Bill C-301 (Historical)

An Act to amend the Income Tax Act and to make a related amendment to another Act (registered retirement income fund)

This enactment amends the Income Tax Act to remove the requirement to withdraw minimum amounts from a registered retirement income fund. It also makes a related amendment to another Act.

Income Tax Act

[Kelly McCauley, Conservative, Edmonton West, AB]

moved that Bill C-301, an act to amend the Income Tax Act and to make a related amendment to another act (registered retirement income fund), be read the second time and referred to a committee.

Madam Speaker, it is my honour to rise today to speak to my private member's bill, and also to interrupt my colleague's rant from across the floor, Bill C-301, the RRIF financial security act to remove the mandatory minimum withdrawal for seniors holding a registered retirement income fund account.

As members of the House should know, retirement is daunting. Planning for life after work is not easy, it is not cheap, and it is not always predictable. The Canadian government has taken great strides throughout the past decade to alleviate the stress of retirement, including increasing the guaranteed income supplement, creating tax-free savings accounts, and introducing income splitting for seniors. The previous government also took an important step forward in helping Canadians by lowering the mandatory withdrawal rate for seniors who held an RRIF.

These measures have led to the lowest poverty rate ever among seniors in Canada. This is a record of which to be proud.

There are still some seniors unable to fully and happily live out their retirement, knowing their savings are sufficient and secure. This is where we must focus our attention. They need our attention, not just in the long term, not just in the next 40 years but now. Removing the mandatory minimum withdrawal on registered retirement income funds will help all of our seniors today.

This legislation would fix an outdated structure that needlessly penalizes Canadians who have spent their lifetime saving for retirement. The probability today of a 71-year-old female living to 94 has almost doubled since 1992. For men, the probability has almost tripled. In the same time, the average return on long-term Government of Canada bonds has decreased by almost two-thirds. In 1992, a 71-year-old woman making minimum withdrawals could expect to use about two-fifths of her savings before reaching her life expectancy. Today, she needs to plan to use about twice as much. She faces a one-in-four chance of outliving her savings entirely. As her life expectancy continues to increase and the average returns continue to decrease, the problem is clear. Too many seniors are outliving their savings because of these archaic rules.

The budget 2015 reduction in the RRIF withdrawal rate was a step in the right direction. However, this response does not go far enough.

The issue that the reduction started to address was the idea that circumstances change. This is true of most private living. However, because government is a removed, cumbersome institution, it cannot possibly react as quickly as individuals can to changing life circumstances. When something unexpected happens, such as, happily, we live longer than we expected, or if our loved one needs late-in-life care, or if we simply want to enjoy our retirement knowing that our income is safe and accounted for, there is no good reason to force us to prematurely withdraw our savings and be taxed.

As mentioned, budget 2015 was a good first step. A lower mandatory withdrawal rate is better, but gone entirely is ideal. Ideal is rarely achieved, however, and we compromise on the ideal solution when it is infeasible, impractical, or undesired. In the case of mandatory withdrawals, however, there are no grounds for compromise. The fact is that a change like this is neither infeasible nor impractical. Nor are the changes undesirable.

In fact, when I was president of the Greater Victoria Eldercare Foundation, a foundation looking after six hospitals for seniors, the elderly, and the severely disabled, my colleagues and I understood that RRIF mandatory withdrawals were an unnecessary and punitive regime.

While meeting constituents in my riding of Edmonton West, the seniors I spoke with were overwhelmingly in favour of such a change.

Since introducing this bill to the House back in September, my office has received an enormous amount of calls from seniors across the country in support of this bill, the bill that would return control over their retirement, seniors like Bert and Mary Meeker who are continuously forced to take more money than they need from their RRIFs and, consequently, must pay more in taxes.

I know the government loves raising taxes, but surely even it would agree that forcing seniors to pay higher taxes is unreasonable.

