been just tinkering so far; there have not been any substantive changes aimed at finding new models that would be more geared to needs or be more effective. We know there's a problem, and there is an attempt to correct it, but pension reform--

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Do you have a recommendation to make?

[Nathalie Joncas]

First of all, there has to be a much more structured process of reflection: a pension summit or something similar. We think that is a necessary first step.

There are some models out there, particularly industry models. We are prepared to discuss them, but a wide variety of stakeholders have to be at the table, because substantive reforms are needed.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

I understand. I would like to throw this question out to all of you. I heard a number of you use the term “public consultations”. The Minister of Finance announced that he had held consultations during the year. Were some of you consulted?

[Marie-Josée Naud]

Are you asking whether we were consulted with respect to CPP reforms?

[Lise Zarac, Liberal, LaSalle—Émard, QC]

I am not referring to Bill C-51, because you already said that you had not been consulted.

[Marie-Josée Naud]

No, we were not, but the Minister of Finance announced that a study on pension reform had been carried out during the year.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Were you consulted?

[Marie-Josée Naud]

To my knowledge, we were not. I am with the Education Department--

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Ms. Carbonneau?

[Claudette Carbonneau]

Yes, we were, but it was nothing like the type of forum that is advisable. These things always happen at the last minute, which means that there is practically no time to prepare anything. As for the idea of a major summit on pensions, this was certainly nothing like that type of consultation process.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Can you tell me quickly how the consultation went? I understand that you had to answer specific questions. Was that what the consultation was all about?

[Claudette Carbonneau]

Yes.

[Nathalie Joncas]

Yes, a document was sent out with questions relating to the possibility of… obstacles to industry-wide plans; so, there were several consultations. I believe this was done in all the provinces. The consultations were held in several places. We had an opportunity to express our views, but the questions we were asked to answer were quite narrow.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Thank you.

[The Acting Chair, Conservative, Dave Van Kesteren]

Maybe we can come back to that point next time around.

Let's be really quick, Ms. Townson.

[Monica Townson]

I just want to respond to that.

What the federal Minister of Finance was referring to was consultations he had on the proposed changes to federally regulated plans, which make up only 7% of workplace pension plans in Canada. He proposed changes to those plans and then he went and consulted people about them.

Federal and provincial finance ministers called for a working group, which is the study I think you're referring to. It has been studying retirement income needs out of the University of Calgary. The federal finance minister is meeting with the provincial finance ministers in Whitehorse in mid-December to receive that report. People are eagerly awaiting it because they're not sure what it's going to say.

The provincial finance ministers have also called for a summit, but the federal finance minister has not responded.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you for that.

Next up is Madam Wong.

[Alice Wong, Conservative, Richmond, BC]

Thank you very much, all of you, for coming to our committee meeting.

I have a couple of questions.

First of all, to the CSN, you probably heard that the Canadian Labour Congress has proposed a phased-in doubling of the proportion of average earnings replaced by CPP from 25% to 50% over seven to ten years. In fact, one of the presenters mentioned that number as well. This is to be financed by a modest increase in worker and employer premiums.

Do you know what the evaluated cost of this proposal would be to employers and employees? Does anyone have any idea? The Canadian Labour Congress has proposed that we should actually double the CPP from 25% to 50%. That means there will be an increase in the workers' as well as the employers' premiums. I want to know if anybody has any idea of the cost of this proposal.

[Monica Townson]

Currently the employers pay--

[Claudette Carbonneau]

Perhaps Ms. Joncas can answer that question.

[The Acting Chair, Conservative, Dave Van Kesteren]

I'm sorry, but Madam Townson was just answering. We'll have her answer and then we'll get yours.

Thank you.

[Monica Townson]

The current contribution rate is 9.9% of earnings, half of which is paid by the employer and half by the employee. That rate would increase; half of it would be paid by the employer and half by the employee. It comes out of earnings. Certainly it's taken into account when the employer fixes earnings. The cost to the employer is not necessarily going to be onerous, because it means the employee's wages would be adjusted accordingly.

