This bill was last introduced in the 42nd Parliament, 1st Session, which ended in September 2019.
Bill Morneau Liberal
This bill has received Royal Assent and is now law.
This is from the published bill.
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.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.
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.
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Mr. Speaker, I thank my friend for his speech. I know he comes from the greater Sherwood Park area, as do I.
I want to ask the member a process question, because he talked at the beginning about some of the back and forth that has happened.
I think the Liberals recognize and we recognize that this is an important debate. The fact that we would significantly increase payroll taxes for Canadians, for Canadian businesses, would have a major impact on our economy, which is why I think it is important that every member who wants to address this vital debate have an opportunity to do so.
The government has pointed out that one-third of Conservative MPs have spoken to the bill, as if that is enough. Clearly, there are still government members who want to speak to the bill, yet the Liberals are shutting down debate. This is what we have been working to oppose. We have been working to oppose their effort to shut down debate on something that is vital and so fundamental to this country.
I would ask the member to maybe just correct the record, because he claimed that we were trying to shut down the House. In fact, it was the government that shut down routine proceedings. It was the government that called two votes today. We did not call any votes today. He may want to at least correct what he said to some extent, because I know it is exactly the same statement that other members, including the House leader, have read out, but it simply is not factual.
This is an important issue. This is going to have very negative impacts on job creators and employees in my riding, and I know in his riding, which is a riding that very much is hurting as a result of the policies of the current government, as are many of Alberta's ridings.
Could the member clarify that, recognize the importance of this debate, and explain why the government is shutting down debate on this important measure?
Randy Boissonnault Liberal Edmonton Centre, AB
Mr. Speaker, I think it is important to note the important and smart math that is in the plan to make the Canada pension plan more robust.
By my math, 60 MPs have already spoken to this bill, including almost 35 Conservatives, one-third of their caucus, and we have had a robust debate on this matter. Procedural tactics are not going to stop this government from getting work done on behalf of Canadians.
We are talking about 1.1 million Canadians, many of whom live in Strathcona County, Morinville, and Edmonton. This is important work that we need to do now. We cannot wait for endless debate on a matter that is so important when we have to get work done on behalf of Canadians.
Scott Duvall NDP Hamilton Mountain, ON
Mr. Speaker, I certainly agree with the member that the CPP has to be changed. It is time. We have to make sure our children are looked after. There was a flaw in the CPP legislation, and it was changed, I believe, in the 1970s. Women were being penalized for leaving the labour market to raise their children, and when it came time to collect their pensions, that was used against them because they were not paying into it during those years.
At that time, the Liberal government, under Pierre Trudeau, fixed it by adding a dropout provision to make sure they would not be penalized, and it has been working ever since. He did the same thing for people with disabilities. They were out of the workforce through no fault of their own. They could not work, but were also penalized. The fix has been working well. For the last three days, we have been asking why this was omitted in the enhancement.
I will ask the hon. member this. Why are the Liberals so proud of bringing forward a bill that proposes an enhancement to the CPP that would help a lot of people in the future, but takes a step back on the rights of women and people with disabilities? It is a step backward.
Randy Boissonnault Liberal Edmonton Centre, AB
Mr. Speaker, I thank my hon. colleague for his question and his clear interest in this important set of amendments to the Canada pension plan and what it would do for workers, people with disabilities, and working women and men.
What is important to note is that the Minister of Finance, after negotiating with his colleagues across the country, has the NDP government in the province of Alberta on board. As a member of the House, I would like to see robust discussion of this plan at committee. That is the opportunity for us to take a look at these kinds of issues, so they can be on the official record and we can advise colleagues from coast to coast on the changes that could be made in further agreements.
Kevin Waugh Conservative Saskatoon—Grasswood, SK
Mr. Speaker, this is my first opportunity to speak to Bill C-26. If I am one of the 36 on this side, I am privileged to extend the debate here today in the House.
The Liberal government continues its assault on hard-working Canadian families. If it is not the carbon tax, it is the CPP tax hike from 9.9% to 11.9%.
What does this mean for hard-working Canadian families? It means they will have less money in their pockets today. They will have less money in their pockets to maybe purchase their first home. They will have less money in their pockets to maybe go on a trip this winter. The economy will suffer because of this. This increase, as we all know, could put thousands of jobs at risk.
