moved that Bill C-574, An Act to promote and strengthen the Canadian retirement income system, be read the second time and referred to a committee.
Mr. Speaker, I am pleased to be here today to kick off the first hour of debate on Bill C-574, something that I prefer to call the pension income bill of rights.
While Bill C-574 is a private member's bill, and my first, it is also a package of proposals that has been extensively researched from a legal perspective and thoroughly vetted. It is intended to address a series of specific systemic and practical challenges facing Canada's various pension systems, both public and private.
As the official opposition critic for seniors and pensions, I have travelled across this country and I have spoken to thousands of Canadians on this very subject. There are many reasons why, for the most part, the majority of people are not setting aside adequate savings for their retirement, and I fear that this trend will only grow in the years ahead.
Already we know that more than 200,000 Canadians over the age of 65 live well below the low income poverty line. Put another way, after a lifetime of working to raise their families and to pay their taxes, 200,000 Canadians are being forced to choose between buying groceries and paying the rent because their retirement income is simply too low to allow them to do both. While sad, and for many, nearly unbelievable, it is a daily reality for far too many. These financial challenges are compounded even further when one factors in elements such as ill health, geographic isolation, or even the loss of a spouse. This means that the most vulnerable are often the ones facing the greatest risk exposure and suffering to the greatest extent.
New Canadians, women, those with the lowest amounts of formal education, native Canadians, and those living in rural, remote or isolated regions of the country are among those facing the most difficulty. It is these Canadians who can expect the least amount in their golden years.
Statistics Canada tells us that Canada's population over the age of 65 could reach an unprecedented 10.9 million by 2036. Accordingly, we need to start addressing these pension shortfalls today if we are to prevent a full-blown crisis in the years ahead. The question though is how. How shall we address this?
When Lester Pearson first established the Canada pension plan in 1966, people said it could not be done. Three decades later, when Jean Chrétien and Paul Martin made the changes needed to put the CPP on stable financial footing, many said it was a fool's errand. The debates were fierce at that time, but they were fundamental to the financial future of millions. All of those were vehemently opposed by the Conservatives, by the way. Perhaps one day we will look back on this debate and say the same thing.
Regardless of the genesis and tone of those past debates, the outcome is not in dispute. Canada now has a good public pension base, which is composed of the Canada pension plan and the QPP, the old age security pension, and the guaranteed income supplement. Alone, these mechanisms provide somewhere in the neighbourhood of 30% of one's replacement income in retirement. In dollars, these plans pay a maximum of about $20,000 annually, but the average payout has proven to be significantly less.
Current economics suggest that this will not be enough for most Canadians. In fact, it is not enough for most Canadians today. They need private retirement savings to survive. Retirement income security, adequacy and coverage are growing problems that urgently require the attention of business, labour, individual citizens, and governments at all levels.
Seventy-five per cent of Canadians working in the private sector do not have a pension plan at all. They are clearly not saving enough and are effectively prevented from accumulating the same retirement income as their public sector counterparts, including all of us.
With the numbers in mind, we have two choices. We can ignore the problem until it becomes a national crisis, or we can address it now before it becomes a crisis. I choose the latter, and that is why I have introduced Bill C-574.
As I have said, 30% is an okay base, but it still leaves a shortfall for most people of 70% of their income. For many, the attainment of that 70% is insurmountable for many reasons. In addition to the rising cost of living, there are also systemic barriers that stand between hard-working Canadians and that much-needed 70%.
Currently, individuals participating in generous defined benefit pension arrangements routinely accumulate five to seven times more retirement income than those who do not. These defined benefit plans are available only to public sector workers and to a very small minority of private sector workers.
Despite this apparent solution, right now the Income Tax Act says that individuals cannot have a generous defined benefit pension plan unless they have an employer who provides it for them. I think that is wrong, and it places those without an employer at a disadvantage. Why should a farmer, a homemaker or a small business owner not receive a pension plan? Bill C-574 would help to level that playing field.
In essence, clauses 4 to 6 of Bill C-574 would guarantee equality of opportunity by providing that a federal law that has the effect of restricting an individual's right to join a pension plan or the flexibility to make the contributions necessary to accumulate an adequate retirement income would be in violation of this bill.
Put another way, if Bill C-574 becomes law it will be illegal to prevent people without cause from joining a pension plan or to restrict their right to make contributions, subject to reasonable restrictions that must apply to all individuals equally.
