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

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I find it laughable, listening to the debate. The members opposite in the government are asking what we have against seniors.

Under our government, we had the largest increase to the GIS in 25 years. We also introduced income-splitting for seniors. We introduced the tax-free savings account, which, I might add, 11 million Canadians participated in, mostly low to middle-income earners.

We had a minister of seniors, which we have yet to see the government even focus on. We took 380,000 seniors off the tax roll, completely.

What the government is proposing with the CPP and also with the carbon tax is going to hurt the job creators of Canada. We are already seeing a deficit in jobs. We have hundreds of thousands of Canadians out of work.

Does my hon. colleague feels the same as us, that the government is clearly out of touch, has no idea what it is doing, and is making it up as it goes along?

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Speaker, I have to agree that the government is out of touch with small business.

I came here with a background in small business. I understood what it took to meet payroll every two weeks, every month, and to worry if there would be jobs for my employees next months, six months down the road, and so on.

The last thing I needed as a business owner was more taxes, more payroll taxes, and higher costs for my business. Everything I have seen promised by the government for small business has been chopped, and everything else it is doing is attacking small business.

[Eva Nassif, Liberal, Vimy, QC]

Mr. Speaker, I am pleased to speak today to Bill C-26, which seeks to improve the Canada pension plan. This plan is a recognized and effective part of Canada's public retirement income system. Since its inception and implementation in 1965, under the Liberal government of Lester B. Pearson, it has provided contributors who reach the age of eligibility regular retirement income payments in order to help them cover living expenses during retirement, and to guarantee the financial security of hard-working Canadians.

Together with old age security, the CPP provides the foundation for our publicly funded system for retired Canadians that allows people and their families to hold on to their savings while living comfortably, without the insecurity that comes with financial instability.

As all hon. members may know, the Government of Quebec manages its own retirement plan, the Régime de rentes du Québec, which is akin to the Canada pension plan. The improvements that Bill C-26 makes to the Canada pension plan are an investment in the future.

The bill presents a comprehensive plan that will provide an appropriate and realistic increase in benefits for contributors when they become eligible. This will have a positive and lasting impact on the financial security of Canadian retirees in the coming decades.

The proposed enhancement, which will be implemented gradually and through the creation of a new separate account to manage additional funds for retirees, will guarantee a stable and smooth transition, without imposing a financial burden arising from unmanageable financial expectations.

As indicated in the bill, the changes will be administered by the Canada Pension Plan Investment Board, which will have the authority to prepare financial statements concerning the amounts managed, which consist of the additional contributions and increased benefits.

Last year, Statistics Canada announced that the number of seniors in Canada, people aged 65 years and older, had exceeded the number of children aged 0 to 14 years. In fact, on July 1, 2015, seniors represented 16.1% of Canada's population, compared to 16% for young children. There are now about six million seniors in Canada and this number is expected to grow by 50% in the next 21 years.

In my riding of Vimy, which is located in the heart of Laval, Quebec, there is already a large population of seniors. Since the population is aging, it is vital that we improve the existing mechanisms that, to our knowledge, effectively provide the necessary financial assistance in retirement.

We have the data in front of us, and we know which way the wind is blowing. Bill C-26 will gradually improve the existing system to help meet the needs of our aging population.

Some opposition members believe that this is just another tax hike and that there are better retirement savings options available to individuals. To say that this is a tax hike is completely absurd, and while it may not be completely false to say that there are better retirement savings options, that is true only within reasonable limits and under very specific circumstances.

Members of the official opposition talk up the tax-free savings account, saying that it could and should be the main means by which low-income and middle-class Canadian workers save for retirement. According to the Conservatives, the higher the annual TFSA contribution limit, the more low-income and middle-class Canadians will benefit.

Let us be realistic. The previous government increased the TFSA limit to $10,000. Does anyone really believe that low-income or even many middle-class Canadians can afford to contribute that much to their TFSA?

The TFSA is a mechanism that can be used effectively to invest and save depending on a person's income threshold, but make no mistake, the $10,000 limit benefited only Canadians with very high incomes who were able to use their TFSAs to get a tax exemption. The public purse paid the price of that measure.

The people that TFSAs were supposed to help are the very same ones who were forgotten when that ill-considered increase was introduced. It would have been better to properly address income inequality by optimizing and using other mechanisms enabling low- and middle-income Canadians to keep more money in their pockets and enjoy a comfortable retirement.

We have heard people say that low-income taxpayers are able to contribute the maximum to their TFSAs. Does anyone really believe that low-income workers and certain middle-class workers who support themselves can pay all of their bills, eat reasonably well, pay off their debts, and splurge on something every now and then and still deposit $10,000 per year into a savings account? That would be really disingenuous, and it would be a pretty mean thing to do to the people we are trying to help.

There is also the criticism that this would do nothing to help seniors now. This argument is not only missing the point of the legislation entirely, but fails to recognize what the government has already done for seniors, both through enhancements to existing programs and fixing the mistakes from the previous government. The first budget made provisions to restore the age of eligibility to the OAS and enhance the GIS for low-income seniors, again, putting money directly in the pockets of those who need it most.

This legislation does not do anything immediately, because that is not its purpose. We have already made changes for the interim to help offset the rising cost of living for our most vulnerable seniors. Therefore, to say that Bill C-26 would do nothing for seniors now, has very little to do with the nature of this debate to begin with. This is a long-term project that would ensure financial security of our seniors for decades and has nothing to do with other adjustments to social security we have already made. The reality is a significant decline for a large percentage of employees in Canada who had access to a registered pension plan through their jobs. It is the shortfall in middle-income retirement planning that is opening up as a result of disappearing corporate pensions.

CPP reform is designed to address these shortcomings. The current maximum amount of income covered by the CPP is $54,900. An enhanced CPP would see that maximum raised to $82,700 by 2025. It would also raise the annual payout target from 25% of pre-retirement earnings to 33%. For retired Canadians, this could represent thousands of dollars in take home pension income.

With Bill C-26, we are planning for the future. We are ensuring the well-being of retirees whose other savings options were curtailed by the elimination of private employer-sponsored pension plans. We are offsetting the rising cost of living by increasing the pension benefits that Canadians receive from a quarter of their income to a third.

We are preserving a certain standard of living for all families so that everyone can live with dignity in retirement. Most importantly, our affordable and sustainable approach will ensure that today's prosperity lasts.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Speaker, we certainly agree that there has to be a change to the Canada pension plan. I certainly support that. However, on the last couple of questions I have asked, it seems as if the members over there are saying that they cannot speak on behalf of the government. I have a news flash. They are the government.

What really bothers me is that we agree with them that the enhancements need to be done for our future, for our children. However, there is a drop-out clause in the existing CPP and it affects women who are raising their children people with disabilities so they are not penalized. We call that a “drop-out rate”. However, it is omitted in the enhancements. That would cause a penalty for something we have always looked after. It is either an honest mistake, or it is omitted purposely.

Therefore, will the member solely support our amendment that will come forward at committee, bringing those drop-out periods into the enhancements? It is a simple yes or no. It is not “I can't speak on behalf of the government”. I would appreciate that.

[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, Liberal, 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 .

Resuming debate, the Parliamentary Secretary to the Minister of Canadian Heritage.