I will go further on that. It is another tax on small businesses. The Liberals have broken their clear promise to small businesses to proceed with their reduction in the small business tax rate to 9% in 2019. This decision will cost small firms over $900 million per year as of 2019, according to the CFIB. Now businesses will have to pick up the increase in these CPP premiums. Premiums will rise up to $2,200 per worker, split between the employer and the employee. Seventy per cent of small business owners totally disagree that the proposed CPP increase is “modest”, as the government calls it. Ninety per cent of small businesses think it is important to have public consultations before any deal at all is finalized.
The Liberal government talks about being engaged with Canadians. Then why does it not sit down with the business community of this country first before going ahead with this? Yes, it has said before that it has consulted with the territories and the provinces, but perhaps it should first talk to the businesses that will be most affected by this CPP increase.
Even with the low Canadian dollar, the Liberals have generated 20,000 fewer manufacturing jobs in the country. In my province of Saskatchewan alone, we lost 4,000 jobs this August from the same period last year. The trend continued. Six thousand fewer people are working in my province this year than they did the year before. The October numbers are out, and they do not paint a pretty picture. Ten thousand fewer people are working in my province today than they did in 2015.
Our previous government led the way for Canadians to save for their future. Canada's savings rate has climbed, as we all know, from 7.7% of pay back in 1990 to almost double that today, at 14.1%. According to Statistics Canada, the share of Canadian seniors living on low income has dropped from 29% in 1970 to 3.7% today. That is still too high. We would all love to see it at zero. However, that is still among the lowest rates in the world today. Eighty-three per cent of Canadian households are on track to maintain their current living standards for retirement.
Let us be honest that each and every family has different views on retirement and that this, too, is up to the family.
The TFSA, put in by our previous government, was simply a fantastic tool for investing for retirement, or even for someone today who is one of the 10,000 in my province who were laid off . Many Canadians are enjoying these benefits. We wanted to increase the contribution limit to $10,000, knowing that it would give Canadians an incentive to save for the future, but the Liberal government, as we all know, rejected that idea.
I believe that the CPP tax hike is really an insult to hard-working Canadian families. Our previous Conservative government believed that Canadian families were able to manage their own money. We had confidence. Obviously, the Liberal government does not trust the Canadian family.
What is concerning to me is that in my province of Saskatchewan, since we have had downturn, more than half of the people are on the verge of not paying their bills. A report by Meyers Norris Penny shows that 64% of people in my province are now living within $200 a month of not being able to pay their bills or their debts. The Liberals can talk about the CPP increase starting at $6 a month and increasing to $33 or $43 a month, but think about these families who today are within $200 a month of not meeting their bills. Thirty-four per cent of people in my province say they already do not make enough money to cover their bills and 57% of people are concerned about their current level of debt—again a jump of 14%.
May I remind the Liberals of laid-off workers. Their families are not the only ones hurting. The slowdown has trickled down to everyone in my province, including the retailers, the restaurants, and virtually every business and every sector. This is why the CPP tax would have a major effect on everyone in my province, the 1.2 million who live there.
We all know that the small- and medium-sized businesses drive the healthy economy, but the additional CPP tax on them could have major impacts on their hiring decisions. We have already seen that. In the past year, the Liberals have not created one full-time job in this country. We wonder about this. The millennials in this country are now upset, as they should be, about the sunny ways of the finance minister, who was recently talking about the job turn and saying not to expect any long-term employment at all. We have witnessed massive increases in part-time jobs at the expense of full-time employment. This will further erode the middle class in our country.
Employees have four avenues of retirement. We have pensions, the current CPP, the improved GIS, and the OAS. Plus, let us not forget that we have other assets like inheritance, life insurance, and other financial assets along with the TFSAs. The value of housing has certainly gone up over the last 10 years, more so in Vancouver and Toronto markets, so that when the baby boomers die, their bequests will give many millennials a healthy financial backing.
We have talked about the CPP tax increase. I am going to discuss the carbon tax now because it is another tax on employees and employers.
In my province of Saskatchewan, we have been very vocal about this carbon tax. I am going to invite the politicians in this House to fly over my province, and especially over Buleya, Saskatchewan. On the field, farmers have created circles with the letters c-a-r-b-o-n t-a-x. These farmers have gotten together in their fields and have drawn a circle around those letters and a line through them, saying no to a carbon tax.
