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.

Second Reading

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, I found it particularly interesting that my colleague's family was the beneficiary of a progressive pension system. Would that every Canadian had such an advantage and benefit.

My question is in regard to the fact that the current proposal would not be fully realized for another 49 years. In other words, young people of today, those who are 16 years old, would benefit.

However, we have an increasing number of seniors living in poverty. While we are waiting for these benefits and enhancements to take effect, what is the government proposing to do for those poor seniors who are suffering? Is there any effort or thought being given to ensuring that the GIS is not clawed back so seniors, even if they do get more federally, are still disadvantaged?

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Mr. Speaker, the member is absolutely right. Young people of today, certainly those under 25, would be the principal beneficiaries of this legislation. To alleviate the situation, I highlighted in my speech several aspects that currently dealt with seniors. However, the member is right. I hope there will be more legislation coming, and even private members' bills, regarding the GIS and other tools by which we can help seniors get out of poverty.

I am focused on this right now. I see us becoming that much more progressive down the line when it comes to a Canadian pension plan system. My father was a principal beneficiary of a hard thought-out progressive pension plan between his union and the company for which he worked. Again, that was not portable. It was for him in that workplace. I would like to see something more generous for the population at large, and this would go a long way toward alleviating that.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I asked this question earlier of the minister, but I do not I got an answer, so I will try again.

We have a choice here between private savings and the private savings vehicles we strengthened as a previous Conservative government, and the current government's proposal to take away more of people's money essentially to save it for them.

We believe in the importance of savings, but one of the advantages of private savings is that individuals can save up for interim projects. It is not just retirement, but they can save money for a home, buy a home, and realize the value of that home in their retirement. They can save for education, put that money into an education, which then will give them increased earning potential in the future.

Our approach, which emphasis private savings, allows people to pull out of those savings for interim investments, which then will pay dividends in the long run. The government does not allow them to do that. It forces them to save for retirement and does not allow them to use those other savings vehicles for important interim projects.

Recognizing the advantage of private savings and of incentives for private savings over this model, would the member not agree with us that a better approach would be the changes we brought in, which the Liberals reversed, such as the tax-free savings accounts and perhaps further reforms to RRSPs to make the home buyers plan more flexible? Would that not be a better way to go rather than the direction the government has gone?

[Scott Simms, Liberal, Coast of Bays—Central—Notre Dame, NL]

Mr. Speaker, it is not better. It is good, but it is not better.

I understand what the member is saying about the tools he is putting forward, such as RRSPs and the investments. However, I go back to the point that these are good measures, but I do not think they are better, and here is why.

In many cases, one has to take on a large element of risk as an investor and that does not always unfold the way it should. Even though it may be low risk, it still is risk at that point. What we are doing today is giving a base for seniors to rely on 100%. This is what I want to enhance in this. It is not just this, as my other hon. colleague pointed out, but it is together with the old age security, and by extension, the guaranteed income supplement.

Again, the tools the member described are good ones. I take advantage of them myself. As an investor, I am a low-risk investor, but I do that with a risk. They are good, but they are just not better.

[Sheri Benson, NDP, Saskatoon West, SK]

Mr. Speaker, it is a privilege to rise today to talk about a very important bill, Bill C-26, and the security of people in Canada when they retire.

I have a few introductory comments. I echo the comments of my colleague from Vancouver East who arrived in the House as a brand new member of Parliament, looking forward to a new spirit of collaboration and co-operation. Our hopes were very high that things would be different. I therefore want to register my disappointment around the government's choice to move forward with time allocation. I share that disappointment with the colleagues on my side who, unlike me, will be unable to share their points of view and comments with our colleagues today.

As I said, I am honoured to be speaking to Bill C-26, which will amend the Canada Pension Plan Act and incorporate recent agreements the government has been able to reach with the provinces to enhance the Canada pension plan.

Although the effect of the changes will not be felt for many years, 49 years, this enhancement is a very important first step in improving retirement for young Canadians. I want to acknowledge and offer my congratulations to the many citizen groups, in particular, unions that have really been fighting long and hard and laid the important groundwork so we were able to get to an agreement on these enhancements.

When this is fully implemented many years from now, but still important, the CPP will replace 33% of pre-retirement income, which is up from its current 25%. The New Democrats have long worked hard for improvements to many aspects of our social safety net, including the Canada pension plan, fighting for better old age security, and increasing guaranteed income supplement benefits.

As I mentioned in some of my questions, retirement security for many Canadians has reached a new crisis level. It really has been increasing and made worse under some of the policies of the previous government, which really saw the crisis come to a head with many people being unable to look toward a retirement. A golden retirement, as people used to say, will not be there.

