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

[Eva Nassif, Liberal, Vimy, QC]

Mr. Speaker, I thank my colleague from across the way.

In my riding, Vimy, more than 21% of the population is aging and most people live in poverty. We are doing something that the previous government did not do in 10 years in power. It never consulted the then minister of finance or considered improving the Canada pension plan, which has been around since 1965.

What we are doing now is truly forward-thinking. We are thinking about our seniors and our young people and how they are going to live with dignity in retirement.

I invite the members across the way to support this bill and to propose changes in committee.

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

Mr. Speaker, I sense a passion on a very important issue, and in representing her constituents. I applaud my colleague on her efforts.

Could the member provide further thoughts on the significance of what is indeed a historic agreement? The Prime Minister and the government have entered into a wonderful agreement with the provinces and territories of all political stripes. They have been able to deliver on something that Canadians truly want. I wonder if she might want to provide some further comment on how good it is to see that strong national leadership working with the provinces.

[Eva Nassif, Liberal, Vimy, QC]

Mr. Speaker, I thank my colleague for his question, his thoughts, and his great enthusiasm during the debates in the House.

Our approach to improving the Canada pension plan is truly an historic one. Canadians elected us on the basis of these consultations and the purpose of this program is to consult and listen to Canadians, to always think that we are truly proud and can always do better, as our Prime Minister says.

There is always room for improvement. This bill is certainly not perfect. However, we consulted all the provinces, which is something the other government never tried or managed to do for 10 years.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I am especially pleased to speak again to an issue that is so important to the future of our seniors, our country, and retirees.

I am referring to Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act. There are several reasons for that. This bill is the promise of a better future. It also reflects the government's commitment to help Canadians achieve their dream of a more secure retirement.

It is a project for the future and for young people who are currently preparing to enter the labour force. This next generation will also be assured of a dignified retirement. We are acting for a future that goes beyond any election cycle to help those who will come after us.

We are building on what was accomplished by the decision-makers of the 1960s who created the Canada pension plan, enhanced old age security by creating the guaranteed income supplement, and implemented measures that, in the long term, would significantly reduce poverty among seniors. What is more, we are here in a true spirit of federalism because the agreement to enhance the Canada pension plan, or CPP, comes from a real spirit of co-operation with the provinces, who approved the approach.

Do we need to enhance the CPP? Absolutely. It is essential and I will explain why. Middle-class Canadians work hard, but they still do not feel as though they are getting ahead. One in four families who are approaching the age of retirement, or about 1.1 million families, may not be able to save enough money to maintain their current lifestyle when they retire. We have to take action.

We also have to accept the fact that fewer companies are offering defined benefit pension plans and that fewer Canadians have such a plan. It is a major challenge for Canadian families and it is time we dealt with this. The agreement we reached with the provinces will increase the retirement income of Canadians who are in this difficult situation, and also promote economic growth and create jobs.

How will the CPP expansion work? There are two key things to keep in mind. First, the CPP currently replaces a quarter of Canadians' average annual earnings. The new CPP will replace a third. Future retirees will therefore have more money in their pockets. Take Mila for example. She is a mother who has earned on average $50,000 a year during her working life. Under the current plan, she will get $12,000 when she retires. Under the new plan, Mila could get a little more than $16,000.

Second, there is a limit on pensionable earnings. The maximum level of pensionable earnings will go up 14% by 2025. That means that the maximum annual CPP benefit, which is currently $13,110, would go up to $20,000 in today's dollars. Under the enhanced CPP, the maximum benefit will go up by almost 50%. It is clear that these changes to the CPP will make life better for retired Canadian workers and will help them achieve their goal of a strong, secure, and stable retirement.

How much will this cost? For most Canadians, the contribution rate will rise by just 1%. Take Kevin, for example, who earns about $55,000 a year. His contributions will increase by $6 per month in 2019. Once the progressive implementation is complete in 2025, Kevin's contribution will have gone up by about $43 per month.

That minor increase will be largely offset by his higher retirement income. With the enhancement, Kevin will collect approximately $17,500 per year in today's dollars in CPP benefits, which is about $4,400 more than under the current plan.

