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

[Adam Vaughan, Liberal, Parliamentary Secretary to the Prime Minister (Intergovernmental Affairs)]

Mr. Speaker, I listened to the member opposite, and my fear is that his parents may have read way too much Ayn Rand to him as a child as a bedtime story. Failing that, perhaps he is on economic steroids and a drug test might be in order.

I heard a description of the CPP as a tax, which it is not, and then I heard that low-income families and low-income wage earners are going to be taxed at an unfair rate and will not be able to save as a result.

I realize that the member may have been paying into CPP for only a short period of time, but is he aware that the CPP is scaled to income and that low-income Canadians who do not have the capacity to save benefit the most from this program, particularly when they retire? Under our government, there is a 10% increase for single seniors, the poorest group of seniors. They are going to get that money immediately as a result of the steps we have taken to make sure that people can retire with dignity in this country.

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

Mr. Speaker, I was worried for a moment that my friend was channelling his inner Donald Trump, but fortunately, he stopped after the drug test suggestion and did not go any further. It was interesting that he drew from some of my comments about virtue ethics that I have an interest in Ayn Rand. He might want to reflect on the philosophical differences between those two traditions.

More to the point, what I emphasized in my remarks was the choice we have between the mandatory and voluntary routes. We favour the voluntary route. What I said specifically about low-income Canadians is that the cuts the government made to the tax-free savings account have a disproportionate negative impact on low-income Canadians. I shared some of those numbers very clearly. Those who are of modest incomes are more likely to use tax-free savings accounts because of the differential impact of RRSPs, on the one hand, and TFSAs on the other. One of the stats I quoted was that more than half of those who maxed out their tax-free savings accounts are making less than $60,000 a year. I see the member shaking his head. I encourage him to go to fin.gc.ca. The numbers are there.

[Cheryl Hardcastle, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, I listened to the comments the hon. member made, and I am having a hard time not having an emotional reaction, because it is very insensitive and an affront to suggest that seniors have made a choice to struggle in retirement. As a matter of fact, we have a regulatory regime that requires that certain payments be taken out of our paycheques, and we need to have the protection of deferred wages legislated. I will tell him why.

Some of the future seniors who will be struggling are making choices right now to remove money from those same savings accounts to help their children with student loans, because it is brutal, when it comes to collecting those student loans, when people are in the workforce. The way the member has portrayed the situation is very unrealistic.

Does the member understand that the GIS fund is actually taxpayer funded and that the more seniors who do not need an income supplement, the better it is for taxpayers?

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

Mr. Speaker, I certainly appreciate my colleague's contributions in this House. With greatest respect, I would ask her to check the record in terms of my speech, because I at no point said that people make a choice to struggle or anything remotely similar to that.

The point that is perplexing to me is that members from the government and the NDP say that people are struggling to save for their retirement, so let us take more of their money away and do it for them. I do not think that respects the autonomy of individuals, whether they are doing well or whether they are not. I do not think it respects their autonomy or their own capacity to plan for their own future.

I think we are better off using tax-free savings accounts, again, a savings vehicle that is more likely to be used by those who are of modest means. We are better off doing what our government did, which was increase the guaranteed income supplement. We made some of these changes to try to address the issue of affordability for seniors, and I listed the many substantial changes the previous government made to make life more affordable for seniors.

What is at issue is the lack of respect for the autonomy of those individuals by individuals in other parties. They think that if individuals are not saving enough, the solution is for the government to take more of their money away. I do not think that is a solution. If individuals are not doing well, we should not be taking more of their money away. In fact, we should be looking for ways to pass resources back to them. That is exactly what we are better off doing. That was the proposal we had. That is what we had in place with the expanded form of the tax-free savings account.

[The Speaker, Liberal, Geoff Regan]

The time for questions and comments will resume after question period. There will be four minutes remaining.

The House resumed consideration of the motion that Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, be read the second time and referred to a committee.

[The Speaker, Liberal, Geoff Regan]

There are four minutes remaining in questions and comments after the speech for the hon. member for Sherwood Park—Fort Saskatchewan.

The hon. member for Laurentides—Labelle.

