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

[Bradley Trost, Conservative, Saskatoon—University, SK]

Madam Speaker, the Conservative Party believes Canadians should decide what they want to do with their own money. They should have the freedom to do it. That is why we are the low-tax party and we believe taxes should only be implemented for absolute necessities. The government and the NDP seem to have the attitude that they know how to spend people's money better than people do themselves. There is a fundamental point of disagreement and we debate it every election.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Madam Speaker, one of the things the member mentioned is to give people a choice. In the last 20 years we have done nothing to the Canada pension plan and that is why we are in this mess. Nothing has been done. Obviously there was no money left for people to save or to put into RRSPs, but they can look forward to the future by investing in themselves as they are working and their life goes forward.

I know the hon. member has said to let the people decide for themselves, let the people decide where they want their income to be, but there is no income. We have to look after our future and if we do not do it now, because we have already learned from our mistakes, we must do it for the next generation.

Why has nothing been done in the last 20 years where the system has failed and yet the member still opposes the bill going into the future?

[Bradley Trost, Conservative, Saskatoon—University, SK]

Madam Speaker, in the 1970s, 20-some percent of seniors lived below the low-income cut-off line. That number has now dropped to 3.7%. As members have pointed out to the House, the previous decade was the most successful in Canadian history for bringing people above the low-income cut-off line, the real poverty line. The best anti-poverty program in the world, by far, historically is free enterprise. It has worked. We are talking about CPP, which is people's own money. Let people spend their money how they see fit.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Madam Speaker, it is clear that the Conservatives deny that there even is a retirement income crisis and they claim that the government has not made a clear case for CPP enhancement. The most recent figures show that 30% of single, elderly women live in poverty. This was a decrease over the last 30 years in the number of Canadian workers covered by workplace pension plans, and this is significant, it is a huge decline that has continued and it continued under the Conservative government. The pension gap and the crisis of Canadians being able to save less for their retirement worsened considerably under the Stephen Harper government.

Could my colleague explain to the House what lessons that party learned from those failures?

[Bradley Trost, Conservative, Saskatoon—University, SK]

Madam Speaker, overall poverty rates among seniors dropped under the Conservatives. CPP deals with people who already have jobs paying into it. For low-income people, we need to deal with the guaranteed income supplement. CPP only affects people who are working and contribute over many years.

[Tracey Ramsey, NDP, Essex, ON]

Madam Speaker, let us take a moment and talk about what pensions really look like. In Canada, there is the concept that if we go to work every day and work hard, one day we will be able to retire with dignity. Canadians planning for retirement dream about what it will be like to finally not have to go to work every day and instead do things they enjoy, such as spending more time with their family, travelling, and volunteering. This is the dream of many Canadians.

Bill C-26 would be a positive step forward in enhancing CPP benefits. This bill, when fully implemented, would increase the current level of CPP benefits from 25% to 33%. Although this falls short of the NDP's long-standing proposal to double CPP benefits, Bill C-26 is a step in the right direction. It would improve retirement security for young Canadians today.

I want to give a huge thanks to the many organizations that have been working hard for this improvement over many years. Labour and retired-persons organizations have long called for an expansion, and we congratulate them for their hard-fought win.

New Democrats have also been long calling for dignity for our seniors, the very Canadians who have built our beautiful country, many of whom are struggling in their later years with very limited incomes. We have consistently fought for increases in CPP, OAS, and GIS and will continue to do so.

The CPP is the best retirement pension deal available to Canadians. The fund is widely considered to be well managed. As of June 2016, the CPP Investment Board manages over $287.3 billion in investment assets for the Canada pension plan on behalf of 19 million Canadians, making it among the 10 largest sovereign wealth funds in the world. The CPP currently covers earnings up to a cap of $54,900; and for earnings up to this cap it aims to replace 25% of income. Maximum pensions are at $1,092 per month or $13,100 per year. For many Canadians, this only covers their basic needs.

The extended CPP would be a separate new tier. This would be added on top of the existing CPP and do two things: taking the replacement rate up to 33%, and expanding the earnings cap to $82,700. While the increase in Bill C-26 is welcome, New Democrats know that better is always possible and the government could have gone further with the percentage changes and still maintained a healthy CPP. The government could also have implemented the changes more quickly to help seniors right now. This bill could have done so much more for those who are struggling today. We need to see immediate action to help seniors and Canadians who would not see the benefits of these changes.

