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

[Bryan May, Liberal, Cambridge, ON]

Madam Speaker, the Canada pension plan is the bedrock of our public retirement income system in Canada. Millions of Canadians rely on it today, and many millions more will rely on it in the future. It is one government program that touches virtually every Canadian.

It is our duty, as parliamentarians, to ensure that the CPP is not just in place for future generations, but also to ensure that it is strengthened so that all Canadians can retire with dignity. After a lifetime of hard work, Canadian families deserve to retire comfortably.

We know that the CPP is an integral part of many people's retirement plan. With fewer and fewer Canadians having a workplace pension to fall back on, its importance is only growing. Our government recognizes the importance of the CPP. That is why we have made a commitment to strengthen and enhance the plan. My hon. colleague, the Minister of Finance, worked incredibly hard with his provincial counterparts to reach a historic agreement to make important and meaningful changes to CPP. As a result, more than one-quarter of Canadian families nearing retirement, about 1.1 million more families, will be able to retire with dignity.

Every week, in my constituency office in Cambridge, my staff see seniors who are struggling to make ends meet. We try our hardest to ensure that they are receiving every benefit they are entitled to; but the fact of the matter is CPP needs to be enhanced. I know how much an expanded CPP would mean to the people of my riding. I can think of thousands of retirees who rely on CPP to fund their retirement and to stay productive members of our society.

I want to take a moment to talk through several key provisions of the bill and speak directly about how I would anticipate those changes enhancing and benefiting the lives of my constituents in Cambridge and, frankly, of constituents across this entire country. I think it goes without saying that CPP needs to be enhanced, in that it needs to see an increase in the amount of retirement pension that Canadians receive. With Bill C-26, however, the enhancements would go further than that. Canadians can expect to see increases to the survivors and disability pension provisions, as well. As our population ages, those survivor benefits ensure that a lifetime of paying into CPP still has benefits even after the death of a spouse.

The increase in Bill C-26 would ensure that the maximum level of pensionable earnings is increased by 14% by 2025. That level of support would be unprecedented in Canada, and it would arrive just as many more Canadians are retiring.

I know that these provisions come with additional costs, but they also come with additional spinoff benefits that would reach deep into our economy. In this case, the benefits would far outweigh the costs. As retirees are unable to participate fully in our economy and many withdraw more and more because of lack of retirement savings, those individuals are not full participants in everything Canada has to offer. This has some very direct issues; for example, not being able to afford things like food and medications. Those concerns are heartbreaking and well-documented, and one of the reasons there is currently a strong push for national pharmacare and increased support for food banks and other emergency social service providers. We see these cases in my office in Cambridge every single week.

However, not having enough retirement savings also causes many seniors to withdraw in many other ways, as well.

I can think of many seniors in my riding who choose to participate in fewer events, to go out less, and to stay in more because of lack of funds. These have several direct and negative effects. We know that seniors and retirees live better and longer lives when they socialize more and when they remain active. For many seniors, this means having the financial ability to go out, drive, and participate in events. Even if these events are low-cost, which many events for seniors are, it is critical that we create a society where they are financially able to continue participating for as long as they are able.

That activity or social time saves health care costs, mental health costs, and housing costs. More importantly, it allows for aging with dignity.

Since the Second World War, the number of company-provided pensions has fallen at a significant rate. This is due to a number of contributing factors, each of which is worth exploring but none of which is likely to be reduced in the short term. StatsCan says that in the 1970s about half of all men had defined benefit pension plans. Now, in 2016 we are at about half that number. That is a significant decline, but is even more significant when we consider the very large population bubble that we call the baby boom. When we consider the rates of company-provided pensions for younger people today who are not part of the baby boom generation, the rates are significantly lower.

I have used men as an example because the work dynamics were significantly different in the 1970s. Women have historically had fewer workplace pension plans and never crossed even the 50% threshold. We know this is causing an impending crisis, one this government is taking steps to fix. Enhancing CPP would allow the young people of today, those who are least likely to have a workplace-provided defined benefits plan, to see a significant increase in their retirement incomes.

It is also worth noting that this new plan would have no major infrastructure costs because the CPP infrastructure is already in place. This means that the new system would be much easier to put in motion, be more easily adopted by Canadians, and would fit within our existing policy structures. All of these reasons would make it cheaper, easier, and better to implement than many other ways to enhance post-retirement income for Canadians. I applaud the government for working to achieve increased CPP benefits.

