Bill C-26 (Historical)

An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act

Part 1 of this enactment amends the Canada Pension Plan to, among other things,
(a) increase the amount of the retirement pension, as well as the survivor’s and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years over which those contributions are made;
(b) increase the maximum level of pensionable earnings by 14% as of 2025;
(c) provide for the making of additional contributions, beginning in 2019;
(d) provide for the creation of the Additional Canada Pension Plan Account and the accounting of funds in relation to it; and
(e) include the additional contributions and increased benefits in the financial review provisions of the Act and authorize the Governor in Council to make regulations in relation to those provisions.
This Part also amends the Canada Pension Plan Investment Board Act to provide for the transfer of funds between the Investment Board and the Additional Canada Pension Plan Account and to provide for the preparation of financial statements in relation to amounts managed by the Investment Board in relation to the additional contributions and increased benefits.
Part 2 makes related amendments to the Income Tax Act to increase the Working Income Tax Benefit and to provide a deduction for additional employee contributions.

Canada Pension Plan

[Rachel Blaney, NDP, North Island—Powell River, BC]

Mr. Speaker, I am always accused of being an optimist, and I think sometimes that is a positive life choice. I am hopeful. I am guardedly hopeful. This is the reality in the communities that we serve. Across this country, housing is a bigger and bigger challenge. Affordable housing is devastating.

I have talked in this context to many seniors who have to make terrible choices. Recently, I talked to a woman whose husband is in care, and 90% of his pension is going to pay for him to be in care. Her housing, her life, is totally at risk. She is only getting 10%, from a time when women stayed home for a longer period. We need to have that national strategy, so we can look at issues that are facing seniors and we can provide a rounded approach on how we move forward in the future.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, today we are talking about the CPP and the importance of investing for the future. The member made reference to a young person and how the benefit will be there, but she also put a great deal of emphasis on poverty, and seniors in poverty. Would she acknowledge that in the last budget we saw a substantial increase for the guaranteed income supplement? Well over 10,000 seniors in poverty will actually be lifted out of poverty. Would she acknowledge, when we deal with seniors' issues, that it is much more complex than just the one issue of the CPP? The CPP that we are debating today is one step forward, but we still need to improve where we can.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Mr. Speaker, I want to clarify that the young person I was speaking of was actually my son. His name is Kai. He just turned 16 in June, and he is six foot three. That is who we are talking about.

I am always appreciative of people listening and trying to help people out of poverty, but there are some parts that are left out. When we look at what is happening in my community, a largely resource-based economy, with many seniors and people retiring in a beautiful location, what we really need is a pharmacare strategy. I am glad that some of those steps are being made, but they are not the solutions that are long reaching. If we look at medication and what families are struggling with every day, we really need to have a solution that is based on making medication more affordable.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I will be sharing my time with my colleague from Newmarket—Aurora.

The average age in my riding, Laurentides—Labelle, is among the highest in the country. According to the 2011 census, the average age was 49.5. It will surely be more than 50 according to the 2016 census. In some communities, homes are listed at less than $40,000 and are not even selling at that price. Young people are leaving the region in droves and seniors are only staying in retirement. We have many challenges and we welcome many changes for seniors. As a government and as a party, we like to plan for the long term and not just for tomorrow.

Therefore, I am very pleased to speak to Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act. There are several reasons for that.

This bill is the promise of a better future. It also reflects the government's commitment to help Canadians achieve their dream of a more secure retirement. This is a long-term project. It is a project for the future and for young people who are currently preparing to enter the labour force. This next generation will also be assured of a dignified retirement. We are acting for a future that goes beyond any election cycle to help those who will come after us.

We are building on what was accomplished by the decision-makers of the 1960s who created the Canada pension plan, enhanced old age security by creating the guaranteed income supplement, and implemented measures that, in the long-term, would significantly reduce poverty among seniors. What is more, we are here in a true spirit of federalism because the agreement to enhance the Canada pension plan or CPP comes from a real spirit of co-operation with the provinces, who approved the approach.

Is the enhancement of the CPP necessary? Absolutely. It is essential, and I will explain why.

Middle-class Canadians work hard, but they still do not feel as though they are making any progress. One in four families who are approaching the age of retirement may not be able to save enough money to maintain their current lifestyle when they retire. That represents 1.1 million families. We had to take action.