Retirement security is in crisis in Canada. We have fewer workplace pensions than ever, with six in 10 Canadians having no workplace pension. This means that 60% of Canadians rely on CPP, OAS, GIS, and personal savings. Most people know that seniors do not have a lot of disposable income and very few have significant savings to help. Many rely on their family to help supplement their needs and to provide them with security. Many are women who are widowed or do not have their own private pension to supplement them.

I remember a conversation I had with a widow in Amherstburg whose husband's workplace pension had been drastically slashed because the company, General Chemical, had left Canada and was now only paying a small portion of its promised pensions to retirees. She was now talking about selling her house that she had lived in her whole life because she could not live on CPP, OAS, and GIS alone.

There are many seniors in my riding who are struggling. We have a lack of affordable housing; rising costs of drugs; and increased costs of food, gas, and hydro. The list goes on and on. Seniors today are struggling, and there is so much that could be done today. The changes that are being proposed us would not take place for 40 years. Those who would see the biggest benefit from the proposed changes are millennials.

If we talk to millennials, we hear they are often not even able to imagine a future that includes a workplace pension. They are struggling to find secure employment and are often working multiple jobs to patch together a living. They do not even think about retirement because they are so focused on working to find a job.

My colleague from Churchill—Keewatinook Aski recently brought her precarious work tour to Windsor, where we met with millennials to talk about their issues. I was crushed to hear a young woman talk about the fact she never envisions having a family or owning a home because she cannot find work. She is certainly not saving for retirement, which shows the clear need for CPP changes for future generations.

What an incredible difference we have had in a generation. It is a sad reflection on our society that 20 years ago when I began working, I was able to find work easily in a unionized workplace that had a decent wage and a workplace pension, which meant that I could retire with security and dignity. Today these opportunities are few and far between. With the decline of workplace pensions we are heading into a future in which there will be no security in later life for Canadians.

We often hear of people talking about the concept of the Canadian dream, that if people work hard for 30 years they can retire with dignity. I continually hear from the other side of the House that if Canadians just work hard enough, they too can join the middle class. This narrative is not only misleading but also insulting. Many Canadians work extremely hard every single day, but for so many reasons they are not able to save enough for a decent standard of living, let alone for retirement. They do not even think about trying to join the middle class, because they are struggling to survive today.

We can go back a generation before that. My grandfather was on the bargaining team in his workplace after he came back from serving in the war. He worked at a place called Dominion Forge. When they negotiated a retirement benefit for a 30-year-and-out contract, he became the first person to retire under that contract once it was signed. Today, we are losing these pensions at an alarming rate in Canada.

Today, our workplaces are creating divisions between new hires and long-term employees. They are pitting working people against each other. This new tier of workers is asked to accept lower wages and smaller pensions, if any pension at all. We see this in workplaces right across Canada. It is a trend that reinforces the growing problem of retirement insecurity.

When I started working 20 years ago, things were relatively good. People with a high school diploma could find a job, and many jobs paid well. People could get jobs with a pension and benefits. They knew they could start a family. Today, this is just a dream for so many Canadians. Young people are struggling to find these good jobs and do not imagine planning for retirement because they cannot even find a job today.

We have a serious problem in our country today with many seniors living in poverty. I am pleased to see that Bill C-26 would address future generations, which will certainly be necessary, because there are fewer young people today who have a job in the first place so they can put some type of personal savings away and, second, have some form of workplace pension .

What are we doing today for seniors in this country? We hear the government talk about the changes it has made to the GIS, which amount to under $1,000 per year at the maximum amount people are receiving. Seniors in my riding who get that extra amount of money have not been elevated out of poverty. They are still suffering from the high costs of medication and still cannot find affordable rent. When some people in my riding found out that seniors were going to receive that money, they turned around and raised their rent. Seniors are not seeing any benefit of that bonus.

So much more could be done today. I look forward to seeing what future initiatives will come forward in the House that would help the retired person and seniors of today.

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

Madam Speaker, allow me to explain what is happening for seniors today.

In the last federal budget, our government committed to an increase of $900 annually in the guaranteed income supplement for the poorest and most vulnerable of Canada's seniors. Our government has dramatically increased the guaranteed income supplement.

Another thing this government did within months of taking office was to reverse the decision of the Stephen Harper government to increase the age of retirement from 65 to 67 for OAS benefits.

We have also done other things.

Would the member not agree that the three most fundamental social programs for our seniors, as our seniors themselves perceive, are OAS, CPP, and the guaranteed income supplement, all three of which this Liberal government dealt with in its first year of governing? Does she not see that as a positive thing?

[Tracey Ramsey, NDP, Essex, ON]

Madam Speaker, it is always positive to see an increase in programs to help seniors. The $900 the member is speaking about is a far cry from a dramatic change for seniors. Over a year, this will be a small amount every month to help seniors.