We currently have more seniors than kids in Canada. I want to take a moment to go back to considering what happens when retirees and seniors withdraw from the system. The benefits and issues are not only in terms of mental health and health care, but also in terms of their significant impact on our economy. The longer a senior is able to participate fully, he or she is able to contribute to the economic robustness of our society. The longer seniors are able to participate fully, the more likely they are to volunteer and remain an economic force in our society. Obviously, solving these long-term demographic trends is not the duty of the CPP solely, but I believe it is the right place to start. It says that we are taking this seriously and are working toward solutions.

I have mentioned in the past that prior to my working in this wonderful profession that we find ourselves in, the people of Cambridge knew me from the YMCA. Prior to working for the YMCA, almost all my involvement was working with youth. The YMCA offers a number of programs for seniors. It is interesting because the span of the demographic that we call seniors can be as wide as 30 years. If we take that same age range and put it at the beginning of life, we are talking about infant, toddler, preschooler, school-aged child, teenager, young adult, and adult all within that same 30 years. We have to be thinking outside the box when it comes to seniors. They are living longer, but they are living differently as well. This approach that we have reached with the provinces is an amazing first step.

I will leave it with one final thought. No matter what the House decides on the CPP, and I am asking everyone to carefully consider supporting the plan laid out in Bill C-26, we will still have a long way to go toward ensuring that all members of our society are prepared for retirement.

[Mark Warawa, Conservative, Langley—Aldergrove, BC]

Madam Speaker, I listened intently to and want to thank the member for his work as the chair of our human resources committee. He is a compassionate person, and I appreciate his bringing up the issue of seniors.

It is interesting that he talked about the YMCA. In the Vancouver Sun yesterday, there was an article about seniors. It talked about 69-year-old John Young, a former business instructor with the YMCA. He was homeless after having slept on a couch in a friend's one-bedroom apartment for the past three years trying to make ends meet with a $1,600-a-month pension. He used to be able to teach people how to start a business, and now he finds himself homeless.

Approximately 20% of seniors in British Columbia are living on a low or fixed income and having a very difficult time living. Increasing the GIS helps a bit for some in need, but it does not solve the problem.

Would the member care to comment on John Young and his predicament and how changing the age of eligibility for the OAS to 65 does not help. How can we help John and other seniors?

[Bryan May, Liberal, Cambridge, ON]

Madam Speaker, through you I would like to thank the member for his continued support and passion for seniors. He definitely keeps them front of mind at our human resources committee, which I am thankful he is a member of.

I agree 100% that there are so many more things that we need to do. I do not think we have suggested that Bill C-26 or increasing the GIS will solve everything. However, they are pieces that will help move the needle in the right direction.

The hon. member knows that we are working diligently in the human resources committee on a study of poverty. He has ensured that seniors have been a key factor in that study. I look forward to continuing to work with the member on that study, and hopefully coming up with some ideas so that the individual he spoke of does not have to rely on all of these services and can live with dignity.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Madam Speaker, I thank my colleague for his speech.

A number of my colleagues and I have detected a major error in the bill. When parents have a child with a disability or an illness, the current pension plan allows for dropping certain years of their contribution to the pension plan from the calculation of the amount they will be paid under the Canada pension plan. However, this does not appear in the bill before us, although it does exist at the present time.

I would like to know when my colleague plans to fix this situation. Clearly it has not been resolved in committee or in the House.

When does the government plan to correct this flagrant error in the new pension plan that it is now proposing in the House?

[Bryan May, Liberal, Cambridge, ON]

Madam Speaker, I apologize to the member, as I will be responding in English. My French is just not there yet. However, I am working on it. I am taking lessons, and hopefully I will be able to respond in French in the future.

I understand the question. I have heard the question many times. We have to recognize that this is a historic agreement. The fact that this has been done in the House in essentially our first year in government is a testament. Is it perfect? No, I do not believe it is perfect. However, I also believe that we will be sitting down with the provinces to work out some of these key issues. As I said in my speech, this is a start, not an end.

[The Assistant Deputy Speaker, Carol Hughes]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Saint-Hyacinthe—Bagot, Canadian Heritage; the hon. member for Lakeland, Immigration, Refugees and Citizenship.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Madam Speaker, that is very kind.

Pensions are important, and I am always reminded that we must prepare for the future. There were stories told in my family about indigenous people out hunting the buffalo on the prairie with the buffalo jumps. After the kill was done, the men and women would work together with the children to collect the meat and tan the hides. There was hours and hours of work to prepare for the coming winter. The children were asked to look for fuel and would toss over the buffalo dung to dry to get ready for the winter.

