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

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I thank my colleague from Sherbrooke for his question.

Yes, absolutely, an enhanced pension plan will help give our seniors a secure future. It is important to note that the government has already improved the guaranteed income supplement by 10% this year. In other words, poor seniors will have almost $1,000 more in their pockets. However, we need to do more.

As my colleague said, and as I said in my speech, the changes to the Canada pension plan will help future generations. We need to think of those generations when we make changes today.

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Madam Speaker, in my riding of Saint John—Rothesay, people who come into my constituency office are very happy and proud that our government has the foresight to make changes to the Canada pension plan, adjustments that will help people save and will protect retirement savings in the future.

I am surprised that all the party opposite can offer is the tax-free savings account, and that this is a vehicle for savings for seniors. I challenge the party opposite to go to a priority neighbourhood and ask seniors how many of them are saving for the future through a tax-free savings account. The answer is really none.

The party opposite's answer was to actually double the tax-free savings account, double something that only 6.7% of Canadians actually maximized, which is mind-boggling to me.

People in my riding are very happy with the upcoming amendments to the CPP. What response is the member getting from constituents in his riding?

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, from what I am hearing, most residents in my riding, whatever their income level, are pleased with the proposed changes to the CPP. I note, however, that many residents in my riding are also happy with the TFSA. I personally make use of it. It is a good vehicle.

The question that was raised was whether the TFSA needed to be doubled. I agree that at this point it did not need to be doubled because only 6.7% of Canadians were maximizing their use of it. However, that does not mean I do not also agree that the TFSA is a good vehicle and that people do have an obligation themselves to save for retirement.

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

Madam Speaker, I again thank my colleague.

I agree with what the member said about the tax-free savings accounts. It was certainly absurd to increase the contribution limit, given the numbers the hon. member just mentioned.

However, the Conservatives seem to think that this is a tax. Does my colleague see it that way as well? It is more of an ideological question, like the one I asked my colleague earlier.

I believe this is not a tax, but a retirement savings investment by the employer and the employee. This money does not disappear into government coffers, like a sales tax does, for example. We get this money back at retirement. This is an investment, not a tax like the GST.

[Anthony Housefather, Liberal, Mount Royal, QC]

Madam Speaker, I totally agree with my colleague from Sherbrooke. This is not a tax.

As I said in my speech, I see the employer's contribution as a sort of raise for the employee, since that money will go to the employee and not the Government of Canada.

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

Madam Speaker, I am extremely pleased to rise today to speak to our bill on the Canada pension plan.

I am from Nova Scotia and represent the riding of Sackville—Preston—Chezzetcook, which surrounds the two cities of Halifax and Dartmouth.

This is federalism at its best. I am shocked that the Conservatives are not on board with this important initiative. That was the problem with the last government. Over the last 10 years, there was no co-operation, no partnership, no collaboration of any kind between the provinces and the federal government.

I remember the former prime minister showing up in Newfoundland or in B.C. on a number of occasions, not even advising the premiers of those provinces that he was going to make an announcement. It was unbelievable.

This initiative is a clear indication of how strong our government is in working in collaboration with the provinces and territories. This was not an easy thing to do. This took a lot of hard-working individuals doing what was right for Canadians.

This is not a tax. This is an investment in Canadians. We should be proud of the fact that we are taking important steps toward ensuring that Canadians will be able to retire in dignity.

Let me talk about our youth. We have had experiences and opportunities that they will never have. Most people in here, including myself, have workplace pensions. Today, many businesses do not offer workplace pensions.

When I was young, a pension did not mean much to me because retirement was too far away. However, five or 10 years ago I started to think about whether I had invested enough money and would I have a pension that would allow me to do the things I would like to do when I retired. Young people today may not have the same opportunities. Over the last 10 years, the gap has continued to expand. Instead of pension funds increasing in value, they will probably be worth a lot less when our youth retire. That is even more important.

The United States has predicted a possible shortfall in its social welfare program if it does not invest. We are saying that we need to ensure that Canadians can retire in dignity. We need to ensure that our youth are able to put more money aside. This is an investment in their pension fund, which is extremely important.

This is not an investment where people need to put in everything in year one. This is a seven-year process. Canadians will invest in the CPP gradually. What is the end product going to be? People on CPP today receive approximately $13,110 a year, and that amount depends on the salary they have received while working. With this new plan, they would receive approximately $20,000. That is close to a 50% increase, which is very impressive when we look at how it is going to be structured.

As my colleague said earlier, Quebec, which is not a part of this plan, is looking at implementing some of the pieces of this government's plan, or possibly implementing it all at the end of the day. That is extremely positive.

Let me talk about the OAS. The former government said that Canadians are living longer, so it would not give them their pension at 65. It did not matter if they planned to retire then. No, they would have to work until they were 67; it would not give them their old age pension at 65. This government committed to returning to the retirement age of 65. We did that shortly after forming government, which shows how we were able to move quickly on our commitment.