I hope all of the farmers in our province do the same for the CPP tax increase. We do not need it in our country at this time. We all want to have money for retirement, and increasing the CPP premium rate from 9.9% to 11.9% starting in 2019 would have a big effect, not only in my city and in my province but also in the entire country.
Ken Hardie Liberal Fleetwood—Port Kells, BC
Mr. Speaker, I always enjoy a sportscaster's view of the world and topics as they are, but I wanted to focus on putting a price on carbon.
As the member may know, that fine old socialist Gordon Campbell brought in a price on carbon in British Columbia in 2007. Cleverly, he said that they would take the revenue and give it back to the people via tax cuts. What that did was provide a couple of incentives. First, if people wanted to avoid paying more in taxes, they could just simply put out less carbon, such as by having a smaller car or by taking public transit more. He also exempted the agriculture sector so that there was flexibility and would not be an impact on the cost of food. Today, British Columbia has the lowest tax rate in the country and the best growth record. Can the member not see that applied properly, a price on carbon could produce very good results for Saskatchewan?
Kevin Waugh Conservative Saskatoon—Grasswood, SK
Mr. Speaker, the premier of my province has been the most vocal premier of any province or territory in this country. He does not want this carbon tax. He does not want it for several reasons. It will cost 1.2 million citizens in my province money, up to $2,600 per family. That is not revenue neutral. I have a brother in British Columbia where gas prices continue to go up because of the carbon tax. Therefore, I think this is very bad news for the province of Saskatchewan, as we have heard that from our premier on down.
Bill Blair LiberalParliamentary Secretary to the Minister of Justice and Attorney General of Canada
Mr. Speaker, through you, I would like to seek some clarification on the comments made by the member regarding the efficacy of the TFSA. He mentioned quite passionately the number of families in his area who are living very close to the poverty line and who are within only $200 of being unable to pay their bills each month, which I also think is a concern across Canada. By my simple calculation, it would take such families nearly 50 years to raise the money to make the maximum contribution to the TFSA.
We have also heard from other speakers today that almost 11 million Canadians use the TFSA. It has been my experience in the House that sometimes statistics are used not unlike a drunk uses a lamp post—more for support than illumination. However, I would like to take this opportunity to add a few more statistics so that we might have greater clarity around the use of the TFSA. There are 28 million Canadians who were eligible to make a contribution to it, but only 1.9 million Canadians made the maximum contribution. That is less than 7%. Therefore, I would ask the member opposite this. What about the other 93% of Canadians who were unable to take advantage of the maximum contribution to the TFSA that he has proposed?
Kevin Waugh Conservative Saskatoon—Grasswood, SK
Mr. Speaker, seniors will not benefit at all from the CPP increase right now. The Liberals will bring this in over 40 years, as we have heard.
Seniors in my riding have taken advantage of income splitting and the TFSAs. We increased the GIS. That government has followed through. The report I have here shows that from 1970 to today, poverty levels have really come down in this country. We increased the withdrawal limit up to $10,000 for workers who get laid off, allowing them to withdraw that amount at any time. Now, because of the current government's decision to scale that back, others are standing in line for EI benefits instead.
Pat Finnigan Liberal Miramichi—Grand Lake, NB
Mr. Speaker, Canada is a country built upon optimism, often in the face of seemingly insurmountable challenges. However, the promise of a better life has been eroded in recent decades and the reality is that many middle-class Canadians have had their confidence shaken.
While our economy continues to grow, middle-class Canadians are struggling. Many Canadians are working harder and longer as the cost of living continues to rise. Middle-class families do not feel they are getting ahead. It is time to recapture the hope and optimism for the future that existed in previous generations.
We must embrace the spirit of those early founders and build upon their legacy by providing the same opportunities for advancement and mobility that they once unlocked. We need to take the next steps to help Canada harness the tremendous growth potential that we have in our great country.
A strong economy starts with a strong middle class. Canadians understand this and so do we. That is why building an economy that works for middle-class Canadians and their families is our top priority.
A strengthened middle class means hard-working Canadians can look forward to a good standard of living and better prospects for their children. When the middle class thrives, we all thrive.