I should also mention that contributions to the enhanced portion of the CPP for wage earners like Kevin will be tax deductible and that a tax credit will continue to apply to employees' current CPP contributions.

We can therefore proudly say that Canadians will have more money in retirement thanks to the new CPP. Furthermore, the budgets of low-income workers will not be affected, because the working income tax benefit will also be increased to offset the premium increases.

I would like to add that our government has decided to give everyone time to prepare for the new provisions. The changes will implemented gradually over seven years, from 2019 to 2025. This is the responsible way to go, to make sure that businesses and workers have time to adapt. We are taking into account the problems that exist at the provincial and national levels. We have engaged with each province to discuss their particular situation, and we will continue to do so.

We took steps to ensure that we could implement these measures in a way that will not hurt businesses, because we want the owners of businesses of all sizes to be assured that the government will implement these changes to the CPP without harming the functioning of the Canadian economy.

As I said in my introduction, the government is creating a better future for Canadians, especially the middle class. This will have a much broader impact on all Canadians, because it is important to have a long-term vision. Higher CPP benefits will lead to greater domestic demand, which will stimulate the Canadian economy.

Since savings will grow, more money will be available for investment, also thanks to the new CPP. As a result, we expect the gross domestic product to increase by 0.05% to 0.09%, which represents approximately 6,000 to 11,000 new jobs. Quite simply, an enhanced CPP means more savings and a better retirement.

Middle-class Canadians will then be able to focus on what matters most, such as spending quality time with their family and friends, rather than worrying about not being able to make ends meet.

Proportionally, my riding, Laurentides—Labelle, has more seniors than almost every other riding in this country. In 2011, the average age was 49.5 years. Seniors' issues are therefore extremely important in my riding. I am acutely aware of retirees' needs. People think my riding is rich because of Mont-Tremblant, but it is not. Workers in my region do not have much money. We need every tool in the toolbox so we can help seniors and future generations and plan for the long term, not just up to the next election.

Personally, I am sick of the government doing all the planning for future generations in just four years. Life does not end in four years. Life goes on. The country and society continue to advance. We will never fix our problems by always thinking only about the next four years. As the indigenous peoples say, we must think of the next seven generations. If we do not, then society will never improve.

I strongly support Bill C-26, because it is an important step in the right direction. It is not a solution to all the problems. A lot of work remains to be done. However, this is one aspect of a plan for the future, for our seniors, and for society in general.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I am pleased to have the opportunity to ask my colleague an important question about the TFSAs.

As everyone knows, when our government introduced TFSAs, more than 11 million Canadians decided to use this vehicle. Most of them were not wealthy people. However, this allowed them to shelter their savings from taxes. They were able to save on their own terms. No one forced them to invest in this type of savings plan.

The solution my colleague is proposing is far from being the solution to all our problems. As a business owner, I can tell you that if I have to invest $1,000 per employee, per year, in my business, I might be forced to cut some positions in order to afford this premium.

Can my colleague explain why they lowered the TFSA ceiling to $5,000, when we know that millions of Canadians saved money through this important savings vehicle?

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, we did not eliminate the program. We rolled it back to where it was shortly before the election.

The Conservatives increased the contribution ceiling in order to help those who had too much money and needed a place to park it. The program is available to anyone who needs it. It increases every year. It is cumulative. The maximum contribution of $5,500 is the annual not the lifetime amount. It is a tool that is available to retirees. However, it is not the only savings vehicle. It is of no benefit to society when those who have the means to save $10,000 a year can do so tax-free. In fact, TFSAs only help those who have an extra $10,000 every year.

Personally, I believe that it is very important to focus on programs that help all members of society and not just those with the most resources.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, obviously, the NDP believes that enhancing public pensions is a good thing. It is a necessary step.

However, an oversight by the government is very embarrassing. A provision of the CPP ensured that parents who took one or two years' parental leave would not be penalized. This provision was put in place by Pierre Elliott Trudeau. All the government had to do was cut and paste it. It forgot to do so.

How did the Liberals forget this? They are going to penalize those people who were previously protected.

Will the Liberals correct this mistake, yes or no?

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I appreciate the question from the member for Rosemont—La Petite-Patrie.