A large part of that problem is that six in 10 working Canadians no longer have a workplace pension. I will do what a lot of people do not do usually and reveal my age. I am 53 years old. My dad would have been one of the first groups of workers who worked for a very large multinational corporation and had a workplace pension. Closer to the end of his tenure in the corporation, during a large corporate takeover, he lost that defined benefit pension plan. My parents, along with many others, have had to look forward to retirement, but, as my colleague on the opposite side said in his previous comments, have had to take on a lot more risk when it comes to pensions, more risks than his parents had and many before him. Younger generations are looking forward to an even more precarious work environment and retirement, one that may not provide them with the things they need to have a safe and healthy retirement.

During the election, the Liberals promised to enhance CPP, and we are glad to see that has come forward. I have a couple of comments on this.

I want to acknowledge my colleague from Hamilton Mountain. As any good MP would, he did some digging and studying up on the bill so we could speak about it as it was coming forward. He found some flaws with it. I thought the government would be very eager to hear about this and do a quick fix. It is one of the reasons we want to continue to debate this, because we would like to hear a response from the government that it does plan to fix this. Just saying that going to committee somehow that will make everything better does not reassure me or people in my constituency, in particular, women and those living with disabilities, that their retirement is going to be as secure as they thought it was.

Of course, what I am talking about is that the proposed changes to enhance the Canada pension plan would actually not afford women and those with a disability the same increases. Although we know this was brought in under a previous prime minister, Pierre Elliot Trudeau, it was not included in this particular enhancement to the Canada pension plan. I know members on this side and my colleagues have been asking the government over and over, both in question period and in debate, to tell us if this was a mistake. We have asked if it is going to fix it, or if it was not a mistake, why it was not included.

Of course, if it was not a mistake then I question its claims about being sincere in addressing some of the inequities and issues, particularly when it comes to retirement for those two groups of people who would be most vulnerable. They are those living on some type of CPP disability and women who had to leave the workforce who were the primary caregivers of children and were therefore not contributing to the Canada pension plan. From what we can see, from what we know, and from the research from my colleague, these folks are not going to see the increase, as others would. It is one reason to continue debate.

I understand the government has just recently, within a month, done some great work and brought our provinces together and got agreement. However, sometimes in haste, things get overlooked. This is one aspect I hope the Liberals just overlooked, and I hope they are going to try to fix it, because it is extremely important to me.

When I was campaigning to be the member of Parliament for my riding of Saskatoon West, one of the key issues in my riding was income and affordability. For seniors, it was being able to afford housing, and if they were lucky enough to scrape together enough to afford housing, they were not able to afford medication.

Retirement income, particularly for women and those who have lived on a more limited income because of a disability, is extremely important to me. Therefore, I rise today to speak about this and to draw it to the government's attention again. It would be nice to hear, definitively, from the government that it does plan to not allow this inequity to move forward, that it does plan to fix it, and not just say that everything will be all right, that we will talk about it in committee, to just get going with this, and keep talking—or not keep talking, I guess—so that we can address this.

I feel honoured to stand up and speak about this issue. I want to congratulate my colleague for bringing forward these two key pieces of inequity in the legislation.

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

Mr. Speaker, in order to come up with the bill we have today, there was a great deal of dialogue and discussion among the different provinces and territories in Canada. As a result, we have this piece of legislation. I was not sitting at the table and so I do not know if the points that have been raised by the New Democrats were issues actually raised at the table. I do know that New Democratic governments, Conservative governments, and Liberal governments all participated in that discussion. Hopefully, the bill will go to committee soon and the NDP can continue to raise those issues.

At the beginning of her speech, the member referenced why we had to move the time allocation motion. Recognizing that the government would like this bill to ultimately pass and given that the Conservative opposition wants to kill the bill, would it be the NDP's approach to allow the bill to die on the Order Paper? Of course, the Conservatives would applaud.

If the Conservatives continue to move amendments and choose to debate the bill indefinitely, for literally hundreds of hours, something an opposition party could do unless the government used some mechanism, does the NDP not think that the government looking at what Canadians want is a high enough priority to move it forward, and that now is a good time to do so?

[Sheri Benson, NDP, Saskatoon West, SK]

Mr. Speaker, my hon. colleague spoke of two issues that I raised in my comments, one was putting time allocation on the debate of this bill and the second, what I feel is the most important point, was that the inequities built into the enhancement to the CPP would not help women who have left the workforce to raise children or people with disabilities get the same enhancements.