Speaking to the broad spectrum of support for the measures enacted by this bill, both the C.D. Howe Institute and the Canadian Association for Retired Persons, or CARP, have indicated their support for removing mandatory minimum withdrawal rates entirely, after long calling for these changes.

When C.D. Howe released its 2014 report calling for the removal of the mandatory withdrawals, the Toronto Star newspaper collected reader responses. I would like to share what the Toronto Star readership thought of the proposal.

One reader said, “Why does the government need to run down tax-deferred assets so quickly? After saving for 40 years, you'd like to hold onto your money till you kick the bucket.”

Another reader said, “Let me keep my money and use it until I die. Then the government can collect the taxes on what remains.”

A third concerned reader wrote:

I maximized my RRSP contributions for many years until I retired at 66. I've always been a conservative investor. At age 71 when I converted my RRSPs to RRIFs, I was dismayed to see the compulsory withdrawals starting at 7.38% and increasing annually on a steadily diminishing amount because of low interest rates.

Another wrote:

It would be better to do away with the minimum withdrawals and allow individuals to manage their RRIF portfolio according to needs and market conditions. Most people would still withdraw something.

When we have a coalition of CARP, the C.D. Howe Institute, and the readers of the Toronto Star on the same side of an issue, it is probably a good policy and worth doing.

Why might seniors' advocacy groups, think tanks, and Canadians across the country support this legislation? It is because it addresses three specific harms brought by the existing out-of-date rules: supplement clawbacks, low-income seniors paying proportionally higher taxes, and harm to working seniors.

First, mandatory withdrawals trigger clawbacks of federal and provincial income supplements such as OAS, GIS, and provincial rent subsidies. Given that forced withdrawals count as income, they indiscriminately factor into income supplement eligibility.

This clawback happens whether people withdraw from a fund worth $50,000 or $1 million, despite the fact that a $50,000-account holder is substantially more likely to rely on income supplements in retirement than the $1-million account holder. More importantly, however, the clawback happens without regard for the notion that the $50,000 might be budgeted for other major expenses.

Seniors like Pat Forrest, who wrote to my office regarding this bill, experience the harmful effects of forced withdrawals on a yearly basis. Since Pat turned 72 and had to convert her RRSP into a RRIF and begin withdrawing from her fund, she has lost her OAS.

It is a nice fantasy that seniors can live out their days comfortably. Reality demonstrates that dying is one of the most expensive acts we will undergo in our lives, and end-of-life expenses are a real, significant budgetary item we must all account for when planning our retirement. For some seniors, that planning includes holding RRIF savings until these expenses come due and utilizing income supplements in the meantime as income for day-to-day living. The mandatory withdrawals remove this ability to save and plan for large expenses later in life without providing a meaningful supplement.

Second, through this clawback setup, low-income seniors pay an effectively higher tax rate. Just to be clear, mandatory withdrawals do not necessarily result in a higher actual tax percentage but rather in a higher hit to one's net cash at the end of the year. For example, if one withdraws $10,000 from a RRIF at some point in the year, it counts as income. Therefore, one would lose part of one's OAS and other federal and provincial benefits, which would effectively be about a 50% tax hit. A wealthier account holder who withdrew $100,000 would lose about the same amount in government benefits, which would result in about a 5% hit. The benefit structure is regressive and unfairly targets low-income seniors with no reasonable mechanism to account for lost benefits.

Lastly, the existing structure double penalizes seniors who wish to or need to continue working. According to multiple studies and reports, including a 2011 report on retirement by Statistics Canada, more and more Canadians are working beyond the traditional retirement age, either by choice or by necessity. Forcing them to withdraw taxable income from their RRIFs will push them into a higher tax bracket on income they are earning from work, and this is on top of the taxes they are already incurring and the increased benefit clawbacks.

These three harms have a significant impact on how seniors and working Canadians plan on saving for retirement. These punitive outcomes are needless but not permanent. Eliminating the mandatory withdrawal requirement will go a long way to ensuring that Canadians can live out retirement more comfortably.