[Alice Wong, Conservative, Richmond, BC]

That leads me to the question about the younger generation. In other words, the people who are presently paying premiums are probably now paying into.... It is the retirees now who will be enjoying those benefits. At the same time, there might be people who are pretty wealthy already, and we are now giving them more because we are doubling their pension income. I want to ask the witnesses if they can shed some light on that.

[The Acting Chair, Conservative, Dave Van Kesteren]

At this time, maybe we can go to the video.

[Marie-Josée Naud]

Well, the CLC's position--

[Claudette Carbonneau]

Our position on this, as we have said a number of times, is that we are in favour of exploring other avenues first. However, as far as we are concerned, one thing is clear: enhancements must be made to pension benefits for all Canadians. Of course, there is a cost attached to that, whether we are talking about private or public plans. We firmly believe that improvements are needed and that it is well worth investing additional monies in this in order to provide greater pension security. For me, that is quite clear.

[Nathalie Joncas]

I would just like to add that it is fine to look at the costs of that protection, but what must also be considered are the social costs of not providing that protection. If people reach retirement age with very little retirement income—or none at all—there will be social costs associated with poverty among seniors and those costs must also be assessed. They are not mentioned often enough.

[Marie-Josée Naud]

We would just like to add--

[Alice Wong, Conservative, Richmond, BC]

If it's cross-sectional, everybody gets it. For those who are now receiving 25%, all of a sudden it would double, regardless of income.

Isn't it fair? I'm referring to the same model right now. They're suggesting that we double the CPP benefits. Whether you need the money or not, you still get it. Would you think that's a fair system?

[Monica Townson]

Yes. The point is that it's a percentage of your earnings. It's not simply doubling a flat-rate benefit. What you get at the end is a percentage of the earnings that you've contributed over the years that you were in the plan. So instead of getting 25% of your average annual earnings, you would get 50%. Not everybody would get the same, because it would depend on what they contributed to the plan and what their earnings were over time.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

Madame Demers.

[Nicole Demers, Bloc, Laval, QC]

Thank you, Mr. Chairman.

Thank you very much for being here this afternoon. I am a woman with a big heart, and I have listened very carefully to your comments. There are a couple of things that bother me.

Ms. Townson, a little earlier, you talked about women staying at home with their children for seven years and not being penalized by their retirement plan. You said that caregivers sometimes have to leave the labour market earlier to look after someone and that, unfortunately, the fact they have to stop working to care for another person is not taken into consideration. As a result, they are penalized.

Do you believe they should be given the same amount of time—in other words, seven years—when they care for someone, which would mean that they would not be penalized under the pension plan?

Also, you said that 82% of women aged 24 to 35 work outside the home. I come back to the concern expressed by Ms. Carbonneau, who talked about intergenerational fairness and the fact that the pension plan would be paying out 50% of income, rather than 25%.

Given that more people are working, do you think that the problems associated with intergenerational unfairness would iron themselves out fairly quickly? The reason I am somewhat bothered by this is that, when my mother began working outside the home, the Quebec Pension Plan did not exist. My mother is now 81 years of age and she is poor; but she raised six children. I think she deserves a decent income.

What would be a decent income, in your opinion?

[Monica Townson]

It would be impossible to give you a dollar figure, but I think it should be at least up to the poverty level. At the moment, your mother—to use the example you gave—who didn't work outside the home and didn't earn a CPP pension, would still be entitled to old age security in her own name, without reference to her labour force participation, plus GIS. But as I mentioned in my presentation, the total she could get from OAS and GIS if she were a single person is less than the poverty level. It's only about $14,000. So I think that needs to be addressed.

Secondly, to jump a little bit to your point about the caregivers—and this is happening increasingly because of our aging population—let's say a woman at the age of 55 has to withdraw from the paid workforce to care for her elderly husband or a family member who has disabilities. When she claims her retirement pension, she can't claim it before age 60 in any case, but let's say she claims it at 60; she has five years from age 55 to 60 that will have to be included in her average earnings, at zero, which means it's going to bring down the average and she'll get a lower pension.

What I argued in the report, and maybe it wasn't entirely clear, is that she should get the same kind of dropout that is entitled to those who have children under the age of seven. In other words, she would be allowed to exclude those years from the calculation of average earnings on which her pension would be based. That would be a caregiver dropout. I think we need to look at that. It's a recommendation that has been around for a number of years.