I would like to hear definitively from the government if it is going to fix it, and I have not heard that. I do not think suggesting that it might have been missed in very high-level conversations with very smart people is sufficient. It is, ultimately, the federal government that brought forward the CPP enhancements and regime that they are asking the provinces to sign on to, so our due diligence at this level and the due diligence of those at the table from the federal government should have realized this and made changes then.

I will leave my comments there, hoping that the government will give a definitive answer yes or no to that question.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, it is very clear that my party has a very different view of these issues in terms of the level of control that individuals should have over their own lives. Certainly when it comes to people's financial decisions, the government and the NDP are clearly very anti-choice. Their view seems to be that caring means controlling, that if we care about people's retirement, it means we have to control it for them.

I will ask the hon. member this. Is there not a way that we can care very much about people having strong and well-cared-for retirements, while still believing that people can have control over their own retirements? We can enhance savings vehicles, whether it be the tax-free savings accounts, RRSPs, or make changes to RRIFs that I know my colleague proposed, to give people more control over their own retirements while also ensuring they have the resources to retire well.

[Sheri Benson, NDP, Saskatoon West, SK]

Mr. Speaker, I believe the member is sincere in believing that the efforts of the previous government, such as the tax-free savings accounts and pooled registered pension plans, were attempts to help people with retirement. Unfortunately, they did not work. That is why we are in this crisis and why we need to be part of something larger in order for people to look forward to retirements that can sustain their quality of life.

[Raj Grewal, Liberal, Brampton East, ON]

Mr. Speaker, first and foremost, I want to thank the Government of Canada for taking on this initiative of expanding the CPP. It is no small task to get the provinces, which represent two-thirds of the Canadian population, to sign on to CPP enhancements. These provincial governments represent all parties, the Liberal Party, the NDP, and the Conservative Party, so the expansion of the Canada pension plan is very much a Canadian solution that is not only important but very much needed.

We know that, today, one in four families, or 1.1 million people, nearing retirement risk not saving enough for retirement. In particular, middle-class families without workplace pension plans are at a greater risk of under-saving for retirement, and a third of those families are at risk.

To address this, this historic agreement was reached with the provinces in June to make meaningful changes to the CPP. These enhancements would be phased in over a seven-year-period, starting in 2019. Once fully in place, the CPP enhancement would increase the maximum retirement benefit by about 50%. Enhanced benefits would accumulate gradually as individuals pay into the enhanced CPP, and to fund these enhanced benefits, annual CPP contributions would increase modestly over seven years, starting in 2019.

I would like to remind the House that our contribution rates in Canada are much lower than those in other countries with public pension plans. In fact, the CPP contribution rate is about half the average rate among the 25 countries in the OECD that have such public pension plans. This remains true even with our CPP enhancement.

What would this mean to Canadians, at the end of the day?

Young workers in their twenties or workers nearing retirement would all benefit from the enhanced CPP. For the young workers in their early twenties just starting out in their career, this would be a great benefit when they retire. By paying their portion of the CPP contributions, which are then matched by their employers, they would be building toward a safe, secure retirement for their own future.

The modest increases in contributions would be phased in over seven years. Someone working with constant earnings of $50,000 would contribute an additional $70 per year, or $6 a month, in 2019. By the end of the phase-in period, that same person would be contributing $475 per year, or $40 per month. By strengthening the Canada pension plan, workers would receive more money from their pension, an increase from one-quarter of the eligible earnings to one-third. For example, people who make $50,000 a year for their working life would receive about $16,000 each year in retirement instead of today's $12,000. That is $4,000 more a year in their pockets.

In addition, the enhancement would increase the point at which a person stops making contributions by about 14% in 2025.

I know that some people are concerned about the increased contributions and what they would mean to their bottom line: their paycheque. We thought about this and designed a gradual phase-in, so that contributions would increase modestly over the seven-year implementation period. We also thought about employers, in designing this enhanced CPP. We specifically designed a slow phase-in process with the express purpose of minimizing the impact and giving employees and employers time to adjust to these changes.

The great news is that our young workers would receive the largest increase in their retirement benefits. In fact, we know that young people, in general, find it difficult to save. Many are working in jobs that do not have company pension plans, which makes them have to save for their retirement on their own.

The other fact is that a tax deduction, instead of a tax credit, would be provided to the employee contribution portion of the enhanced CPP. This would avoid the new CPP contributions increasing the cost of saving.

Workers in the middle of their career or nearing retirement would still benefit from an enhanced CPP as the increased contributions that are made in 2019 and later would go toward an enhanced retirement pension.

What about the low-income worker worried about the effect of increased CPP contributions on his paycheque? How will the enhanced CPP help him or her? I want to assure my colleagues and low-income workers all across this country that an enhanced CPP will benefit all workers, including those with low incomes.