I am also reminded of the western view on this, where the grasshopper and ant have to prepare for the future. One enjoys himself and the other does not.

Therefore, when I was considering this problem on the finance committee, I often thought of it as something about preparing for the future, but it is also related to the idea of poverty, which is a huge problem in our society.

In March 2015, Statistics Canada showed that Canadian household savings was at a five-year low of 3.6%. To give a frame of reference, in 1982, the savings rate of Canadian households was 19.9%. Therefore, we are just not saving enough. We know that we should. We know about these stories. We hear these stories in our homes and we teach them to our children, yet it seems that we do not take the time to actually do it ourselves when it comes time to think of our long-term, 40-year futures and how we are going to retire.

Members might ask what my interest is in this. Well, obviously, I am a citizen and am always interested in the future. I am also on the finance committee with some fabulous colleagues. We have been studying this issue for over a month, preparing, listening to witnesses, considering testimony, and even studying the bill itself.

[An hon. member]

A whole month.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Yes, Madam Speaker, a whole month.

I am also interested in this because of my mother. My mother did not lead a very easy life. She grew up in great poverty. She also had some mental illness. We grew up in poverty with her. However, she never had a company pension plan. She never really worked in some of those jobs that one needs, and she was seemingly always poor. When she died at 58 years old, she was looking forward to being 65 years old, the day she would get her Canada pension plan. She would get the guaranteed income supplement and old age security, and she would break out of the poverty barrier in this country. However, she never managed to get there, which is unfortunate. I always have her in mind when I think about the future, because I know there are many other Canadians who face similar issues.

I have enjoyed the process of studying this bill and the process of “making sausage” for the House, but the CPP is simply not a tax. I have heard my colleagues on the opposite side categorize this as a tax, but it is not. It is a form of savings for the future.

In committee, I had the opportunity to ask the opposition what our nation would be like if we did not have the Canada pension plan. What would our country be like if Canadians could not look forward to a day when they could have a form of savings to rely on when they were retired? Well, we would have 44% of all seniors in this country living in poverty, because that is what we had in 1950 before the Canada pension plan came into effect. I have heard the arguments made by witnesses and by the opposition on why we should not do this, but those are the same arguments that were made in the 1950s on why we should not have the Canada pension plan. I have had the opportunity to read Hansard from that period.

Today, we have some of the lowest rates ever of seniors poverty in our country, and for that I am very grateful, but we can always do better. How does Canada compare to other nations in the world? How do we compare to OECD countries?

I looked at pension contribution rates around the world and at a report that was put out by the OECD in 2013. In fact, Canada has some of the lowest contribution rates in the world. Our contribution rates for our Canada pension plan is 9.9% currently and it is going up to 11.9%.

If we look at Austria, in 2012 it was 22.8%. In Estonia it is 22.8%. In France it is 16.7%. Even the United States had a contribution rate in 2012 of 10.4%. Therefore, I do not believe we are losing our competitive advantage by investing in our future. In fact, we are still very competitive with the United States.

The only country we have a really large trading partnership with that does not have a pension plan is, in fact, Mexico. It had no contribution rate in this 2013 report. I asked the opposition in committee if we actually want to be like Mexico. Do we want the same form of protection for our workers and fellow citizens that they have in Mexico? I think we all know the answer to that. We are very happy to be living in Canada. We are very blessed.

I believe that it is important for us to be saving for the future. It is one principle that I think people, whether young or old, can get behind. There is actually an old proverb: look to the future but believe in the present. Have foresight and look to the future. It is also in the Bible, where Joseph and the Pharaoh saved during the good years for the seven lean years. It is something that is taught to all of us, and I hope we always remember it.

In committee, I heard testimony from lobbyists, representing some very important companies, who presented flawed data. For instance, one survey they presented to the committee said that Canadians prefer using the tax-free savings account and registered retirement savings plans over having a larger Canada pension plan. The options offered in the survey were the tax-free savings account, the registered retirement savings plan, personal savings, other investments, CPP, and voluntary retirement savings plans, but there was no option of a defined company retirement pension plan, an RPP, a benefit pension plan provided by an employer. It is unfortunate that it is not offered to employees in this country. I am sure we already know what the response would be. Most employees would like to have a company pension plan, but unfortunately, they have been declining.