As to the question of those who are in the paid workforce—and I said 82% of those in the child-bearing years are now in the paid workforce—we have to recognize that on average they have one and possibly two children, usually not more because of what has changed in the last 30 to 40 years. Plus, generally speaking, they take their full maternity leave, funded by maternity benefits, and they're back at work within two years. So they're not dropping out of the paid workforce for many, many years and not having any pension. They can leave out the years when they had a child under the age of seven, even if they went back to work and had to work part-time. By allowing them to exclude those years, it means that their average earnings are not pulled down when it comes to calculating their pension. So it's a consideration given to women who take time out of the workforce when they have young children. I was arguing that the same consideration should be given to those women who have to come out--

[Nicole Demers, Bloc, Laval, QC]

Thank you. I am sorry to interrupt you, Ms. Townson, but I have another question.

Earlier, you talked about the money people can take out of an RRSP and the fact that they end up with less than if they hadn't saved any money at all. As I recall, a senior is allowed to earn $5,000 without any penalty.

[Danielle Casara]

It's $500.

[Nicole Demers, Bloc, Laval, QC]

I believe the Minister raised that to $5,000. Am I wrong?

[The Acting Chair, Conservative, Dave Van Kesteren]

Very quickly.

[Nicole Demers, Bloc, Laval, QC]

An individual can withdraw $5,000 from his or her RRSP. Having to pay tax on that amount would be perfectly normal, but she could also withdraw that amount without it being added to her income, without having to pay taxes again and without being penalized because all the programs are being cut. Is that something that would be feasible?

[Marie-Josée Naud]

That is one of the proposals the FTQ brought forward today. Based on our figures, the amount is $3,500. It has been raised from $500 to $3,500, but that is for employment income. That is all that is allowed.

We think this should also include RRSPs. Canadians are being encouraged to save money and put it in an RRSP, but when they are already living close to the poverty line—we're talking about an income bracket of between $17,000 and $21,000—and want to withdraw that money, they are taxed on it at a rate of 80%. That is discouraging for workers.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

Colleagues, we have some committee business. However, the last time we went through this exercise, those who had the motion withdrew it. Is it the same this time? I'm asking for the cooperation of the committee. Do you want to move this motion at this time?

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

No.

[The Acting Chair, Conservative, Dave Van Kesteren]

If our witnesses would indulge us a little bit longer, should we continue on? I'm sure you all have some more questions.

[Some hon. members]

Agreed.

[The Acting Chair, Conservative, Dave Van Kesteren]

That's good.

Ms. Ashton, you're up again.

[Niki Ashton, NDP, Churchill, MB]

Obviously, in terms of the economic recession we've just gone through, one piece of research after another has indicated that women are always affected more in terms of the economic impact and the economic challenges they face as a result. In this case it is pensions, which are already smaller and more precarious for women. We've seen many of those regimes affected by the economic recession.

Certainly there are examples of pension plans that have worked out a lot better, but I'd be interested to hear your thoughts on what we can do as we move ahead, having learned what we have from the difficult economic time we have gone through and are still going through. Are there models that need to be looked at? What can we do to strengthen the system so that we don't find ourselves in a mess, and so that women workers who have lost a great deal don't have to go through the same...?

[Marie-Josée Naud]

In my opinion, one of the avenues that should be explored--

[Nathalie Joncas]

I can answer that. May I speak?

[Niki Ashton, NDP, Churchill, MB]

Yes.

[Nathalie Joncas]

We have looked at new pension plan models. We really have to give this some thought.

In terms of defined benefit plans, as we know them, many women currently contribute to such plans. Yet, as you mentioned, returns under those plans were very low during the economic crisis. As a result, the funds accumulated by women workers have dropped considerably. The large defined benefit plans have also seen some pretty tough times during the crisis, particularly in companies verging on bankruptcy or experiencing financial difficulties.

We are currently analyzing new models. These plans fall somewhere in the middle, in the sense that they are a little less risky. Risk management is tighter, but it is still possible for risks to be shared by both workers and employers. We may want to look at less risky plans that have better risk management and better governance. One option would be hybrid models that fall somewhere in between defined contribution and defined benefit plans.