I know what my colleagues opposite are going to say. They are going to try to argue that this benefits the wealthy. They are going to say that forced withdrawals do not mean forced spending and that seniors can simply reinvest their money. Let me pre-empt these baseless criticisms.

First, these changes do not uniquely alter the thinking process for wealthy Canadians to shield their income. If wealthy seniors want to shield income and plan for retirement, they can do so already under existing rules. This legislation does not make it uniquely easier for wealthy Canadians to circumvent the rules and hide from paying taxes.

In fact, the potential benefit of enabling seniors to continue with their savings invested rather than forcing them to prematurely sell their investments could actually increase the government's tax revenues once an account holder passes away. We must not forget that RRSPs and RRIFs are not permanent accounts. Taxes will be paid eventually. The taxman always gets his pound of flesh. This legislation ensures that we are not unfairly punishing seniors so that the government can be paid a little today.

The second point, to borrow a phrase from CARP, is that “re-investing is not just that easy”. While forced withdrawals are not the same thing as forced spending, the idea that seniors should simply re-invest their money is disingenuous at best. According to CARP, “this approach ignores the effect of taxation on each withdrawal and the loss of investment scale that occurs when funds are diverted from a larger pool of investments into smaller accounts”.

Moreover, forcing individuals to withdraw funds ignores the effects of market timing. It is financially imprudent to require a senior to withdraw a certain sum of their savings if the market is not performing well, forcing the account holder to sell investments at a lower return than they might otherwise have earned.

Let us make sure we have something clear here: seniors today are from a different generation, one in which saving for retirement, saving for a home, saving for anything was a way of life. Having a healthy RRSP or RRIF does not mean an individual is rich. It means they scrimped, saved, and worked incredibly hard to ensure they had enough to prepare for the days when they could not work any longer.

Arguing that a policy like this is a tax break for the rich not only minimizes the hardships faced by real seniors across all income levels, but in fact also assumes that any senior who has taken the overtime, the double shifts, the holiday shifts, and forgone many opportunities in order to save for their retirement must be wealthy and does not deserve to control their income. We know that this is not the case. We know that seniors are struggling, and we know that Canadians deserve better.

None of these trends I have noted in my remarks are expected to reverse. Canadians are not expected to lose years of their life expectancy over the coming decades, nor are investments predicted to earn any more than they do presently. Canadians are predicted to work longer. Canadians are healthier than ever before, and financial retirement planning becomes more pertinent given a longer lifespan.

Government is slow to react. This is not meant as a criticism, but is simply a factual statement. Things take longer to get done when it is the government that is doing them. In the meantime, seniors suffer, Canadians face uncertainty, and no one can adequately plan for their retirement while they wait for the government to react.

We are all going to be seniors at some point, and some of us are closer to that reality than others. This is not an arm's-length issue. Any one of us could get that call from mom asking for help because her monthly GIS or OAS was taken away due to end of year income she did not need, even though she reinvested the money. It could be me, it could be any of the members in this place in 10, 15, or 20 years.

There is only one solution: eliminate the mandatory withdrawal. Stop punishing seniors for saving, and enable Canadians to manage their retirement as they see fit. Enact this broadly supported and sound legislation.

For seniors now and tomorrow, it's time to take the next step and finish the job.

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I thank my colleague for raising a very important issue, as I think we can all agree as members of Parliament who all have seniors in our ridings. I would say that in my riding, there are quite a few because we have an aging population.

I would like to correct the member when he said that this government did not act quickly. Let me remind him of three things we did for seniors that will benefit not only seniors of today, but future generations of seniors, because we know that seniors care not only for their children, but also their grandchildren.

The member is well aware that very recently we managed to strike a historic agreement with provinces to enhance the CPP, which will benefit generations to come. That was the right thing to do. It is the smart thing to do.