Investments are needed today that will strengthen and grow the middle class. We know Canadians, and in particular younger Canadians, are concerned about whether they will be able to enjoy a secure and dignified retirement. That is why our government committed to working with all provinces and territories to enhance the CPP to ensure that future generations of Canadians could count on a stronger public pension system in their retirement years.
In June, the Minister of Finance met in Vancouver with provincial and territorial finance ministers and they reached an agreement to strengthen the Canada pension plan.
First, the agreed upon plan will increase the share of their annual eligible earnings Canadians will receive in retirement through CPP from one-quarter to one-third. For example, if they make $50,000 per year over their working life, they will receive under this agreement about $16,000 per year in retirement instead of $12,000.
Second, it will increase the point at which this new one-third replacement rate maxes out by 14% in 2025. For most Canadians, these significant increases in the Canada pension plan retirement benefit will come from only a 1% increase in their premium.
For those higher income Canadians with earnings above the current maximum pensionable earnings level, a separate contribution rate of about 4% will be introduced, starting in 2024, that will provide them with the opportunity to save at a rate more in line with their higher income.
The agreement will also provide a tax deduction for employees' new Canada pension plan contributions. Providing a tax deduction, as opposed to a tax credit, will avoid new Canada pension contributions increasing the cost of saving for Canadians.
Under this agreement, increases to the working income tax benefit to roughly offset incremental CPP enhancements will mean eligible low-income workers see little to no change in their household budget, while still ensuring these workers see higher benefits in retirement.
In addition, we have ensured that the proposed changes are affordable for business by introducing a long and gradual phase-in starting in 2019, which will allow more time for business to adjust. This is the responsible way to ensure that business and workers have time to adjust to the additional contribution associated with the enhanced program.
The moderate and phased-in approach agreed upon by Canada's finance ministers will have a net positive impact in the long term and that is what is important about our plan. Saving for retirement has always been a challenge and unfortunately those numbers are not improving.
In 1977, 43% of Canadians were covered by a secured defined benefit workplace pension. By 2012, that figure had fallen to 27%. The situation in the private sector is even more stark, with the level of defined benefit coverage down to a mere 11%. This means that only a few Canadians with workplace pension plans will retire with the security of knowing exactly how much retirement income they will be getting each month. Everyone else's workplace pension is dependent on market performance. That was why it was so important for our government to work with the provinces to enhance the CPP.
The CPP enhancement is about helping today's young people and future generations of Canadians, and it complements a solid set of voluntary private retirement savings options available to Canadians through tax-assisted vehicles, such as the registered pension plans, registered retirement savings plans, pooled registered pension plans, and tax-free savings accounts.
In addition to our co-operation to enhance the CPP, our government is working with our provincial partners to support low costs for Canadian financial consumers who choose to make PRPPs a part of their retirement savings plans through our recent multilateral agreement on PRPP.
By making these changes, we wanted to complement private savings and pensions in a way that would make our retirement savings system even healthier and more effective.
These changes to the CPP are about hope and optimism. They are about middle-class Canadians, and those working hard to join them. They are about taking a fundamentally new approach and charting a new course for Canada. We are ensuring that investments needed to support the economy will lead to long-term growth that strengthens the middle class.
Canadians are the real drivers of change, and their voices will continue to guide the government as we work together to build the Canada of the 21st century.
Ziad Aboultaif Conservative Edmonton Manning, AB
Mr. Speaker, the government and the member opposite never mentioned the payroll tax as a result of the bill. It would negatively affect Canadian businesses across the country.
My question is twofold. Does the member opposite know how many full-time employees there are in Canada right now? If yes, has he made the calculation on how much money would be collected on an annual basis as a result of what the Liberals call the expansion and what is in fact a tax?
Pat Finnigan Liberal Miramichi—Grand Lake, NB
Mr. Speaker, as a small business operator, when my staff members retire, I can see the income they will be getting for the next few years will not be sufficient. I really welcome this. It is going to be an even, spread out contribution by not only the employee but also the employer, and that is a fair way to do it.
Our forefathers had the vision 40 years ago, so we can retire now today. We need to plan ahead. I am confident that most employers will see a benefit of both the employee and employer contributions for the secure retirement of our future pensioners.