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

Mr. Speaker, I could not help but notice that during the member for Sherwood Park—Fort Saskatchewan's patrician lecture on virtue, he seemed to believe that people who did not have the income to put money aside had something to be ashamed of, that people who did not have the revenue to take advantage of the voluntary deferred revenue programs such as RRSPs or TFSAs lacked virtue, that to have virtue one required at least some wealth, and that those who did not have any disposable income should be judged by how they spent that same disposable income.

I am happy the member has never had to choose between his housing and his retirement, between his food and his medication, between his education and his immediate need for income. Those problems may not be his reality, but I can assure him that this represents the daily life of many virtuous Canadians.

Could the member for Sherwood Park—Fort Saskatchewan confirm that he believes that someone who simply does not have the revenue to put money aside has no virtue?

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

Mr. Speaker, it is really shameful that when we try to engage in a substantive discussion of issues, the member across the way would so flagrantly misstate what I said in questions. I do not know if I should add anything to that. The record is very clear in what I talked about.

I talked about a choice between giving people the means to voluntarily control their own circumstances and the benefits of that situation and a situation in which the government tried to take away the means for people to control their own circumstances. I advanced the argument that giving people more control over their circumstances was good, not only because they would be able to leverage their greater knowledge of their circumstances for their own good, but also because it would provide them with the opportunity to practise and to deepen virtue.

That is not in any way a function specifically of a person's wealth. It is a question of whether these decisions are made by individuals or by governments. I specifically said that for those who were struggling, the better alternative was for the government to cut taxes to give more resources to those who needed it.

I am sorry to say this, but the member should really be ashamed for asking a question that way, which so deeply misstates the speech. He would be better off to listen and to pose questions that reflect what was actually discussed.

[Jamie Schmale, Conservative, Haliburton—Kawartha Lakes—Brock, ON]

Mr. Speaker, I appreciate the words of my friend from Sherwood Park—Fort Saskatchewan.

What we have heard on the other side is that government knows best; that is big government telling people to give it their money, that it knows best. When we give Canadians options, they will make choices that best reflect their situation. However, taking away methods for Canadians to save and taxing them more are not good policies.

I wonder if my friend from Sherwood Park—Fort Saskatchewan could also comment on this. What happens if people pass away before they collect CPP, they get zero. That is a big issue, especially when they want to pass on an inheritance or their savings to others. Maybe the member could comment on that.

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

Mr. Speaker, those are all very good points from my colleague.

This is one of the advantages of the voluntary savings vehicles about which I talked. It remains an individual's money. Individuals have no disincentive to put money aside and save it because they know that money will be theirs for them to use in the future or to pass on to someone else.

That is another very good reason why the voluntary approach is a better approach for society, as opposed to the government knows best, government takes it away and gets to spend it, approach.

[Jean-Yves Duclos, Liberal, Minister of Families]

Mr. Speaker, I would like to share my time with my colleague from Mississauga East—Cooksville.

I am delighted to be here for this very important, and I would call it historic, debate. The changes our government is proposing to enhance the Canada pension plan are important to every working Canadian and would have a lasting impact for generations to come.

Not only are the changes important, they are needed. We know that today one in four families nearing retirement, that is 1.1 million families, risk not saving enough for retirement. This is even higher for middle-class families. A third of middle-class families without workplace pension plans are at a risk of not saving enough for retirement. It is estimated that the proposed enhancement debated today, once fully in place, would reduce the share of families at risk of not having adequate retirement savings from 24% to 18%. This is close to 300,000 Canadians who would be lifted out of post-retirement income insecurity.

For families at risk, it is estimated that the average gap between retirement income and income required to replace 60% of working income will decrease by more than half, declining from $8,300 to $3,700, which represents a substantial increase in income security for the remaining 18% of retirees.

This enhancement will be gradually implemented over seven years, beginning in 2019. Retirement benefits, which will gradually increase as people contribute to the enhanced CPP, will be funded by a slight increase in annual contributions over seven years. The slight and progressive increase in CPP contributions will minimize the impact on employers and employees and give them time to adjust.

I want to remind the House that 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 of the average rate among 25 countries in the Organisation for Economic Co-operation and Development, or OECD, that have similar public pension plans.