Any amount of money is always welcome, but to say this dramatically changes the lives of our most vulnerable seniors is implicitly false. That is not the truth. I am sure that if the member opposite talked to seniors in his own riding, he would certainly hear the exact same thing I am hearing, that the money has now had the consequence of increasing costs in the community so that the seniors will not even see the benefit of it. There needs to be something more significant.

With regard to the CPP specifically, going to 33% is positive, but what the member opposite is not admitting is that this will only happen 49 years out. This does nothing for seniors today. There has long been a call to have CPP benefits doubled, which could easily be done. This is a very healthy fund and is very well managed in our country. It is viewed around the world as one of the best plans. However, we can give back, because there is money sitting inside there right now that is not going to good use. That money needs to be in the hands of seniors right now in Canada, and so there could be an increase beyond the 33%

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Madam Speaker, the hon. member mentioned immediate action. Can she comment on the fact there is no immediate action in the bill to help seniors?

[Tracey Ramsey, NDP, Essex, ON]

Madam Speaker, I do agree that the bill takes no immediate action. Seniors are struggling. Right now they cannot bear the cost of medication and the cost of food. Seniors in my community are making difficult choices about whether they keep their lights on during certain times of the day, or potentially go on public transit or get into their car if they can afford gas for that.

The cost of living has gone up and the CPP has not kept pace with it. There is so much more that can be done for seniors right now. One of the things the government can do is to stop the cuts to health transfers to the provinces. This will have a direct impact on our seniors in our communities, because if they are not able to access services because the money is not coming from the federal government to the provinces, they will find themselves in more difficult situations.

In my riding and in Windsor, there has been an attempt to cut local services and to move them up the road to London, Ontario. We pushed back against that. If we see these cuts coming in health care, we will see more services being removed from our communities, and that would hurt seniors.

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

Madam Speaker, I appreciate that this does not have an immediate positive effect on seniors, but indeed hurts them. It appears that the government does not have a plan to take care of seniors. It has ignored seniors. Would the member agree?

[Tracey Ramsey, NDP, Essex, ON]

Yes, Madam Speaker, the government does not have plan to address seniors now, today, who are struggling in our communities.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Madam Speaker, I am pleased to speak to Bill C-26 this afternoon, as there is no question that the suggested changes to the CPP will have a significant impact on Canadians and our economy.

I have heard a repeating mantra from the government that people are struggling to save, yet Canadians' retirement system is one of the most envied in the world. Poverty among seniors has dropped significantly in recent years, and Canadians are saving more for retirement today than ever before. I agree that all Canadians should be able to retire with dignity: those now retired, those soon to retire, and young Canadians who are just beginning their journey in the workforce who will, before they know it, be where our seniors are today.

Despite these facts, there are definitely many seniors currently living in poverty and many working poor Canadians who are struggling to make ends meet. These are the individuals government should be focusing on. Our government should be implementing ways to help these individuals help themselves and should provide assistance when circumstances are such that retirement is difficult and the basic needs of life are out of reach.

The previous government expanded the guaranteed income supplement, and the current government did the same, increasing it by 10% in its first budget, which was a very good decision that I applaud.

When it comes to CPP contributions, I believe that the approach in Bill C-26 would cause more harm than good. Why? It is because it is not specific, when is could be, and so it would impact Canadians who have their savings plans already established and growing and would negatively impact Canadian businesses that actually fuel the economic growth our entrepreneurs, tradespeople, professionals, and labourers need to be successful.

We should be targeting voluntary additional individual contributions to CPP and not mandating that all Canadians participate further in a program that is complementary to the savings they choose to make as individuals. Canadians should be able to manage their own money. If they want to make additional individual contributions to the CPP, that could be done. As a small business owner, I know that it would be an easy move to add a request on a TD1 indicating how much more an employee would like attributed to his or her CPP contributions above and beyond the minimum. They could also use TFSAs, RRSPs, employer pensions, and other means of providing for their own retirement.

Small business owners are being penalized when they are forced to contribute more to CPP rather than being able to invest those funds in their businesses or other means of fund growth. Instead of stimulating the economy, they are being forced to contribute to a government program that takes away their right to manage their own investment of that income.

As well, we know that the CPP is unfair to single and divorced individuals. A constituent in my riding, who has been a certified financial planner for 20 years, indicated to me that 15% to 20% of his clients fit this category. When they pass away, their estate receives a CPP death benefit of only $2,500, because they have no spouse to receive the survivor benefit, yet they have faithfully made their CPP contributions over the years, and in the case of the self-employed, have made double contributions, which could have amounted to over $100,000 in the past, and in the future to perhaps well over $200,000.

