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

[The Deputy Speaker, Conservative, Bruce Stanton]

Before we go ahead with the next segment, I would remind the hon. member for Souris—Moose Mountain that there are two and a half minutes remaining in the time for him for questions and comments when the House next returns to debate on the question.

The House resumed from October 24 consideration of the motion that Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, be read the second time and referred to a committee.

[Celina Caesar-Chavannes, Liberal, Parliamentary Secretary to the Prime Minister]

Mr. Speaker, I am very pleased to stand today to speak to Bill C-26, which aims to amend the Canada Pension Plan, the CPP Investment Board Act, and the Income Tax Act.

When I was campaigning last year, and in fact in many meetings and conversations I have had since then, I heard over and over again that people are worried about their financial future and specifically about whether they are saving enough to retire with security and dignity. That is why I am pleased to share my reasons for supporting Bill C-26, which aims to address those concerns in a responsible and meaningful way by expanding the CPP.

Earlier this year, Canada’s provincial finance ministers met with my colleague, the federal Minister of Finance, and agreed that more must be done to ensure all Canadians are able to retire with dignity. They recognized that an expansion of the CPP plays a major role in achieving this. It was a textbook example of the kind of consensus we can achieve when everyone comes to the table as partners in pursuit of better service to Canadians.

Many people in my riding of Whitby, and right across the country, are working harder and longer than ever. According to a 2012 study, almost two-thirds of Canadians are working more than 45 hours per week. That is a 50% increase from more than 20 years ago.

On top of that, advancements in technology mean that workers are on call 24/7. Even with all these extra hours and hard work, many are concerned that they will not have enough money for retirement.

Far too many Canadians are facing significant drops in their quality of living upon retirement. In fact, 1.1 million Canadian families are approaching retirement having not saved enough. That is why we have recognized the need to do more for workers, and we are taking action.

The Canada pension plan has been a source of financial security for Canadians for more than half a century. It provides Canadians with a predictable benefit, year after year. Unlike private investments or pension plans it is not subject to market volatility. It is also one of the more efficient ways for Canadians to save as its massive contribution base allows the CPP investment board to deliver strong net returns.

Despite all the benefits provided by the CPP, there has been a recognition in recent years that it is not doing enough to support Canadians in their retirement. Our government has heard these concerns and is moving to address them. Bill C-26 will significantly boost how much each Canadian will receive from the Canadian pension plan. Under the current system, retirees receive one-quarter of their earnings; after this much needed expansion, that will increase to one-third, up to a maximum annual benefit of nearly $20,000.

As a former small business owner, I know that the CPP plays an important role in ensuring that employees can save for their retirement. Employees work very hard for companies. It is very important to me that they be able to retire with dignity.

It was a priority of our government to move forward with the expansion in a responsible way, which is why we are phasing it in over several years. Starting in 2019, annual CPP contributions will begin to increase modestly over seven years. As an example, a worker earning just over $50,000 will contribute an additional $6 per month in 2019, and by 2025 that worker earning the same amount will be contributing about $40 per month.

The expansion of the CPP will benefit all workers; however, it is very important that workers on the lower end of the income spectrum are not unfairly burdened. Our government understands that while lower income workers want to save more for their retirement, they face tight budgets that will make the increased contributions difficult for them. This is why Bill C-26 also proposes to increase the working income tax benefit to offset increases in CPP contributions. The working income tax benefit will be increased to roughly match the level of CPP contributions. This will allow lower income workers to increase their retirement saving without creating unfair burdens on their tight budgets.

I also want to speak about how this legislation would benefit the next generation of workers. Young Canadians face a much different employment landscape than their parents or grandparents did, many of whom worked in the same job for the same company for decades and have access to private pension plans as part of their compensation, providing them with financial security upon retirement.

That is no longer the norm. It is now common for workers to change jobs, or even fields, a number of times throughout their careers, which can have significant effects on their pension contributions and payout.

Even more troubling is the overall decrease in companies providing registered pension plans to their employees. In those organizations offering pension benefits to their employees, we are seeing a significant shift away from defined benefit plans to defined contribution plans, which often provide less financial certainty upon retirement.

When we combine all of these factors with rising life expectancy, it is becoming more likely that Canadians, in particular young Canadians, will outlive their savings. The expansion of the CPP would mitigate that risk. In fact, young Canadians who are entering the workforce over the next few years will benefit the most from this change to the CPP. As such, this expansion is a tangible investment in the future security of our children and grandchildren.

While recognizing that this expansion would do the most for our younger workers who are just beginning to make investments in their CPP, we must acknowledge that too many current retirees are facing significant challenges in making ends meet. This is why our government is also taking steps to improve the quality of life for seniors today. In budget 2016, our government confirmed that it was boosting the guaranteed income supplement top-up to benefit single seniors with up to $947 annually. This will help lift low-income seniors out of poverty and improve the financial security of about 900,000 single seniors across Canada. This increase is directly targeted to assist those seniors who are most vulnerable.