We also have to accept the fact that fewer and fewer companies are offering defined benefit pension plans and that fewer Canadians have such a plan. It is a major challenge for Canadian families and it is time we dealt with this.

The agreement we reached with the provinces will increase the retirement income of Canadians who are in this difficult situation, and also promote economic growth and create jobs.

How will the CPP expansion work? There are two key things to keep in mind.

First, the CPP currently replaces a quarter of Canadians’ average annual earnings. The new CPP will replace a third. Future retirees will therefore have more money in their pockets. Take Mila for example. She is a mother who has earned on average $50,000 a year during her working life. Under the current plan, she will get $12,000 when she retires. Under the new plan, Mila could get a little more than $16,000.

Second, the maximum level of pensionable earnings will go up 14% by 2025. That means the maximum annual CPP benefit, which is currently $13,110, would go up to $20,000 in today's dollars. Under the enhanced CPP, the maximum benefit will go up by almost 50%. It is clear that these changes to the CPP will make life better for retired Canadian workers and will help them achieve their goal of a strong, secure, and stable retirement.

How much will this cost? For most Canadians, the contribution rate will rise by just 1%. Take Kevin, for example, who earns about $55,000. His contributions will increase by $6 per month in 2019. Once the progressive implementation is complete in 2025, Kevin's contribution will have gone up by about $43 per month. That minor increase will be largely offset by his higher retirement income. With the enhancement, Kevin will collect approximately $17,500 per year in today's dollars in CPP benefits, which is about $4,400 more than under the current plan.

I should also mention that contributions to the enhanced portion of the CPP for wage earners like Kevin will be tax deductible and that a tax credit will continue to apply to employees' current CPP contributions.

We can therefore proudly say that Canadians will have more money in retirement thanks to the new CPP. Furthermore, the budgets of low-income workers will not be affected, because the working income tax benefit will also be increased to offset the premium increases.

I would like to add that our government has decided to give everyone time to prepare for the new provisions. The changes will implemented gradually over seven years, from 2019 to 2025. This is the responsible way to go, to make sure that businesses and workers have time to adapt.

We are taking into account the problems that exist at the provincial and national levels. We have engaged with each province to discuss their particular situation, and we will continue to do so. We took steps to ensure that we could implement these measures in a way that will not hurt businesses, because we want the owners of businesses of all sizes to be assured that the government will implement these changes to CPP without harming the functioning of the Canadian economy.

As I said in my introduction, the government is creating a better future for Canadians, especially the middle class. This will have a much broader impact on all Canadians, because it is important to have a long-term vision. Higher CPP benefits will lead to greater domestic demand, which will stimulate the Canadian economy. Since savings will grow, more money will be available for investment, also thanks to the new CPP.

As a result, we expect the gross domestic product to increase by 0.05% to 0.09%, which represents approximately 6,000 to 11,000 new jobs. Quite simply, an enhanced CPP means more savings and a better retirement.

Middle-class Canadians will then be able to focus on what matters most, such as spending quality time with their family and friends, rather than worrying about not being able to make ends meet. It is important that we plan for the future.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I heard my colleague opposite talking about the average age of people in his riding and the relatively low household income.

Obviously, his riding is not made up exclusively of retirees, even though the people who live there will retire someday. His riding is also home to entrepreneurs.

What does my colleague have to say to those entrepreneurs who will have to contribute to the plan, along with the people they hire? There is the potential for job losses in his own riding.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I am not worried about job losses. I am proud of increasing pensions for the future.

Planning for the future is an important strategy. It goes hand-in-hand with the enhancement of the guaranteed income supplement. It is part of a larger plan to improve the situation of seniors. If we did not make those plans 50 years ago, where would we be today?

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Mr. Speaker, I congratulate my colleague on his speech.

There is no question that everyone is happy that the government is moving in this direction and that it has made major financial plans over 50 years. We need to ensure that those plans remain viable in 50 years for the 16-year-olds who are about to begin working.

That being said, can my colleague talk to us about the vulnerability of seniors in his riding?

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, there is no doubt that the seniors in my riding have a lot of concerns. I do not come from a wealthy riding. Even though Mont-Tremblant is located in the middle of my riding, there are 42 other towns that have less money, so everyone is concerned about improving the situation of seniors.