I am not a member of the committee that will decide what amendments to make. I would not discourage that, and I think it is important to look at all questions raised in committee to ensure that the best possible bill is introduced at third reading. That is what we will work towards.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Speaker, I certainly agree with my colleague that the CPP has to be enhanced. There have to be changes for our future, for our children and our grandchildren. It is much needed.

However, the member mentioned in his speech that he was so proud that a person by the name of Kevin could really be proud and the enhancement would help him going forward. However, he eliminated Susie, Jane, and Margaret who could be penalized if they raise their children. They will not have the same benefit.

It is a bad mistake and we have to fix it. The Liberals omitted it, and I am not sure if they did it on purpose, but it has to be fixed.

I am asking the member if he will support this going in to the enhancement part so that the people with disabilities and people who are raising their children will not be penalized, like Kevin will not be.

[David Graham, Liberal, Laurentides—Labelle, QC]

Mr. Speaker, I appreciate the member's support for this very important bill. I am also pleased to note that the Speaker himself wrote the bill, I am very impressed with the Speaker's ability.

I would in turn encourage the member to take this up at committee. That is the best place to take it up, at committee. It is too late for here. I think it is really important that we study every aspect of the bill, and the best possible bill comes out of it.

[The Assistant Deputy Speaker, Anthony Rota]

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, Health; the hon. member for Abbotsford, The Environment; the hon. member for North Island—Powell River, Public Services and Procurement.

[Randy Boissonnault, Liberal, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, I rise today to address what has transpired in this House over today and yesterday.

Today would have been the sixth day of debate on Bill C-26, a bill that would help Canadians achieve a secure, safe, and dignified retirement.

The Conservatives have requested more time for debate on the bill. They could have debated the bill today, as scheduled, but instead, they resorted to procedural tactics to obstruct debate and attempt to shut down the House of Commons and go home.

I had hoped for a negotiated consensus, but now we will respond to political manoeuvring from the other side in the Conservative Party, so that such important financial measures that affect all Canadians are brought to a vote.

Disappointingly, it has become clear that the Conservatives would rather focus on these type of tactics than debate substantive issues. As a result of Conservative tactics, six committees were disrupted or cancelled, including the appearance of five ministers and important witnesses scheduled to testify on issues of relevance to Canadians.

This kind of behaviour is exactly what Canadians rejected when they voted for real change a year ago.

Consequently, the Conservatives have left us with very few options in terms of how—

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

Mr. Speaker, I rise on a point of order. With respect to the member, I think if a member is quoting the government House leader, he should attribute that quotation to the House leader.

[The Assistant Deputy Speaker, Anthony Rota]

I believe that is debate. I will let the hon. parliamentary secretary continue.

[Randy Boissonnault, Liberal, Edmonton Centre, AB]

Mr. Speaker, returning to the matter at hand, when we are talking about the Canada pension plan, what does the agreement in principle mean for Canadians? As my hon. colleagues may not like to understand but is true now that so many provinces have agreed, once fully in place, the CPP enhancement would increase the maximum CPP retirement benefit by about 50%. The current maximum benefit is $13,110 and in today's dollar terms the enhanced CPP would represent an increase of nearly $7,000 to a maximum benefit of nearly $20,000.

What do my hon. colleagues across the way have against making sure that Canadians have a more secure retirement? Enhanced benefits would accumulate gradually as individuals pay into the enhanced CPP, and young Canadians just entering the workforce would see the largest increase in benefits.

To fund these enhanced benefits, annual CPP contributions would increase modestly over seven years starting in 2019. For example, an individual with earnings of $54,900 would contribute about an extra $6 a month in 2019. By the end of the seven-year phase-in period, contributions for that individual would be about an additional $43 per month. This would make the CPP more relevant and more effective and would ensure that we are lifting millions of Canadians out of precarious financial positions and out of poverty.

To ensure that eligible low-income workers are not financially burdened as a result of the extra contributions, the Government of Canada would enhance the working income tax benefit, an existing benefit that is designed to help keep people in the workforce and encourage others to join it. One of the advantages of this CPP agreement is that it would significantly reduce the share of families at risk of not saving enough for retirement and the degree of under-saving that is prevalent in Canadian society.

The Canada pension plan will always be there for Canadians. It helps to fill the gap for those who do not have a workplace pension plan, and it is portable across jobs and provinces.