Then we went on with the GIS top-up, as the member will know, because it was very significant. We are talking about 900,000 seniors who will be helped, and mainly women who live in poverty. I am sure that the member would agree with me that this is the right thing to do as well for our country.

Then we acted on OAS eligibility, moving the age of eligibility from 67 to 65, because that is the right policy to take to help our seniors.

What we are talking about today is about tax fairness. That is what I would like to remind the member about. Why does he not agree that when we ask people to take out some money, it is because the policy objective for that is for these fund to be used at retirement? That is what the policy is intended to do, and that is what Canadians understand the RRIF to be as well.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I am glad the government has increased the GIS. I fully support that.

The CPP changes will not help any seniors today or in 10 years. It will help seniors 25, 30, and 40 years down the road and will do nothing for seniors today.

The OAS is still set at age 65. It is set at 65 next year, and it will be set at 65 five years from now. The government did not change it to help any seniors today.

Changing the rules for the RRIF will help seniors today. There is no reason in the world we should force them to take out their savings and be subject to the taxman just to help the government with its spending issues.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, as the member well knows, Canada's retirement system was founded on three pillars, and this bill will be of great assistance with respect to the pillar of personal savings.

I want to look at the situation of women. We know today that the probability of a 71-year-old woman reaching her nineties is much higher than it was even 20 years ago.

Shifting the conversation to Bill C-26, I realize that the Conservatives stand against this bill, but it more than likely has the votes to pass in this House. Would the member not agree that since the bill is going to pass, the government should at least amend its own bill to fix the provisions that unfairly penalize women with respect to that all-important pillar of government pensions for retirement security?

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, the member has brought up a great point. The problem we have with the CPP is that women, seniors, and widows living in poverty are the ones who are not collecting CPP right now. Adding more money to the CPP does not help those who are living in poverty who need the help. I am sure we will support anything this bill or the government does to help those living in poverty.

[Mark Warawa, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, this bill is insightful and thoughtful.

My question is this. Will it help seniors? Will it provide dignity for seniors? Will it give them choice so that they can take care of their finances and their unique challenges as they age?

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I know that my colleague is a big advocate for seniors. This will help seniors immensely, and a broad range of seniors. In Edmonton, over 5,500 seniors are living in provincially assisted care, where their rent is based on their income. The fact that we are forcing them to take money out of RRIFs pushes up their income and pushes up their rent. We are taking food out of the mouths of seniors through this archaic rule.

It will help out people with children with disabilities. We have a phenomenal organization in the west end of Edmonton called Elves, which helps out the most severely disabled children. One of the biggest issues I hear from parents is the worry that they will outlive their children. We are punishing those people by making them take out their savings and taxing it and taking care away from their children in the future.

[François-Philippe Champagne, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, before I start my speech, I would like to again thank the member for raising a very important issue. I would also like to remind members on both sides of the House that we take issues regarding seniors very seriously. That is why we acted in the first budget of this government.

What I will do now is walk the member through the policy issues behind it and the unintended consequences that following his logic would have for seniors. Let me explain.

I rise today in the House to explain in detail how the Government of Canada is trying once again to boost Canada's economy, spur sustainable economic growth, and strengthen Canada's middle class.

In the last fall economic statement, the government presented additional measures to Canadians to ensure progress for the middle class and build on the momentum generated by budget 2016. Bill C-301, this private member's bill introduced by an opposition member today, does not support long-term income security for Canadians.

This bill amends the Income Tax Act to eliminate the minimum withdrawal requirements that apply to registered retirement income funds, or RRIFs, and makes a related amendment to the Income Tax Conventions Interpretation Act. This legislation therefore undermines our current objectives in terms of retirement income, which is the point of the retirement savings tax deferrals that are offered.