We are also of the view that small company plans will be much more at risk if the company has financial problems. It would be better to bring in a plan that covers a large number of companies working in the same business or industry. That way, the risks could be shared by a larger number of companies. Those are some of the avenues we have been exploring in seeking new tools.

[Marie-Josée Naud]

As regards risk management, I fully agree with Nathalie Joncas. Everything depends on that, in fact. It is the cushion you build up through your pension plan that allows you to deal with the fluctuations that affect defined benefit plans. We need to rethink the structure of our defined benefit plans in order to be able to handle the kinds of crises that we have experienced.

We really have no choice. Some steps have been taken. For example, I know that under the Université du Québec's pension plan, risk management and risk sharing between workers and the employer have been redefined to a certain extent. Some companies have introduced the concept of indexation. That is the case for the Régime de retraite par financement salarial. If things are going well and there is a good capital reserve, retiree benefits can be indexed. In terms of risk management, that is really quite an attractive option. For the time being, it's working.

[Monica Townson]

There are a couple of other things. In Ontario, there's a Pension Benefits Guarantee Fund. If an employer goes bankrupt, the fund guarantees the pensions of workers up to an amount of $1,000 a month. A recent commission in Ontario recommended that that be increased to $2,500 a month, but the Pension Benefits Guarantee Fund doesn't have much money in it. In fact, it has nothing in it at the moment.

Ontario is the only province to have such a fund. The CLC has recommended that there should be a fund like that at the national level that provinces and employers could opt into. This fund is funded by levies on employers who sponsor pension plans and it doesn't have government money in it, so something like that might be a possibility.

The other one, which I think somebody here recommended, was to change the bankruptcy laws so that employees who have pensions owing to them are given more priority in bankruptcy proceedings.

[Niki Ashton, NDP, Churchill, MB]

Thank you. Merci.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

Go ahead, Ms. McLeod.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, and thank you to our guests.

I'd like to start by acknowledging some people's presence. We acknowledged some people in the audience earlier, but we also have a number of folks in our audience today who are students from McGill University, and they're women. There are 35, I believe, who are here.

First of all, it's good to see them here, but it also brings to my mind an example. We have 35 young girls. We know that the female-to-male proportion in university education is shifting quite dramatically. I really believe that the world is going to be their oyster as the baby boomers leave some of these jobs. We have a recession right now, but ultimately these young students are going to have many opportunities.

We are certainly concerned. We talked about the different pattern of women's work, and we perhaps need to look at women who find themselves in particularly difficult situations, as happened with Madame Demers' mom, but has there been a lot of work done in terms of the future? I know the contributions women are making into RRSPs are starting to increase more and more, so I think the issue we have right now is perhaps going to be a very different issue, and maybe not an issue, 20 years from now.

I'd appreciate some comments.

[Monica Townson]

If only it were true.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

It will be.

[Monica Townson]

I just finished writing a paper on women and poverty and the recession that looks at the roots of women's poverty. There a whole bunch of them: women's wages are lower, there's no child care, their access to training is lower, the welfare rates are too low, women who are single parents have the highest poverty rate of any group in society, and so on. Even though women have gone into the labour force in much greater numbers, as I said earlier, the kinds of jobs they're getting are not going to provide them with stable long-term financial security, so the fact that women are out there working and in many cases doing really well--women are much better educated now than they were, and in many cases better educated than men--is not spelling out in terms of better salaries and better financial futures. That's why I think it's so important for the work that you're doing to look at how you provide financial security for them in the future.

[Danielle Casara]

I agree with the other witness. I have no intention of repeating all her arguments. In Quebec, we have had pay equity legislation in place for 10 years now. Enforcement is remarkably difficult. That means that, despite their higher education level and other positive legislative factors, women's salaries are still lower than men's.

I am not usually pessimistic, but I have little hope that snapping our fingers will make this materialize. It will take several generations to catch up, hence the need to provide greater security to women under public plans. Things are not going to change overnight.

[Claudette Carbonneau]

In any case, even if women's employment situation were to improve—something that we should all hope for—I agree that waving a magic wand will not make it happen. The fact remains that access to a pension fund, which allows you to accumulate money for retirement, will continue to be a necessity.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you.