In closing, I would like to thank my colleague, the Minister of Finance, and his provincial and territorial counterparts for their hard work on this important issue. This expansion is an important part of ensuring that all Canadians have a secure and dignified retirement. I am very proud to stand here and support Bill C-26.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Madam Speaker, this summer I had the privilege of talking to an accountant who manages the payroll of a number of small and medium-sized companies. When she heard about this proposed CPP increase she was very concerned that not only would it not allow firms to hire new people, but it might also, in some cases, require the layoff of some people because of the increased CPP premiums over time.

Therefore, how can it possibly be of benefit to have a few seniors earning a few more dollars in retirement when there are hundreds of thousands of jobs being lost across the country as a result by people who really need the jobs now?

[Celina Caesar-Chavannes, Liberal, Whitby, ON]

Madam Speaker, our government has taken a responsible approach to implementing the expansion of CPP. As I said in my statement, it will start in 2019 and increase over time to 2025.

I want to be clear about the expansion. For someone making about $50,000 a year, it would start at $6, and by 2025 it would be $43 extra they would be putting into their retirement. Doing the math, this would be equal to roughly $2 per day that Canadians, people in my riding of Whitby, would be able to securely put into a fund that they would be able to use when they retire, ensuring that they are able to retire with dignity.

Many employers are really looking to this as a way to show their employees they are committed to ensuring that they can retire with dignity, by both contributing a little more to CPP than they currently do.

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

Madam Speaker, I would like to pose a more general question.

Today, we are debating the issue of the Canada pension plan, but the Prime Minister has done more than just propose changing the CPP. There are three real foundations to our pension program. There is the CPP, which we are dealing with today. There is the OAS, which the Prime Minister and Liberal government reduced the age of eligibility for from 67 to 65 shortly after taking office. That reversed something the former prime minister had put in place.

There is also the guaranteed income supplement. The increase in that will see some of the poorest, if not the poorest, seniors from all regions of our country receive a substantial increase. It will be somewhere in the neighbourhood of $900 more. That will help those seniors most affected by poverty.

Could my colleague share her thoughts on what I believe is a good government that truly cares about our seniors?

[Celina Caesar-Chavannes, Liberal, Whitby, ON]

Madam Speaker, I thank my colleague for eloquently stating some of the initiatives our government has taken to really look at what is happening with our seniors population, not just for today, but putting steps in place so we can take care of them tomorrow.

As mentioned, the OAS was rolled back so that seniors could retire at 65. They had been planning to do so all their lives and heard that they might have to work an extra two years under the previous government's plan. I know in talking to some of the residents in Whitby, they were concerned about that.

The guaranteed income supplement of about $1,000 also helps. It helps them today, but the expansion helps those tomorrow.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, Finance Canada has said that this new CPP increase would reduce employment, reduce GDP, reduce business investment, reduce disposable income, and reduce private savings by 7%. Could the member comment on that?

[Celina Caesar-Chavannes, Liberal, Whitby, ON]

Madam Speaker, we know that Canadians are not saving enough for their retirement right now. That $2 a day we would be expanding the CPP by would allow people who currently put that $2 in a jar and take it out every time their car breaks down or something happens in their family, to have that money stay in a fund that would allow them to have security and dignity when they retire. That is what our government is looking forward to our seniors having.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Madam Speaker, I am extremely happy to rise today to speak to Bill C-26, the legislation that deals with proposed changes to the CPP. I am also happy because this is another initiative that our government has brought forward after committing to it prior to the election, and one that we continue to work on.

I want to thank our Prime Minister and our Minister of Finance for not wavering on this issue. This is an important initiative that needed the support of the provinces and territories, which we were able to successfully get.

When we talk about CPP we think about our seniors, but this is also about our youth, because over time they will become seniors. Time goes by quickly. When our youth start in the workplace they do not have any of the benefits that our generation had. The private sector chooses not to invest in the Canada pension plan, so our young people do not really have a guarantee at the end.

We want our seniors to be able to retire with respect and dignity. We want them to be able to live the golden years they worked for all of their lives. However, it is going to be difficult for our youth to do the same, because when they become seniors, there will be no pension funds available for them.

There is also the question of those who are going to soon reach the “senior age”, if I may use that term. Information from the Department of Finance in 2012 indicated that about 24% of individuals who were soon to retire were not saving enough to make sure they could continue their existing standard of living while working. That is a challenge as well.

I should add that Canadians live longer, and everyone is happy with that. I sure am. However, with that comes the need for people to save more, which can be a challenge for some individuals. By proposing changes to the Canada pension plan, the government is putting some protections in place to allow future seniors to retire in a much better way.