Even with the CPP enhancement, this rate would be just over half the average OECD rate. Accordingly, a person who earns $50,000 a year would contribute approximately $70 more per year, or $6 per month, in 2019. By the end of the phase-in period, those same people would be contributing $475 per year, or $40 extra per month to benefit from the enhanced CPP.

By strengthening the Canada pension plan, workers would receive more money from their retirement pension. The amount would increase from one-quarter of their eligible earnings to one-third. This means a person making $50,000 a year over a 40-year career would receive $16,000 each year in retirement instead of the current $12,000. That is $4,000 more each year right in the pockets of workers.

A more modest earner, one averaging about $35,000 a year, would receive almost $3,000 more a year above the $8,500 currently provided by today's CPP.

In addition, the enhancement would increase the point at which a person would stop making contributions by about 14% in 2025. This increase in eligible earnings would further increase the retirement benefits that all of these Canadians would receive.

This enhancement will give more Canadians access to a public pension plan. It will also give low-income workers more incentive to work because they will receive higher benefits. Low-income workers will benefit in the short term because they will have more disposable income, and in the long term because they will have a better retirement. A total of 6,000 low-income workers will be lifted out of poverty in the short term.

Additional great news is that our younger workers would see the largest increase in their retirement benefits. Younger Canadians often find it difficult to save in safe, reliable, and efficient ways. Many are working in jobs that do not have a company pension.

Workers in the middle of their careers or nearing retirement would also benefit from enhanced CPP as the increased contributions made in 2019 and beyond would go toward an enhanced retirement pension.

However, the Canadians who will benefit the most from this enhancement are those who do not currently have access to a private pension plan. The advantages of public plans are considerable because they effectively protect against financial and longevity risks, they are transferable between businesses and provinces, and they are administered at a low cost to businesses and workers.

The enhancement of the CPP is therefore an inclusive policy that is good for the middle class for several very important reasons. This enhancement offers all Canadians the opportunity to benefit more fully from a public plan. It increases low-income Canadians' incentive to work. It reduces poverty among low-income workers, and it improves the income security of our seniors.

We believe that all Canadian workers will benefit from this enhancement, particularly the middle-class and those working hard to join it.

I invite my colleagues to enthusiastically support this historic opportunity to enhance the Canada pension plan, a measure for our country and all Canadians.

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

Mr. Speaker, when we look at the whole package in dealing with seniors, today we are talking about CPP and this historic agreement of the minister and this government with other provincial jurisdictions, which is good for CPP and good for future pensioners. We also saw through the cabinet issue dealing with the guaranteed income supplement that there is a substantial increase, especially for Canada's poorest of seniors. We will see some single seniors receiving upwards of $900 more a year as a direct result. Then we have the OAS, the third pillar to our pension program, where this government has made the decision to return it back to the age of 65. The Harper government increased the age to 67. We have returned it back to 65.

Would the minister not be of the same opinion that we have a government that is in touch with what Canadians want and expect when it comes to pensions?

[Jean-Yves Duclos, Liberal, Québec, QC]

Mr. Speaker I would like to congratulate my colleague for making it very clear that we are not only concerned about the present circumstances of our middle-class families, but we are looking to the future to make sure that families and our citizens and our workers, when they retire, have the income security that they not only deserve but also want.

It is a great fortune for us in the House to stand here today at this time to celebrate this historic change in the CPP. We will remember this because the impact of that magnificent change will be felt and celebrated for many years to come.

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

Mr. Speaker, in my riding in Courtenay—Alberni, we have a disproportionate number of elderly women who are living in poverty, women who are going to the food banks for the first time, pensioners who are struggling to make ends meet. They cannot even afford to buy medicine. Some of them are going to homeless shelters. The most recent figures available show that 30% of single elderly women live in poverty. That number has tripled in the last 20 years under Conservative and Liberal governments. Only 4.5% of female CPP recipients receive the maximum benefit compared with 18% for men.

How will this CPP enhancement plan help lift vulnerable elderly women out of poverty? In our communities where we are having this homeless problem, we are not getting the support we need for homeless shelters. We need that, so if the member could answer the question it would be greatly appreciated by the people in my community.