I want to make sure that we eliminate every possible barrier currently preventing the self-employed, farmers, stay-at-home parents and those engaged in the workforce from saving effectively for retirement. Today, right now, if MPs from all political parties band together and pass Bill C-574, we will have taken the next step in securing pension security, adequacy and coverage for all Canadians.
It is with these basic concepts foremost in my mind that I speak today to this bill. Yes, Bill C-574 is about many things: financial literacy, pension security and even basic fairness. But more important, the debate could highlight what the legislation is not about.
I think it is fair to say that Bill C-574 is not about partisan posturing or brinkmanship. Bill C-574 is about so much more than that.
From my perspective, my goals are simple: to help ensure that every Canadian has access to effective retirement savings mechanisms; to empower people with detailed, up to date, conflict-free information about their financial future; and to acknowledge that universal dignity in retirement is more than just a nice extra. It is a goal to which we all as legislators should aspire in the years ahead.
With this direction in mind, I am pleased to openly say that the Parliamentary Secretary to the Minister of Finance has signalled that he is prepared to co-operatively explore this matter. While there will almost certainly be differences that we need to work on, I am encouraged that we can at least agree on the stated objectives of the bill. These objectives may be simple but they are far from simplistic.
This legislation is the first of its kind ever proposed to ensure that our seniors have better nest eggs and the retirement income security that they need.
In broad strokes, the bill seeks to do a few general things: to create substantive rights; to give every person a chance to accumulate retirement income in a plan that will be there in the long term; to promote good administration of retirement income plans; to ensure that members of retirement income plans regularly receive good, plain-language information that they will need about their plans; and to set out in law the goals to which we aspire legislatively as they relate to retirement income.
Members might not fully appreciate why these measures are so essential, but I would submit that the recent examples of why they are needed are all around us.
When Canadian technology giant Nortel announced it would seek to liquidate its assets, company pension plans and long-term disability benefits fell into chaos. Thousands of hard-working Canadians suddenly found themselves thrust into financial uncertainty despite having contributed to a workplace pension regime for several years.
Last week, the House industry committee heard that many of these problems could have been prevented if only pensioners had access to some basic financial know-how.
Bill C-574 promotes increased financial literacy for individuals participating in a retirement income plan in three ways.
First, it requires clear disclosure of the risk the individual has in the plan relating to benefit security and conflicts of interest.
Second, it requires regular plain-language disclosure to the individual of his or her rights, obligations and options relating to the plan.
Third, it requires that federal laws governing retirement income plans promote access to training in financial literacy and retirement planning.
It would seem that some of these measures are long overdue, especially for a former Nortel employee.
I would never want to frame Bill C-574 as a response to the Nortel situation. Quite the contrary, Bill C-574 is more inclusive and more far-reaching than that.
In fact, there were many reasons why I opted to present Bill C-574, but in simple terms, I presented it because it is the right thing to do. Bill C-574 is about helping people and protecting pensions for the next generations.
In 1960, when the Bill of Rights was passed by Canada's Parliament, it was heralded as a historic first step towards establishing an important slate of Canadian rights. In that same vein, Bill C-574 strives to be that first step towards ensuring pension security, coverage and adequacy. I have even sought to incorporate some of the language used in the Bill of Rights in an effort to strike a balance between goals to which we aspire and rights that must be protected.
If I had to summarize Bill C-574 in 50 words or less, I would have to say that Bill C-574 is about choice, fairness and flexibility. It is not about tearing down pensions; it is about elevating everyone to the same level. Every Canadian should have the right to a financially secure retirement, and I believe this proposal sets the stage for that to become a reality.
In the days ahead I look forward to working with colleagues of all parties. I welcome any suggestions that can help to strengthen Bill C-574 while at the same time staying true to the stated goals of the legislative proposal.
In the meantime, I would urge each member of the House to consider supporting the bill so that it can be sent to committee for additional study and consideration. Pensions are not a matter for partisan consideration and neither is Bill C-574. Canadians are counting on us to do the right thing.
I believe it is very much a motherhood issue with basic principles that I think all of us espouse. It is clearly one that will start to protect pensions in the future and better prepare our children and other Canadians so that they are better prepared and when retirement comes we are not hearing about 200,000 people still living below the poverty line. Everybody should be able to contribute, no matter what small amount, into a pension fund that would be there for them when they need it.