A Statistics Canada survey shows that from 1977 to 2013, total RPP coverage went from 35% to 24%. It is declining. Fewer and fewer people have access to company pension plans, and that is unfortunate. If private companies are unwilling to take up that slack, it falls to us to make sure we provide for the most vulnerable in the future.

In committee, the third opposition party has been talking about the issue of women. The Liberals have raised this issue as well in committee. In fact, my esteemed colleague from Pickering put forward a motion calling on the finance minister to speak to the other ministers of finance across Canada to raise the issue of equity in pensions for women. This is a long-term process. This pension plan will be in effect in eight years, so we have time to prepare for the future. We have time to make sure we get this right.

We also need to take the time to work with the provinces, our provincial partners, because they are our partners. We cannot unilaterally say that we are going to change this by ourselves or that it is only for us to decide. That is not how our government works. We work in consultation and through discussion. Though it may take a little longer, at the end of the day, there is more buy-in and it is more positive for more people.

I think of the young pages in the House. I think of young people. This pension plan will not benefit me, because in 40 years, I am going to be well into my eighties, but it will benefit the pages. They will see the full benefit of this Canada pension plan. That is truly thinking for the future, thinking for seven generations, thinking long term. That is what we need most in the House, not short-term political gain but a long-term vision for our nation.

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

Madam Speaker, the member talked about a vision for the long term. We know from the study by McKinsey & Company that the problem we are trying to fix is the 17% of Canadians who cannot afford to retire. We know who those people are. We know that they are elderly widows and people who are lower income, including some of the people we have talked about today, such as single mothers, disabled folks, etc.

We know who the people are. We know what the problem is. Why did the government choose to ignore doing something for those people to fix their problem today, which the Liberals could have done, when they only have a three-year mandate, instead of implementing something that Finance Canada says is going to be bad for 30 years and will not have a benefit for 40 years?

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Madam Speaker, at committee, I do not believe the finance department said it would be bad for 30 years. We should not look at the CPP by itself. We have to consider all the measures the government is taking. One of the very first measures of this government was including une bonification, or looking to increase the guaranteed income supplement and old age security for the seniors most in need.

This impacts a lot of women and a lot of men as well. It is no longer going to be always about dividing men and women. It is going to be about poverty in the future. It is going to be about those who have education and the ability to profit from the system we have created. We have to make sure that all of us have the ability to profit from that situation.

We have taken a long-term approach but also an approach that looks at all sorts of instruments to improve the level of poverty for all Canadians.

[François Choquette, NDP, Drummond, QC]

Madam Speaker, it is clear that the situation of our seniors living in poverty has to be improved. Such poverty is absolutely unacceptable. People talk to me about this often in my constituency. It is totally revolting to see how seniors manage to survive on the little they have.

One of the important things that the NDP has proposed is the importance of retaining the child-rearing dropout provision and the dropout provision for persons with disabilities.

Why did the Liberal government not agree to keep these two dropout provisions, which allow seniors to have a better pension and help lift women from poverty, among other things? Unfortunately, it is often female seniors who find themselves living in poverty.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Madam Speaker, the Standing Committee on Finance addressed this issue. A Liberal motion called on the Minister of Finance to take a much closer look at these issues with finance ministers across the country and work with them. We had an opportunity to really enhance the plan, so we had to take steps right away. Everyone was in agreement, so why wait for someone to object? We had to strike while the iron was hot, so we did. That does not mean we are done striking. It means we are ready to press on and make sure the people who need protection get it.

We want to make sure that women who raise children get this protection because they are the ones who need it most, not women who earn $200,000 or more because they probably already have that kind of protection. We cannot transfer money from the poor to the rich. We have to make sure that everyone has the same advantage. That means we want everyone to be on a level playing field.

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, it is a pleasure to rise in the House to talk about the amendments the government is planning to make to the CPP. I call upon all my colleagues to consider all the debates we have heard on this issue over the last many days.

One of the things that strikes me the most in this debate is that we are failing to recognize the achievement of reaching an agreement with all nine provinces that have opted into the CPP. It is rare in Canada that we have provincial-federal agreement on an issue as broad and comprehensive as this in a way that has brought everyone together. This is one example of co-operative federalism that works.

Even my own province of Quebec has agreed to look at these changes and to incorporate them as best it can into the QPP. For me, this agreement, by itself, the nature of the Government of Canada talking to the provinces, is a success story.