The purpose of tax deferrals on cumulated savings in registered retirement savings plans, RRSPs, and in RIFFS, is essentially to help Canadians earn replacement income at retirement. By imposing a cutoff for contributions to these plans and requiring that some of the savings be withdrawn and included in annual income once an individual has reached a certain age, the tax rules ensure that the savings are used for their intended purpose, in other words, to provide retirement income.

Compulsory minimum withdrawal rates were lowered in 2015 for individuals aged 71 to 94 in order to fall in line with recently observed historical long-term real return rates and projected inflation. These new withdrawal rates, which are considerably lower than the previous withdrawal rates, allow seniors to reduce the sums they withdraw from their RIFF and thereby keep more money in it, money that will continue to cumulate with a tax deferral, in order to meet their future retirement income needs.

Eliminating mandatory minimum RRIF withdrawals will enable high-income seniors and others who do not need the savings accumulated in their RRIFs for retirement income to postpone paying tax on the full amount of those savings until they are much older, possibly even until death, in which case the assets become part of their estate. In other words, they would not be forced to withdraw a portion of the savings in their RRIF and could defer taxes for virtually all of their retirement.

This situation is simply not compatible with the basic purpose of retirement income from tax-deferred retirement savings held in RRSPs and RRIFs. If gradual withdrawal of assets in a RRIF were not mandatory, it would be possible for some account holders to accumulate huge amounts of money in those accounts by the time they die. Consequently, large sums of money held in a RRIF would have to be included in income for the year of death. This could motivate survivors to press for tax exemptions for a portion of the deceased's RRIF assets, which would be contrary to the basic principles of our fiscal policy.

This bill would also create a major intergenerational disparity because younger seniors would not be obligated to withdraw a portion of the savings in their RRIFs every year while older seniors were forced to do so beginning at 71.

The Government of Canada took an important step to enhance seniors' income security in budget 2016, its very first budget.

Middle-class Canadians are working harder than ever. However, many of them are worried that they have not saved enough for their retirement.

In fact, one in four families approaching retirement age, or 1.1 million families, might not be saving enough. For that reason, the Government of Canada promised to help Canadians reach their goal of a secure and dignified retirement, and has worked with the provinces and territories to enhance the Canada pension plan.

I will outline how Canadians will benefit from the enhancements to the Canada pension plan. Once fully implemented, these enhancements will result in an increase of up to 50% in retirement benefits. The CPP provides secure and predictable benefits, which means that Canadians will not be as concerned about exhausting their savings in their lifetime or having their savings affected by turmoil in financial markets.

Canada pension plan benefits are fully indexed to inflation, which reduces the risk of price hikes gradually eroding the purchasing power of retirement savings. The CPP is also in line with Canada's changing job market. It helps to close the gap resulting from the lower coverage offered by employer pension plans and is transferable from one job and one province to another, which promotes labour force mobility. I know that my colleagues in the House will support a measure that promotes labour force mobility.

The CPP is also a large plan with millions of contributors, which makes it possible for the CPP Investment Board to take advantage of economies of scale in order to generate healthy net returns for all Canadians. Since CPP contributions are deducted automatically for all workers across the country, the CPP is an easy way to save.

This enhancement also enables us to put young Canadians facing a difficult job market on a more solid footing. This new measure is an important step that will help ensure a secure and dignified retirement for all Canadians, something that I am sure all parliamentarians want for Canada's seniors. Enhancing the Canada pension plan is an efficient and effective way to improve retirement income security for workers and their families.

Furthermore, enhancing the Canada pension plan is a responsible budgetary move on the government's part, unlike the private member's bill introduced here today. The 28th actuarial report on the CPP tabled by the chief actuary confirms that the level of proposed contributions and benefits under the enhanced CPP is sustainable in the long term. Canadian workers can therefore count on an even stronger and more stable pension plan for many years to come.

With its fall economic statement, the Government of Canada is maintaining the momentum generated by budget 2016. It is taking action to keep the promises made to Canadians, thus laying the foundations of a better Canada for today and for future generations.