This will be the third program we improve, after making changes to two programs. If we had managed to get everything done, we could just walk out of here. However, there is still a lot of work to do, and I am not afraid to work to build a better future for our seniors.

[Ginette Petitpas Taylor, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, I would like to thank my colleague for his speech.

Could he tell us more about the personal benefits to Canadians of the increase in additional contributions to the Canada pension plan?

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, this measure will definitely help people in the future by providing them with more money. It is an extremely important program for everyone's long-term future. I mentioned the figures in my speech. It is a significant increase, and that is not the only thing we could do.

[Martin Shields, Conservative, Bow River, AB]

Mr. Speaker, I appreciate the comments of my colleague.

One of the things my own children want to make sure of is that I stay financially healthy so that I never live with them, so I understand how important this is. They say that they lived with me for 20 years, and that was enough.

You have mentioned one side of it, but again, the job creators of our communities are small businesses. I have had many small-business people talk to me about their concerns about this, because they are fighting on a fine line to stay in business, and they find this another piece that is going to create difficulty for them in staying in business.

In response to that, you have not mentioned anything about the small businesses and the costs there will be for them.

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

Before going on to the hon. member for Laurentides—Labelle, I just want to clarify. I am sure the member for Bow River did not mean that I did not mention anything. I just want to clarify that for everyone in the room.

The hon. member for Laurentides—Labelle.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, to be fair, you had not mentioned it either.

I think there is an opportunity for businesses to plan ahead. This would not even start for three more years and would not be at full scale until 2025. Businesses have an opportunity to prepare for this change. It is not a huge change, from that side of things.

The important thing is that we are planning for the future so that our seniors, later, are able to take care of themselves, like our ancestors, if we can call them that, planned for us today. I think it is very important that we do this work and do not slow down or slack off on it.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Mr. Speaker, I want to thank my colleague from Laurentides—Labelle for his contribution today. He, like all members in the House, realizes how important Bill C-26 is to society and to ensure the growth of our economy well into the future.

Today many Canadians are worried that they will not have enough money for retirement. We all heard this when we were knocking on doors during the campaign. Middle-class Canadians I know who have worked hard their whole lives are working harder than ever but are still concerned that they will not be able to afford retirement. This is wrong. This is not a great policy for Canadians, and we should all make sure we make the necessary changes today so that retirement income exists in the future. That is what Bill C-26, in essence, is all about.

The facts tell the story. Fewer and fewer Canadians have workplace pensions to fall back on. The days of working for one company for 35 to 40 years, although a romantic notion, I am afraid are over. That is the reality we face. We can all harken back to Mad Men. I know everyone here enjoys Netflix, and I am sure everyone here has watched an episode or two of Mad Men. Those days of working for one company for an entire career are over.

That may be good or it may be bad, but the consequence of that reality is that there are no company pensions to look forward to at the age of 65, when we punch out of work on the final day, say goodbye to all our friends from those 40 years, get our gold watch from the boss we probably never really got along with, and ride off home into the sunset to put our feet up on the footstool, have a cold beer, and ponder the next 20 years of our lives, wondering when the kids are going to call. That does not exist. That is not the reality for so many Canadians.

Perhaps it should be, and perhaps we wish it would be, but wishing and hoping does not put food on the tables of seniors. We need to make sure that we are responsible as a government and make decisions today that, yes, are difficult and challenging, but they are decisions that will help in the future, and not only seniors.

I think we all hope to be seniors. Some of my colleagues already are, but I hope to be one some day. I want to make sure that I live in a society, a country, and an economy where everyone can live with dignity and can afford to not only buy the necessities of life but to contribute to the economy.

This is right, not just for social reasons but for economic reasons.

For businesses to thrive in any economy, they need consumers. Consumers need to have money. Seniors who do not have money cannot consume and therefore, small businesses, big businesses, and medium-sized businesses are limited in the amount of profit they can make, because the market is smaller than it ought to be. This is why Bill C-26 is important. This is about the future of Canada and Canadians, but it is also about the economy of the future, and I am happy to be part of a government that has introduced Bill C-26.