Why would anyone wish to pay into a program that may never benefit them or their estate? This is unfair and is a form of discrimination. If I personally came up with a new pension plan today that asked clients to contribute $2,500 to $5,000 per year over their lifetimes, with the only guarantee on death, before drawing CPP, being $2,500, I am quite certain that the authorities would call such a plan criminal in nature.

Another concern is that the offsetting tax credit the Liberals are suggesting to balance the additional monthly contributions for the working poor would only apply to a maximum annual income of approximately $28,000 a year. For an individual, let alone a family living on a monthly income of $2,400 a month before deductions, an increased CPP contribution will be a hardship they cannot afford.

In 2013, the total household net worth of Canadians was $7.7 trillion, split almost equally between pension assets, real estate equity, and other assets. According to a study by McKinsey & Company, 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 has dropped from 29% in 1970 to 3.7% today, which is among the lowest in the world.

According to Finance Canada's analysis, higher CPP premiums will reduce employment, reduce GDP, reduce business investment, reduce disposable income, and reduce private savings by 7%.

A paper released by the C.D. Howe Institute shows that the Liberals' CPP plan would not benefit low-income workers. Their premiums would go up, but their net increase in retirement benefits would remain low, since higher CPP payments would be offset by the clawback of GIS benefits.

Seventy per cent of employed Canadians oppose a CPP expansion if it means a wage freeze. Fewer than 20% of Canadians say they would opt to put more of their savings into the CPP, according to a survey by the CFIB.

Clearly, low-income workers and the working poor should be the focus of this government's argument that people are struggling to save. It should help those working hard to join the middle class through a voluntary CPP program instead of having an all-encompassing program that benefits the well employed, who already have strong retirement pensions and plans in which CPP payments are an added bonus.

I now quote Fred Vettese, chief actuary at Morneau Sheppell and co-author with the Minister of Finance of The Real Retirement. This appeared in the Financial Post on June 5, 2016. He said:

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

Charles Lammam and Hugh Macintyre, of the Fraser Institute, stated, in the Financial Post, on June 2, 2016:

Instead of expending political energy on debating CPP expansion in the misguided belief that many middle- and upper-income Canadians are not saving enough for retirement, the focus of public debate should be on how best to help financially vulnerable seniors.

Yves-Thomas Dorval, CEO of CPQ, said that he was worried about the new direction of the Canada Pension Plan and the impact on the Canadian economy. He said that if we want to encourage saving for retirement, a universal solution doesn't work. On the contrary, it is likely to have a negative impact on economic activity, jobs, and wages.

What impacts Canadians' ability to save is a slow economy, a loss of confidence in our economy, a loss of jobs, a loss of incentives, and increased taxes, all of which have a huge impact on the ability of young families to save.

I received a call from Brian, a constituent in my riding, who was emotional and distraught as he told me that the impact of an increase in CPP premiums, coupled with a carbon tax on everything, means that his wife will no longer be able to remain a stay-at-home mom, the way she wants to be, with their two small children. He was overwhelmed by the thought of his wife having no choice but to go to work, which will also increase their monthly costs, with child care, another vehicle, and all the additional expenses of a secondary income for their family.

The government is calling on Canadians to contribute more to the CPP, saying that Canadians do not know how to save enough, yet the Prime Minister has blown his modest deficit promise, borrowing three times more than he ever said he would. The Prime Minister has broken his promise to cut taxes for small businesses. The Prime Minister has broken his promise to make his tax plan revenue neutral. The Prime Minister has made children's sports, arts classes, students' textbooks, and tools for tradespeople more expensive. The Prime Minister has taken away the universal child care benefit, a plan that was easily implemented without a lot of red tape, that helped families and lifted hundreds of thousands of children out of poverty.

Those with higher incomes paid the benefit back in taxes too. However, if that well-off family faced a downturn in the economy that ended its employment, like what we are seeing in our resource sector right now, for example, they could keep that benefit. Under the Liberal child benefit, those families will have to wait until next year to show their income loss before benefits are adjusted.

Some people truly are struggling to save, absolutely. That is why the government should be targeting voluntary additional income contributions to the CPP and should be focusing on helping those who are working hard to join the middle class and on seniors living in poverty right now, rather than blanketing all Canadians and all businesses, which are growing the economy, with a punitive program that limits their ability to save and invest.

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

Madam Speaker, it is something I have emphasized in the past.

[An hon. member]

Not again.