In closing, I would like to once again thank my colleague on behalf of all parliamentarians for bringing this subject before the House this evening. I think that he will understand the goal of the public policy that we are proposing, which is to ensure tax equity among generations and ensure that Canadians can retire with dignity.

I have travelled all over the country, from Moncton to Yellowknife, to talk to thousands of Canadians, and I can assure members that what we have done in budget 2016 and our proposal to enhance the Canada pension plan are exactly what Canadians expect from a responsible government, a government that puts their interests first.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, I want to congratulate the member for Edmonton West for bringing the bill forward. I am sad to hear from the parliamentary secretary that the government will be opposing the bill. When we look at the three pillars that Canada's retirement system is based on, we know that workplace pensions are really the pillar that is suffering. Therefore, the government has to look at the other two. They are the ones where the government can have a real influence.

To the government's credit, it is bringing in Bill C-26, and it has made some amendments to the guaranteed income supplement, which deals with that third pillar of personal savings. If we allow seniors, especially in this unstable retirement environment, more freedom to choose how and when they withdraw their retirement savings, that is all the better for them.

The bill is obviously not a panacea for the difficult issues facing our seniors today, but private members' bills have to be very careful. To succeed, they have to focus on one little item where they can make a real difference. It is really up to the government to do the rest. We will certainly be keeping our eye on the Liberal government to ensure it does that.

There may be some watching this debate who are unclear on the difference between RRSPs and RRIFs. We know that RRSPs give everyone the ability to save for their retirement, as long as they have contribution room available and based on their earnings. A RIFF is used as the fund people can withdraw from during their retirement. However, there are mandatory minimum withdrawals that a person must make every year.

The rules for these mandatory minimums were created back in 1978. While I acknowledge there certainly have been some modifications over the years, basically we have old rules that are not very well adapted to today's society and today's reality in which many retirees are living. Seniors are now living much longer than they were in the 1970s. Now RRIF holders face the very real likelihood that they will run out of money in the later stages of their retirement. When that pillar of personal savings is taken out, a person's quality of life can take a significant downhill turn. We certainly want to ensure, through this bill, that we address that very issue.

I venture to say that all members of Parliament in the chamber believe Canada's seniors deserve to retire in dignity and that the government should be doing everything it can within its power to make that a possibility. I strongly encourage support of the bill at second reading so we can at least bring it to committee for further study and hear from expert witnesses. We should at least do the bill that justice.

This has been a battle the New Democrats have been waging for some time now. I would like to point out for hon. members that it was in the previous Parliament that our pensions critic brought a motion before the House to review the retirement income fund mandatory minimum withdrawal threshold. That was John Rafferty, the former member of Parliament for Thunder Bay—Rainy River. His Motion No. 595 stated:

That, in the opinion of the House, the government should review the Registered Retirement Income Fund mandatory minimum withdrawal thresholds and amend them to ensure that they do not unduly force seniors to exhaust their savings too quickly.

The NDP has a history of supporting the intent of the bill. I am very happy to be offering my support of this bill at second reading. I believe this issue deserves further study.

Our party ran on support for any action that would address mandatory minimum withdrawals from RRIFs, so the ultimate aim is to ensure that seniors are not outliving their savings. We have supported this because of the very fact that if we follow the current withdrawal schedule, we will have many retirees with average savings, which are not very high, running out of money when they are in their 90s. No one in the House should support that.

If we look at the future, it basically means people who have saved diligently all their lives could have their quality of life significantly reduced later in retirement. When the income they were relying on from their personal savings suddenly dries up, because they had to follow that mandatory withdrawal schedule, suddenly they become reliant on just the government pension system. Of course, the guaranteed income supplement will respond accordingly in some way.

However, removing one of those pillars, such as personal savings, could have a very drastic influence on someone. I would argue that for a senior who has made it to the age of 90 and beyond, this is the last thing we need to do to them at that particular age. They have enough concerns when they are in their 90s, they do not have to suddenly worry about their income.