To make sure that eligible low-income workers are not financially burdened as a result of the extra contributions, the government will also enhance the working income tax benefit. The proposed enhancement to the working income tax benefit is designed to provide additional benefits to roughly offset the incremental CPP contributions for eligible low-income workers.

With this enhancement, there will be no impact on disposable income. When he or she retires, they will also get a larger retirement benefit payment. The bottom line is that people who are working in Canada, paying into the CPP, and planning to retire after 2019 will have more money in their pocket from their CPP retirement pension benefit.

In my riding of Brampton East, day in and day out, I speak to constituents who call me personally about the issues they or their families are facing. I often hear that young Canadians have a hard time finding permanent, stable employment with reliable pension plan. That is often way out of reach. I hear from young families and established families alike who are thinking of retirement and realizing they do not have adequate savings. This concerns me, and it should concern every member of the House.

The Canadian Association of Retired Persons estimates there are roughly 600,000 seniors living in poverty in Canada. That is more than the population of Brampton. Frankly, that is unacceptable.

Our government is doing its part to ensure that in the future no seniors live in poverty. We started by reducing the age of eligibility for old age security back to 65, and boosting the GIS by 10% to provide almost $1,000 per year per GIS recipient, aimed especially at helping low-income seniors who live alone.

However, that is not enough. Associations like CARP have been calling for an expansion of the CPP for years, and it is about time we delivered. We feel this is a win-win. I urge my hon. colleagues to support an enhanced CPP that will further help Canadians contribute to a safe and secure retirement.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I do know that this member is very concerned about small businesses in my riding, whether they be olive importers or others.

I want to ask him specifically about the impact the proposal will have on small business. We have heard of studies done and concerns raised by the Canadian Federation of Independent Business. We do know that a survey was done in Ontario relating to the ORPP and the negative impact it would have on small business.

This proposal leads to a loss of jobs, fewer jobs created, and wage cuts. Would it not be better to use a private savings model in which individuals could earn just as much but save more of their money? Would that not be better for small businesses in my riding and his?

[The Assistant Deputy Speaker, Anthony Rota]

Before we go to the member for Brampton East, I want to remind everyone in the House that debate is taking place. It is nice to see a friendly conversation amongst you, but if you do not mind, keep it down or whisper, as opposed to talking loudly, so we can hear the debate, which is very fulsome.

The hon. member for Brampton East.

[Raj Grewal, Liberal, Brampton East, ON]

Mr. Speaker, my hon. colleague across the aisle is a great guy, even though I mostly disagree with him completely on almost every issue. However, he is a personal friend and that is what makes democracy so great.

The single biggest reason why enhancement of the CPP is needed is the dire state of the private pension system. Anyone can look to statistics. The member opposite mentioned a study done by the Canadian Federation of Independent Business, which has a 109,000 members. It testified at the finance committee.

The devil is in the details of their research. It was relying on responses from 651 members. A survey was sent to 10,000 of their members. It said members were against our proposal, when among its 109,000 members, only 651 members said that the enhancement of the CPP was a bad idea.

I urge the member opposite to talk to small businesses in his riding, because small businesses all across this country know that if their employees are taken care of, if their employees can look forward to a safe and secure retirement, that will benefit their bottom line in the short and long terms.

I encourage my hon. colleague across the way, who is a great guy, a smart guy, to support the CPP enhancement

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Speaker, I appreciate the speech by the member for Brampton East. We certainly agree with him that we need an enhancement to the CPP. However, there is an important part missing in this, and that is the child rearing and disabilities drop-out period that is in the existing CPP, but for some reason has been omitted in the enhancement by the government. As the member and I have heard from many stakeholders and organizations, this is a critical part. We need to know the answer. Has the government made a mistake and is it going to fix it by putting the drop-out periods into the enhancement, and will it support that?

[Raj Grewal, Liberal, Brampton East, ON]

Mr. Speaker, my hon. colleague has recently been substituting on the finance committee and I welcome him to the committee. He does really good work on the committee.

The fact of the matter is this. If people retire in Canada after 2019, they are going to have more money and all Canadians should be proud of that. We said at the beginning that the single reason that an enhancement of the CPP was needed is that in 1971, 48% of Canadians had a defined pension benefit plan provided by their employers, but that by 2011, it was 25%, and still declining. Employers are not providing employees and Canadians with defined benefit plans anymore. Canadians are struggling to save for retirement and enhancement of the CPP is critical.

The most telling part of this is that all the provinces agree with this, whether NDP, Conservative, or Liberal. This is something that all members in the House should agree with because Canadians deserve safe and secure retirement. I encourage the member and his party to support the bill.