We made a commitment to strengthen the Canada pension plan to help all Canadians achieve a strong, secure, and stable retirement. Those three words are important. Strong means that people do not have to worry from day to day. Strong means remaining active participants in Canada's economy. Strong means not relying on our children, grandchildren, or food banks for groceries or asking someone to help pay our rent, keep our hydro on, or pay our monthly bills. That is important, I am sure we can agree, to Canadians.

Canadians also need a secure retirement. Canadians are living longer, which means that retirement will be longer. We do not want Canadians to be in a position of dreading that their money will run out before they do. That is not ideal. That is not a secure environment and is not what anyone in the House would want.

We also want a stable retirement, which in my opinion means that Canadians can enjoy retirement. Canadians who have worked for 40 years, who have grown our economy, who have put children through college and university, who have bought houses, cars, automobiles, washers and dryers, clothes and groceries, all the things that sustain and grow the Canadian economy, deserve to live with stability and peace of mind in their waning years. The sad truth is that too many Canadians are not living under these circumstances today. That is what Bill C-26 is trying to address. We would be hard pressed to find anyone in this House who does not agree with at least the goal of Bill C-26, which is to ensure a stable, strong, secure retirement for Canadians and a strong economy well into the future for Canadians.

The other issue is that demographics are making this more urgent than ever. More than one-quarter of Canadian families nearing retirement today, which is 1.1 million people, will face a drop in their standard of living and will not be able to retire with the dignity they deserve. This demographic reality should make all of us realize that something needs to be done. In my opinion, Bill C-26 does exactly what needs to be done.

There is always change, but it needs to be done moderately and modestly. This bill achieves those goals. We want to make sure that these changes are affordable. We will phase them in slowly over seven years, from 2019 to 2025, so that the impact is small and gradual, which is an important component of this bill, one that ought not be overlooked.

This deal will boost how much Canadians would get from their pensions, from one-quarter of their earnings now to fully one-third, which I think is an important facet of the new legislation that needs to be fully appreciated. It makes this bill strong social policy and strong fiscal and economic policy.

We know that this deal came about because of the agreement in principle reached among all the provinces, with the exception of Quebec, which we hope will be working toward something similar. This is important. It is an important element of today's debate that we could get an agreement in principle, with the number of provinces and our diversity and diverging points of view on so many policies. With many topics in Canadian life today, it is hard to find any consensus. I will not say that it was easy, but we have reached an agreement in principle now, and that needs to be given some weight when we consider how we will vote on Bill C-26.

Whether we live in B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, or any of the three territories, I think we can all agree that we deserve the right to retire with dignity. We deserve the right to retire with stability. This is inarguable. I think the best approach to get there is what we see in Bill C-26.

I would submit that anyone who cares about seniors today or tomorrow, who cares about Canada's economic integrity well into the future, and cares about Canada's economic integrity well into the future, would be hard pressed to vote against Bill C-26. Every Canadian deserves a secure and dignified retirement after a lifetime of hard work. Through this enhancement, we have taken a powerful step to make that happen. Let us not lose this chance, this historic opportunity, to make sure that all Canadians, today, tomorrow, and well into the future, retire with the dignity they deserve and have earned. To do anything else would be foolhardy.

[Kevin Sorenson, Conservative, Battle River—Crowfoot, AB]

Mr. Speaker, the member would get a 10 for a big finish.

I appreciate my colleague's vote but in some ways he painted a very dire picture of what is happening in retirement. He talked about wanting to retire and said that we deserve the right to retire in dignity, which is what he wants to do. He wants to put up his feet and retire in dignity. The problem is that McKinsey and other people have done studies on this and I would like to tell the House some of the things that they have said. For example, 83% of Canadian households are on track to maintain their current living standards in retirement. According to Statistics Canada, the share of Canadian seniors living on low incomes dropped from 29% in the late 1970s to 3.7% today.

I agree with my colleague that we all want to live with dignity in retirement. However, I would suggest that by far the majority of Canadians are doing that. Canada is one of the best countries in the world for seniors to live, seniors with pensions and seniors with savings.

My fear with the legislation is that the government is using a big hammer for a small problem. The CPP, as important as it is, is only one strong pillar of our retirement. It is not the main pillar of our retirement. Savings such as tax-free savings accounts, RRSPs, and private pension plans are all part of a comprehensive strategy for retirement.

In a time when our economy is slow, would taxing small and medium-sized businesses and taking money out of the pockets of employers not hurt the economy?