When we look at Canada's demographics, we have a real tsunami heading our way. In the next 20 years, the population of Canada's seniors is set to double. Time is of the essence. This is the time when we seriously need to be bringing forward proposals. To the government's credit, they have done some but I would argue this particular measure by the member for Edmonton West is something we could also be doing for that critical third pillar of personal savings.

We know that the probability of a woman who is now 71 living into her mid-90s has basically doubled. The same rate for men has actually tripled. We basically have 265,000 Canadians right now who are in their 90s. By 2021, just a few short years away, we are going to add another 100,000 Canadians to that number. I think that mandatory minimum RRIF withdrawals are becoming increasingly irrelevant as women and men are living much longer and working more years.

This bill does not address everything. On this side, the NDP will be working hard. We will continue to work hard to improve the lives of our seniors. We will support this bill, but we think that much more needs to be done so that workers can retire with adequate incomes. More importantly, we need to make sure that seniors have access to the services they need to maintain their quality of life.

As I go on, I want to talk a little about some of the other areas where I think seniors need considerable help. I want to give a nod to my colleague, the member for London—Fanshawe for the incredible work that she has done on behalf of seniors, on the national seniors' strategy. It is a real honour to sort of inherit the mantle of the NDP seniors' critic. It is like Isaac Newton once famously said:

If I have seen further than others, it is by standing upon the shoulders of giants.

Certainly, the member has done such incredible work, it has allowed me to build on that base.

We know that more than a quarter of a million seniors are living below the poverty line, and that without concrete action, many more are going to fall into poverty in the future. We need that national seniors' strategy that my colleague from London—Fanshawe has brought in. It will ensure that seniors have access to high-quality and affordable health care and housing, and additionally improve the financial security, quality of life, and the integration of seniors within our society. This is really such a multi-faceted issue, looking at the issues that seniors face.

We certainly want to see some measure on home care. We do not want to see the same funding proposal kept that the previous Conservative government brought in. We would urge the government to look at that escalator to make sure it does not drop down to 3%, but to keep it at the current 6%. Health care budgets are drastically affecting our provinces' ability to deliver services. Now is the time for the federal government to take real leadership on this issue, to reinstate that funding that was cut under the previous government.

We need a system of a national pharmacare plan. That is one of the greatest costs that our seniors face. We do not want our seniors to have to choose between food and proper prescription medication. We also need to have real food security. One of the fundamentals of healthy living is making sure that proper, nutritious meals are available for our seniors, as well as affordable housing.

On the pension system as a whole, while I appreciate the 10% increase to the guaranteed income supplement, it really took a fairly small number of seniors off the poverty rolls. Much more needs to be done.

In conclusion, this is also a good time to remind the government that their members need to keep the promise that was made in the March 2016 budget and introduce that seniors price index. That seniors price index needs to be introduced so that we make sure our old age security and guaranteed income supplement are keeping up with the rising costs. I certainly hope to see some news from them soon.

In conclusion, I will be voting for this bill to go to committee for further study, but we must never rest until every senior is out of poverty and can retire with dignity.

[Mark Warawa, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, it is a real honour to speak to this bill. Bill C-301 is a very important bill. As we have heard already, it is very important for Canadian seniors.

Bill C-301 proposes to amend the Income Tax Act to remove the requirement to withdraw minimum amounts from the RRIFs. It would allow Canadian seniors to adjust their withdrawals according to their individual financial situation, lowering the tax burden on them and providing more sustainable retirement income. That is it in summary. It is the right direction to go.

I would like to give a little history. I did some studying of it. It was actually back in 1978 under then prime minister Pierre Elliott Trudeau that the RRIF rules came in. It is kind of ironic. Here we are many years later, under the son of that former prime minister, who is the Prime Minister of the present government, being asked to fix the problem and to provide dignity and respect for seniors.