Let us talk about CCB, the child care benefit. Throughout the campaign, that was the main issue I was hearing about, and I covered approximately 22,000 houses. Young families were out there struggling and needing support so they could provide for their families. That is an extremely important issue, and I was impressed because I asked young couples about the cost for young kids, whether they were struggling, and how we could help. They said that what we were proposing was exactly what they needed. It was to increase the child care benefit by an enormous amount and it would be tax-free. That is what is important, tax-free. That means they would not be taxed on the extra money they would receive from the government to help them as a family. That was a key point for young families.

The other piece that we have to keep in mind is seniors. When we talk about seniors, we brought forward also the 10% increase, which brings almost $1,000 to low-income seniors and single seniors. It is a multiple approach to ensure that we are helping the middle class. That is what it is all about, helping the middle class.

I could spend hours talking about infrastructure, which is one major strategy that will ensure job creation. We need to renovate, we need to improve what is out there, and we need to build, and the infrastructure investments are pieces. It is not just happening in one area. This is an investment that is taking place across Canada, in all parts, in all provinces.

When we put these pieces together, it becomes more and more obvious that we are a government that cares about its people. We are a government that cares about the middle class, youth, and seniors. We are a government that made commitments, and we are delivering on those commitments. I am extremely happy to support the government's CPP initiative.

[François Choquette, NDP, Drummond, QC]

Madam Speaker, as I have already said, every year we meet seniors who tell us that the pension plan is not very generous and that it must be enhanced. Therefore, the government's desire to enhance the CPP is good news.

However, the Liberal government has made some mistakes with its approach. One of them is not stressing the importance of keeping the dropout provisions. We currently have dropout provisions that ensure that years spent outside the labour market raising children do not count in the calculations. There are also dropout provisions for people with disabilities, who can no longer earn income when they are unable to work.

Why did my hon. colleague not support these requests? Why did he not work with his team so that we could keep these two dropout provisions, which are extremely important when trying to keep women, seniors and people with disabilities out of poverty?

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

Madam Speaker, I thank my colleague for his question.

This agreement was put together by the provinces, the territories and our government. It is not perfect. However, our minister has already indicated that he intends to raise this issue with the provinces and the territories at their next meeting, which is coming up. Our intention is to support Canadians in every way possible.

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

Madam Speaker, I thank my colleague for his speech, even though he spent half of it talking about other things. I have a hard time understanding why the Liberals think it is so urgent to pass Bill C-26.

They are saying that it is so urgent that we pass Bill C-26, that they had to move a time allocation motion. That is what the government did this morning. I did not support it. Nevertheless, there have been three or four Liberals who have spoken on the subject.

If Bill C-26 is so urgent, why do Liberal members keep rising to speak to it? I would like to know the reason for this double-talk.

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

Madam Speaker, I thank my colleague for his question.

It is important to remember that we want to tell Canadians about the CPP enhancement and how it will help them. It is our responsibility to speak and move things forward so that we can implement these measures. Our government made promises, and we must work to pass this bill. That is what we are doing.

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

Madam Speaker, I thank my hon. colleague for his speech. I would like him to elaborate on how Bill C-26 will help Canadians.

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

Madam Speaker, I thank my colleague for her question.

Obviously, this is an investment. Canadians will benefit from it for years to come. It is one of many extremely important social initiatives that our government has put in place to help Canadians. It is another part of our government's plan to ensure success in this area.

[Julie Dzerowicz, Liberal, Davenport, ON]

Madam Speaker, it is an absolute pleasure for me to be addressing the House on this issue of Bill C-26 on behalf of the residents of Davenport.

I love meeting with the residents of Davenport. I have, over the last few months and since I was elected, constantly met with them. The groups of people I most enjoy are seniors. They are not shy about letting me know what they are thinking, what they are worried about, whether for themselves or for their families. They always joke with me. They often say to me, “When is the Prime Minister of Canada going to give me a raise?” They talk to me about the increasing cost of prescription drugs. They talk to me about the increasing cost of everyday life. They also tell me that they are worried about their children. I also have spoken to many of the middle-class Canadians who work in my riding, and they tell me that their pension and saving for their pension is one of the things that most worry them.

That is where I am going to start, by just reminding us all of some of the facts.

We know that middle-class Canadians are working harder than ever and that many are worried that they will not have enough set aside for retirement. I have heard that time and again right across my riding, and I am sure that is a message that is heard right across this country in every riding. We know there has been extensive analysis conducted by our finance department and by provincial governments, and they have found that around one-quarter of families nearing retirement—some 1.1 million families—face a drop in their standard of living when they retire. This is absolutely something worrisome. We also know that, according to Statistics Canada, in 2014 only 37.9% of employees had a pension plan and that number was trending down.