I hope my more optimistic view of our future is realized. It doesn't, as you say, neglect the fact that we need to be planning for pensions in the future.

Actually, this is a question that I'm almost embarrassed to ask. We talk about CPP and QPP. What are the differences with QPP? I know probably most people here understand that QPP is administered in the province. Is it any different in terms of benefits or rates or...?

[Marie-Josée Naud]

In fact, the Quebec Pension Plan is the plan in place in Quebec, whereas the CPP is the plan in place in the rest of Canada. I am no expert on contribution rates, nor do I have technical expertise in this area, because I work in educational resources. I think it is simply the plan that operates in Quebec.

[Monica Townson]

There are some minor variations--for example, in the benefits for dependent children of contributors, and so on--but basically the two plans are the same. Quebec's plan is administered in Quebec. The CPP is a federal-provincial thing, and in fact Quebec has a vote on changes to the CPP.

If you are somebody who works both in Quebec and in some other province, or if you have worked in Quebec in the past and then you work in some other province in Canada, your pension at the end will be based on a combination of both plans. Your service in the QPP would be combined with what you had in the CPP, so your pension would be based on a combination of the two.

[The Acting Chair, Conservative, Dave Van Kesteren]

I'm sorry, but you're well over your time. Perhaps we'll go quickly to the video side to see if there's something you can add to that very quickly, as the time has lapsed.

[Nathalie Joncas]

I would just like to add one thing about the CPP and the QPP. Two reforms have been announced: one has been announced in relation to the Quebec Pension Plan, and Bill C-51 has already been passed.

If different approaches are taken, the two plans may end up not being quite so similar. Indeed, the differences between CPP and QPP have been fairly insignificant thus far. One of the important points to make is that the CPP is on a more sound financial footing than the QPP, because Quebec's population is aging more quickly than that of the rest of Canada. The effect of an aging population is thus a lot more pronounced in the Quebec Pension Plan than in the Canada Pension Plan. That may require different kinds of changes.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

We'll go now to the Liberal side. Mr. McCallum and Ms. Zarac are going to split their time.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you. I would just like to ask one question and then share the rest of my time with my colleague.

My question is for Monica Townson. I believe that right now the contribution rate for CPP between employers and employees is 9.9%. Rounding it up, we can call it 10%. That's up to about $44,000 or so.

[Monica Townson]

It think it is $46,000.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay, it's up to $46,000, and for that you get a 25% replacement rate. I would have thought that if we moved from a 25% to a 50% replacement rate, doubling it, the contribution rate would approximately double. Is that not right?

[Monica Townson]

It would if it were done as you describe. There are some options. For example, you could increase the contributory earnings and raise that level from $46,000 to a much higher level.

[John McCallum, Liberal, Markham—Unionville, ON]

Let's say we leave it at $46,000 but go from a 25% replacement rate to a 50% replacement rate.

[Monica Townson]

Yes, I think it would be, roughly. The CLC has calculated it. I don't remember exactly what it was; it wasn't exactly double, but it was certainly increasing.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

My question is addressed to Ms. Joncas. You said that we don't talk enough about the costs of social services for the poorest members of society and the direct connection between that and pensions. I agree with you.

Has the CSN conducted any studies in that area?

[Nathalie Joncas]

No, we haven't studied the impact of not having a pension plan. However, we do know that, at the best of times, only 40% of workers have access to an adequate pension plan. That number is currently dropping. We have conducted a lot of studies dealing with poverty among seniors. If we no longer have these supplemental pension plans, the situation will certainly not improve. We will continue to have problems.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

I understand, but I was just wondering if you had done any studies on this.

[Claudette Carbonneau]

No.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

There aren't any.

As regards public plans, you also mentioned that you are recommending that the Guaranteed Income Supplement be raised, and that other adjustments also be made. I would like you to expand on that. What kind of adjustments are necessary, in your opinion?

[Claudette Carbonneau]

First of all, the Guaranteed Income Supplement must be raised.

Second, current clawbacks that apply to other income should be reviewed. In that respect, I agree with the recommendations I heard a little earlier. There is also a need to update the formula used to calculate the pension amount, in order to reflect new realities, such as family caregivers. That is absolutely clear, as far as we are concerned.