It is important also to make a comment on survivor benefits, which are monthly benefits that are provided to the surviving spouse or common law partner of a deceased contributor and a monthly benefit to their dependent children. It is also important to mention the death benefit, a one-time lump sum benefit usually paid to the estate of the deceased.

I must congratulate my colleagues in the government benches and their colleagues in the provinces, as stewards of the CPP. These changes are important for the future of Canada and for Canadians.

It is also important to share with the House why it is important for us to take these bold moves to enhance the CPP. Some 1.1 million families approaching retirement are not saving enough. My mother recently turned 65, and she is fortunate enough to have saved enough with my father over time, and the CPP adds to that income. However, we know from Statistics Canada data that 1.1 million families approaching retirement are not saving enough, and that will put them in a precarious financial position.

It is important for us to respond so that the CPP will not simply drift into irrelevance over time. Middle-class Canadians, as we know, are working harder than ever, and many are worried that they will not have set aside enough money for their retirement. Young Canadians in particular are facing the unique challenge of securing adequate retirement savings at a time when fewer can expect to work in jobs that historically would have paid pensions over time. The question remains as to how to close that gap, though, and that is what the Minister of Finance and colleagues in government and provincial colleagues have come to agree to with this agreement.

The Department of Finance has examined whether families near retirement are adequately preparing for retirement. Based on household income and wealth data from the 2012 survey of financial security, families are considered to be at risk of under-saving if their projected after-tax income at retirement does not replace 60% of their pre-retirement after-tax family income.

Some 1.1 million Canadians are approaching retirement without having saved enough for a secure retirement.

I must congratulate the Minister of Finance, his parliamentary secretary, and his provincial counterparts for having made predictions and examined demographic and statistical data in an effort to ensure that retired Canadians can retire with dignity.

Middle-class families without workplace pensions are at greater risk of under-saving for retirement, and I know what this is like. I grew up in a middle-class family in Morinville, Alberta. When my dad had his first heart attack at 39, I was 16, and we felt immediately the effects of that kind of hardship on a family. If that happens later in life and people do not have enough money to save, the CPP, in many cases, is a life and family saver.

It is estimated that 33% of families nearing retirement age who have no workplace pension plan assets may be at risk of under-saving for retirement, compared to 17% of families who have workplace pension benefits. Overall, families in the lowest income group were found to have the lowest risk of under-saving, as OAS and CPP benefits provide relatively high income replacement at this income range. At the same time, lower-income families are likely to require a higher level of income replacement than other income groups to maintain their pre-retirement living standard.

This is the kind of foresight and the kind of planning that Canadians elected us to provide. The Minister of Finance and his colleagues, the ministers of finance of the provincial and territorial governments, also understood that this was a critical time for Canadians.

We are living longer and healthier lives. Longer life expectancies increase the level of savings required at retirement to maintain comparable living standards. At some time in our past, at 46 years old, I would be considered already an old man, but I feel very young. Statistics say that I will live well into my 80s if I maintain a healthy lifestyle and understand the consequences of other behaviours. I want to be able to live a long life, and Canadians are living longer lives, and so we have to make sure that our social programs, like the Canada pension plan, provide for this longer life expectancy.

Overall participation in private sector RPPs has declined since the 1970s, and there has been an ongoing shift in defined benefit contributions. These trends of declining workplace pension plans mean that Canadians on the verge of retiring have fewer options to plan as they live into their 80s and 90s, and we know historically that more Canadians are living to 100 than ever before.

Economic conditions since the 2008-09 recession pose a particular risk that young Canadians may be moving from job to job and may not have the kind of safety net that other Canadians in past generations enjoyed. This agreement in principle to enhance the CPP is smart public policy. The income replacement level would be increased to one-third of eligible earnings, and there would be a gradual seven-year phase-in beginning on January 1. We would increase the working income tax benefit, and tax deductibility has also been factored in.

This is why Canadians voted for real change. This is the kind of work that, within the first year of our mandate, we can all be proud of, because we have ensured dignity and retirement savings for millions of Canadians. I am proud to represent the residents of Edmonton Centre and to stick up for this kind of smart public policy.