I would like to briefly outline what is being put in place with the provinces' agreement. This process will begin in 2019 and end approximately seven years later. The investments will be modest at first, but will increase over the seven years. The money invested will increase benefits from 25% to 33%, which is huge. In 2025, a person who is now earning an average salary of $50,000 will have $4,000 more for their pension. That is a sizeable increase.

The other important aspect is that those who retire and have a lower income will be able to benefit from the gains without contributing more. By the end of this initiative, the pension amount will have increased by 50%.

This means that people who receive $13,100 today could receive up to $20,000, which is a dramatic increase. That is a good example of a government that is working closely with the provinces and territories to ensure that Canadians will benefit more fully.

It also shows our government is proactive. We are not sitting back and risking that times will be really tough and Canadians will not have something with which to retire. We are being proactive.

Let us look at other jurisdictions. Let us talk about the U.S., for example. The social welfare programs could be somewhat in danger. I am quoting from what I believe is called the American social security program that is projecting that the benefits Americans are receiving now when they are retiring will not be guaranteed to still be there in 2033. That could be devastating for Americans, today and in the future and for future generations. That is extremely dangerous.

There is no question that our government is taking a proactive approach to this, and I believe this is a shining example of working together with the provinces and the territories. I believe this is what I would call true federalism, where people, communities, and governments are coming together to put in place an initiative that would make life better for Canadians in the future.

This is not the only initiative that our government has put forward. When we were first elected, the first main initiative we put in place was the 7% tax reduction for Canadians. On top of that, we were the only ones who were willing to and who did put an increase on income tax for the wealthiest Canadians. That was a major initiative that our government put in place.

The second one, which we know—and as I travel across my riding, seniors and Canadians who will retire soon share that—is the fact that the age for OAS was returned to 65 years old. Canadians are extremely happy that they do not have to work those extra two years. That is another major initiative that our government brought forward.

There are all kinds of those. We can look at the budget. The 2016 budget focused on the child care benefit. That child care benefit program, while I was campaigning, was the most important thing.

We are saying Canada needs more people. We want immigrants, we want refugees, and we also want to have more kids, young families; so we need to support them, and we are supporting them with that major initiative of the child care benefit.

The infrastructure investment will create jobs and create foreign investment. Those are initiatives that will be very positive.

I have to say in closing that I am extremely happy with this initiative. I know that the people in my riding will be extremely happy with this, and I also know that Canadians will be happy. This is the Canadian way of doing business, and it is how government should work, working together for the betterment of all Canadians.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Madam Speaker, twice now we have heard people from the other side say that this is an issue that would address seniors' poverty. There are those who disagree with that. In fact, I would like to quote from someone we all know, and I will tell you who that is in a minute.

Whatever the reason might be to expand the CPP, it is not to eliminate poverty. The poverty rate among seniors is now as close to zero as we can get. Yes, a little over five per cent of seniors today still have income below the poverty line....

This is according to the chief actuary of Morneau Shepell; and his co-author is our current Minister of Finance.

Even if the question is about poverty, these changes that we are proposing today will not be fully implemented for 40 years, so how can we honestly say that this is addressing seniors' poverty?

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Madam Speaker, we have to have a vision, a plan to put structure in place, and move that plan forward. When we go up the ladder, we do not climb to the top; it is one step at a time, and these steps are what we have put in place. It is a very gradual approach on a seven-year plan that will help all Canadians. This is not about seniors today; this is about those who will join the senior category soon, about young people who will be seniors in time, and that is what this plan will do. It is a big-vision project initiative with many parts to it.

[Jenny Kwan, NDP, Vancouver East, BC]

Madam Speaker, as the member may well know, six in 10 Canadians do not have a workplace pension, and to make matters worse, young Canadians are increasingly working precarious, temporary, and part-time jobs without benefits, let alone building a pension or retirement savings program. In the interim, as this plan will not really kick into effect for 40 years for many people, what can be done and what is the government doing in the interim to address the issue of precarious work, particularly for young Canadians?

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Madam Speaker, it is a very important question because I believe that many of the initiatives we put in place in the last year are already contributing greatly to youth and employment, and by that I mean investment in infrastructure. That is a major investment in job creation. We are looking from one extreme to the end. We are talking about 40 years, but if we look closer, in 2025 there will already be major benefits for Canadians. This is another piece of our vision to make Canada great again. With this measure, as well as the guaranteed income supplement, the OAS, the CPP, and tax reduction—I could go on for a while—there are many great things we put in place. This is one piece of the big puzzle.

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

Madam Speaker, could I get the member to continue on with what he is saying specifically to a question about not helping our seniors today? This is a piece of legislation that would help workers of today and into the future for retirement. However, dealing with seniors today, what is going to help is the significant increase to the guaranteed income supplement, which will literally take thousands of seniors out of poverty as a direct result.

Would the member agree that it is more than dealing with one of our three foundation pension programs, but by doing this we are helping many Canadians?