We know from the Broadbent Institute, which put out a report earlier this year, that 47% of those aged between 55 and 64 have no accrued employer pension benefits, and the vast majority are retiring with inadequate savings for retirement. We also know from that same report that just 15% to 20% of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for their retirement. Therefore, we know that there is a huge worry. We see the statistics. We know that Canadians currently are not saving enough for their retirement, and we know that action needs to be taken.

There was a commitment from the Liberal Party in the last election that we were going to improve the Canada pension plan, and indeed that is what we are proposing. I am very proud that our Minister of Finance met with his provincial counterparts earlier this year, and in June came up with a way to enhance our Canada pension plan. I just want to say that it is not easy to be dealing with all the provinces. I note that the Ontario government had its own pension plan enhancement that it was planning to put into place. I know there were a number of other provinces that were further down the line in terms of what they wanted to do. I know this was a huge effort on the part of our Minister of Finance. It was a huge coming to the table by all parties, all finance ministers from all provinces right across the country. I just want to say that it was wonderful leadership and a wonderful show of co-operation right across this country to actually enhance the Canada pension plan and to really be thinking about the future of all Canadians in every province.

Next, I will take this opportunity to say what the enhancement of the Canada pension plan means and what changes are being proposed. I am going to be heavily using information from a wonderful CBC news article that I happened to be reading, because it makes it so easy to understand and I want to make sure I am explaining it in a way that makes it easy for people in my riding of Davenport and all Canadians to understand what we are proposing.

The first thing is that there would be an increase in premiums. The increase would be for both the worker and the employer. Under the proposed enhanced plan, the CPP would replace fully one-third of a person's pre-retirement income, up from the current 25% replacement rate, up to a maximum amount of earnings that would also rise quite a bit.

Currently, a worker and an employer contribute 4.9% of the worker's income to the plan. The proposed change would increase it by one percentage point. So, it would go up to 5.95%. It will be phased in over five years, beginning in 2019. By the time the higher premium is fully in place in 2024, a worker earning around $50,000 a year on average would pay roughly about $25 a month more in premiums, or almost $300 a year.

That is just an idea of what is going to happen to our premiums. There would also be a bit of an increase on the employer's side. We are working to try to better save for our future retirement.

What happens to benefits? How will Canadians benefit from this increase? What does this actually mean?

In plain terms, a middle-income Canadian entering the workforce and now earning around $50,000 a year would in the future receive a pension of around $16,000 a year in retirement, instead of what they would currently be receiving, which is around $12,000. That is according to Finance Canada.

I should note, though, that younger workers will be contributing at the higher rate for a longer period of time, the 5.95% I was talking about, but it is an investment in their future, as my colleagues have been saying, and they also stand to gain the most when they eventually reach retirement age.

I know that constituents in my riding of Davenport will be very sad that the current CPP enhancements will not be positively impacting them, but we do have a number of different programs we are putting into place that will benefit them moving forward.

There is one other thing I wanted to mention because I thought it was an interesting fact. There was some concern by a number of people that the increase in the CPP premiums would impact lower-income Canadians. As a result, the Minister of Finance and his provincial counterparts have agreed to an expansion of the existing refundable tax credit known as the working income tax benefit, to offset any higher premiums. The maximum payout for this program is currently $1,800 for a family earning less than $28,000 a year.

We want to make sure that we are protecting lower-income Canadians and so have been very thoughtful in trying to make sure that not only will this benefit future generations, including helping middle-class Canadians and youth to invest in their future and their retirements, but will also include protections for those on the lower end of the salary scale in Canada.

There has been a lot of concern about the impact on small business. I have a lot of those small businesses in my riding. I know they were very happy to hear that it would be implemented over five years. I think they appreciate that there would be enough time for them to plan, organize, and arrange for the future. So while I believe there will be an impact, I think overall it would be beneficial to our businesses, to our workers, to our economy overall, and to Canadians in general.

In conclusion, I encourage everyone in the House to vote in favour of supporting Bill C-26. It would benefit youth, it would benefit families, and it would ensure that future generations would be more secure in their retirement.

[Alice Wong, Conservative, Richmond Centre, BC]

Madam Speaker, I just heard what the member opposite said and would like to correct her in many ways.

I have been consulting entrepreneurs across the nation. I have been consulting seniors in my own riding and across this nation. I have been speaking and listening to seniors for at least five to six years. This is not what they are telling us.

There is a misconception or misinformation. The Liberal government is trying to say it is good for seniors. No, not a single senior would benefit from the CPP hike.

Then there are the young people. I have talked to and listened to young workers. They do not want this because, after 40 years, they want their own money so they can decide where to put it for the best investment.

The Liberals are not doing anything good for seniors, they are not doing anything for the youth, and they are killing jobs.

My question is, how can you treat our small business people like that?

[The Assistant Deputy Speaker, Carol Hughes]

I will remind the member to address the Chair and not use the word “you”. It will save a lot of headaches.

The hon. member for Davenport.