Just to repeat, the very first step is to avoid weakening the public system—indeed, doing everything we can to prevent that from happening.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Thank you.

[Claudette Carbonneau]

The reason we insist on the need for guaranteed income is that we believe a fairer source of income must be found through the general taxation system—for example, to deal with situations such as the one the member's mother finds herself in, having spent little time in the labour market, as was referred to earlier.

[Lise Zarac, Liberal, LaSalle—Émard, QC]

Thank you.

Do I have any time left?

[The Acting Chair, Conservative, Dave Van Kesteren]

No. We're going to try to get everybody in.

Go ahead, Madame Boucher.

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

I would like to ask a very general question. We have often heard experts say that workers are ill-prepared, or that they do not plan their personal finances appropriately. That is especially true for young people—members of the generation that follows our own. I myself have two daughters aged 20 and 21, and when I talk to them about planning their pension, they look at me as though I were an old lady. But I am only 46 years of age!

What can we do, as elected members of Parliament, whatever party we may represent, because we are all members of this Committee? How do you see that working? How can we educate future generations so that they have a better understanding of pension plans? What should politicians be doing about that in general? Should we be providing people with more information? That is one of the questions in my own mind, because we talked a lot about intergenerational differences. When I talk about pensions with my own girls, they tend to see me as an old lady.

[Nathalie Joncas]

I can answer that question. The day we individualize retirement, we place a very heavy burden on everyone, and especially young people. I am talking about retirement, finances and planning.

During the economic crisis, it was clear to everyone that even the best managers were having a lot of trouble dealing with the crisis. So, how can we ask the average person, whatever their age, to take responsibility for that kind of planning or management? Retirement planning absolutely must be part of a collective process. It has to be collectivized. If we rely on individual plans, on RRSPs and on individuals, we really will be getting off on the wrong foot.

[Marie-Josée Naud]

The FTQ takes exactly the same position; that is our leitmotiv. We have really spearheaded group plans and public plans.

As Ms. Casara said earlier, we support the position taken by Mr. Denison, who pointed out how difficult it is for individuals to make profitable investments. Often you end up paying huge management fees. Also, the person doing the investing is the one that has to manage the risk. In the last financial crisis, we saw just how difficult that is.

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

Thank you.

[The Acting Chair, Conservative, Dave Van Kesteren]

Madam Wong, you have one minute.

[Alice Wong, Conservative, Richmond, BC]

I'm particularly interested in the suggestion about a type of sectoral collective plan. I don't know whether you are aware that in British Columbia there used to be a teachers' credit union that actually used teachers' pension funds to form a kind of credit union. Then it failed, so a whole bunch of teachers were faced with the challenges of not having money from their pensions. In your suggestion, is there any way this could have been prevented?

[Nathalie Joncas]

Pension plans are not going to prevent bankruptcies. It is important to understand that. However, we may want to review our current pension models with a view to making them a little less risky. They need to be better managed and there must be better governance. When plans are allowed to run a deficit, when that deficit is not absorbed quickly and when companies are fragile, we expose ourselves to pension income losses.

On the other hand, I do think some new models could be explored. In order to do that, the legislative framework in which all of our current pension plans are evolving needs to be reviewed. We must explore substantive reforms and new pension models.

[Alice Wong, Conservative, Richmond, BC]

Do I have more time?

[The Acting Chair, Conservative, Dave Van Kesteren]

No. Thank you.

Go ahead, Monsieur Desnoyers.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chairman.

To begin with, I want to be sure that we will be receiving a copy of the briefs submitted by all the individuals and organizations appearing today. I would also like to receive a copy of the paper the CSN submitted to the Department of Finance. We have received testimony from employer organizations. They were consulted and will be submitting their documentation. If it were possible to have a copy of yours as well, that would certainly help us to identify the differences between what employers and unions are suggesting, in terms of responses.

My question is for the CSN. I would like to know what you think of industry-wide pensions, but in the private sector. That is trickier. One example might be the metallurgical industry, which includes a lot of small- and medium-sized companies, and even some large ones.