What I have heard an awful lot of is that it is either this or that. I have heard people talk about this taking away people's obligations and their opportunities to save for themselves. I have heard from the other side the importance of government acting on behalf of people and protecting them.

In my view, we need to have a balance. People need to take responsibility for themselves. I agree that people should be contributing to RRSPs, and people should be contributing to TFSAs. I have been lucky enough to do that, but I also know that there are other people in the country who have not been lucky enough to be able to do that. Whether because of family obligations or the fact that their salary gives them just enough to survive on week to week, they have not been able to save for retirement. Does that mean they have no such responsibility? No, I do not agree with that. Everyone has a responsibility.

However, at the same time, all parties in the House have agreed that the Canada pension plan deserves to exist. If we agree that it deserves to exist, because we need to have a balance to protect people to a certain extent in retirement, we obviously then agree that at certain times in history, the Canada pension plan needs to be updated. I think the real debate I am hearing is whether this is one of those times that the Canada pension plan needs to be updated.

Some of the statistics I have looked at show that, on balance, among all the G20 countries, Canadian households seem to have the highest debt. The Canada pension plan covers a smaller percentage of retirement income than similar pension plans in other countries, including our neighbours, the United States.

The wage ceiling of the pension plan, at $54,900, is well below what the wage ceiling is in comparable pension plans. When I was the mayor of Cote St. Luc, for example, we noticed that the wage ceiling for our pension plan was one of the lowest on the island. We were at exactly the $54,000 level. We increased that to $82,000, because we recognized that since we had not adjusted the wage ceiling for decades, we were no longer allowing people to provide for themselves in retirement.

The increase from approximately one-quarter of one's earnings to one-third is a valuable improvement. I believe that there are facts in hand to justify the increase to the CPP at this time.

I want to tackle one issue I have heard as well in this debate. One of the things I have heard that is very interesting has been the argument that this is a payroll tax on employers and that it will inordinately impact small businesses. I do not see this as a payroll tax, because in the end, the amount employers are asked to give is going to the employees for their pensions. In a sense, it is saying that the employers are compelled to give the employees a salary increase, to some extent, because they are contributing more to the employees to protect them in old age, but I do not believe that it is actually a tax.

For the many years I was involved in private business, which was my entire career until I was elected to the House, my company never once looked at our obligations under the CPP to determine whether we would hire employees in Canada versus other countries. What we looked at was how easy it was to terminate an employee and the average cost of engaging an employee in this jurisdiction versus others, all things taken into consideration.

Canada was usually, if not always, a good choice based on the fact that we had relatively flexible regimes in place. I do not think this is going to change the idea of whether a Canadian employer is going to engage an employee.

I do think this will help a certain group of people in retirement. I agree with all that has been said. This is not a measure that will help current poor seniors. The increase to the GIS certainly will do that as will other measures the government has put in place. However, this regime change is for a long-term benefit. This will help those people in their 20s, 30s, and 40s today, not people who are today in their 70s, 80s, already retired, or on the verge of retirement.

A government needs to take into account comprehensive solutions to problems. This is simply one of them. However, if we do not act, and I will not invoke biblical references like my colleague from Winnipeg, when we can, we will face the same problem with the Canada pension plan years from now, when an increasing number of people will be entering retirement and falling into poverty because they have not adequately been able to save for their retirement.

As such, this change to the Canada pension plan is a good change.

I agree with my colleagues in the NDP that certain proposed amendments would be very important to look at going forward. I do not think the intent was to harm people who were outside of the workplace. I appreciate that my colleagues on the finance committee are working to encourage the minister. I know he has already announced his intention to work with the provinces to further change the CPP.

When we have an agreement on 90% of the points, I do not think a deal should fall because we then have disagreement on 10%. Let us get the 90% done, and then let us come back to the 10% afterward.

I support these measures. They are good changes to the CPP. I encourage all my colleagues to consider this philosophically. If we support the CPP and we agree that at certain times amendments should be made to the CPP, why not support the long-term benefits we are giving to the future generations by changing the CPP?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Madam Speaker, I thank my colleague for his speech in the House on Bill C-26.

Does he think that the government has a duty to ensure that our seniors, most of whom worked hard and paid taxes all their lives, have a well-deserved retirement and can live with dignity at the end of their career, once they are retired? As a government, we must not let our seniors live in poverty.

Does my colleague think that a strong, solid public pension plan will in fact ensure a good standard of living for our seniors once they are done working and are ready to just enjoy life after many years of hard work?