[Claudette Carbonneau]

I have frequently cited the example of childcare centres, which are not public organizations. Another major experience in Quebec was in the construction industry. The number of small companies is no higher, and it is not really that private.

We are proposing two solutions that complement each other. I believe that employers would be far more interested in industry-wide pension plans if they were required by legislation to offer a pension plan. If that were the case, an employer with only 20 or 25 employees would probably decide not to take on that responsibility alone—hence the attractiveness of working on an industry-wide basis.

There are sector committees in Quebec. That means that the parameters are already defined. That could be a source of inspiration or prove helpful in this case.

[The Acting Chair, Conservative, Dave Van Kesteren]

Ms. Ashton, you have some time.

[Niki Ashton, NDP, Churchill, MB]

Perfect. Thank you.

I want to start by saying that I'm encouraged by the focus on youth coming from my colleagues, and I certainly hope that concern carries over when we're dealing with a number of other policy issues that affect my generation, whether they are post-secondary education, health care, or foreign policy, for that matter. I also note that unfortunately research has shown that despite the fact that women are getting more post-secondary education, we are still earning far less than our male counterparts. As much as I'd like to think my future is rosy, many of my sisters are facing some challenging times ahead.

What I would like to hear as a bit of a wrap-up is the sense of urgency that you feel

regarding the changes that are required. We have been hearing testimony and different messages for weeks now. Some go over the same ideas. I would like to know how urgent you think it is to take action?

[Danielle Casara]

Decisions and reforms of this kind are not made every day, with scissors in hand. This is something that really requires proper planning. That is why we are asking for extensive and transparent public consultations. That is also why we deplore the process that has unfolded thus far at the political level.

[Niki Ashton, NDP, Churchill, MB]

I see.

[Monica Townson]

I agree that there needs to be some kind of summit or consultation at which all the stakeholders are present--not just the people who sponsor pension plans, but unions, seniors, and everybody who has an interest in this.

We all have an interest in it. It is urgent. The so-called baby boomers are now in their sixties. They're going to be retiring over the next 10 to 12 years, and many of them will not have enough to live on. Some of them will be forced to go on working because they won't be able to afford to retire. We need to do something about it, because whatever we decide to do cannot be implemented just like that; it will take time to phase it in. We need to be deciding what we're going to do and then we need to start phasing it in.

[The Acting Chair, Conservative, Dave Van Kesteren]

Thank you.

That concludes this meeting. I want to thank those on video. I see they're not there, but I'm sure our clerk will offer our thanks for their participation.

I'd also like to thank both parties here as well for the time and the effort that you've put into this. We thank you for your contributions. We know that it's going to be most helpful.

Go ahead, Madame Demers.

[Nicole Demers, Bloc, Laval, QC]

Mr. Chairman, if you would like to wrap it up with our guests, I have a comment to make afterwards.

[The Acting Chair, Conservative, Dave Van Kesteren]

Absolutely.

[Nicole Demers, Bloc, Laval, QC]

Thank you.

[The Acting Chair, Conservative, Dave Van Kesteren]

Go ahead.

[Nicole Demers, Bloc, Laval, QC]

Oh! All right.

Mr. Chairman, our witnesses on November 24 were supposed to be Ms. Ducharme and Ms. Marquis, who are with the Public Service Alliance of Canada, but they are unable to attend. They have asked the Clerk if they could appear on December 1 instead. I believe that when that date rolls around, we will already have started to write our report. And we do want to table it fairly quickly. I believe their testimony would certainly be very helpful, but I am not sure how we could arrange to hear them.

[The Acting Chair, Conservative, Dave Van Kesteren]

I will confer with the clerk for a second. Is it okay with the committee that on December 1 we move the Canadian....

[Nicole Demers, Bloc, Laval, QC]

I'm talking about Ms. Ducharme and Ms. Marquis from the Public Service Alliance.

[The Acting Chair, Conservative, Dave Van Kesteren]

Do we have consensus?

[Nicole Demers, Bloc, Laval, QC]

Thank you very much, Mr. Chairman.

[The Acting Chair, Conservative, Dave Van Kesteren]

Yes. Is that okay with everybody here? It is.

The meeting is adjourned.