The RRIF rules came into place in 1978. Under those regulations, Canadians must withdraw from RRIFs at age 71 and their savings are subject to mandatory minimum withdrawals. These mandatory minimum withdrawals are designed to virtually empty their RRIFs by the age of 92. Given today's likely increase in life expectancy, many of the RRIF holders face running out of money, and that is not providing our Canadian seniors with the dignity they deserve.

I listened intently to the member for Cowichan—Malahat—Langford. He is the NDP critic for seniors, and I want to thank him for the work he does. His recommendation was to send this to committee, as it is the right approach. Procedurally, this can be killed and ended in a very short period of time before the House rises. The bill would die because the Liberal majority in the House can kill the bill. The message that would send is that the Liberals do not want to hear from seniors and from seniors' stakeholders like CARP.

CARP, probably the largest seniors stakeholder in Canada, has been calling on the federal government to completely eliminate mandated minimum RRIF withdrawals. The previous government took a major step in that direction. The fact is the previous government reduced the amount that had to be withdrawn from 7.38% to 5.28%, a dramatic reduction. It was a step in the right direction taken just over a year ago. It showed that the previous government was listening to seniors and to the seniors' stakeholders.

I have been given the honour to be the official opposition critic for seniors. I have met with many of these stakeholders over the last year. It has been wonderful to hear from them. What I have heard is that they want to be listened to. They want a minister for seniors. Previous governments had a minister for seniors. The current government has a Minister of Status of Women and a minister for youth, the Prime Minister himself. There is a minister for everything except for seniors. Why is that? There are special advisers to the Prime Minister for special interest groups, but a minister for seniors is absolutely ignored. That is the number-one request I have heard across this country, to please appoint a minister for seniors. Second is to create a national seniors strategy so there is a plan.

Right now in Canada, one in six Canadians is a senior. There are more Canadian seniors than youth. They want a voice. They want the government to listen to them. They want to hear from the government that they are being listened to.

In six years one in five Canadians will be seniors, and in 13 years one in four will be. They will face unique challenges. They want a plan. They want the government to come up with a minister and a plan to prepare for this aging population. Part of that plan should be to make sure that we do not have a cookie-cutter approach that the Liberal government had in 1978 when life expectancy was much shorter and the government put in mandatory withdrawal requirements. Seniors want that to be reviewed.

I really thank the member for Edmonton West who came up with this idea. Let us consider it, let us debate it, and let us hear from seniors. Let us have the government listening to Canadian seniors and letting them have a voice. That was the suggestion of the member for Cowichan—Malahat—Langford. He said that we should allow this to go to committee. How would that happen? When this is voted on after the second hour of debate, the government could support the bill's going to committee so that seniors could be listened to. They would have their voice. It would go to committee and the committee would call witnesses.

I am disappointed that the government has not yet appointed a minister for seniors. The Liberals do not have a plan and they need one, but are not listening to seniors. They do not have to continue down this path, but can start listening to seniors. They can realize that dignity and respect need to be shown to seniors. It begins with some evidence that seniors are being listened to. We have heard announcements from the government that it is not going to do this, that it will kill the bill at the first opportunity. That is sad.

Groups like the Canadian Association of Retired Persons have asked for this. The C.D. Howe Institute has asked for this. It has said:

Governments impatient for revenue should not force these Canadians to run their tax-deferred assets down prematurely. Reforming the withdrawal rules for RRIFs and similar accounts would help retirees enjoy the post-retirement security they are striving to achieve.

If we allow seniors to take the money out if it is needed to repair a roof, for example, to allow them to age in place in their homes, it will save millions of dollars in health care dollars by allowing them to age there and not prematurely have to move out. That shows dignity. Seniors may need to have railings put in their houses. They may need to have a ramp built and need to withdraw the funds they have saved by being good financial managers during their lifetime. We should reward them for that. We should trust them and show them respect and allow them to withdraw the money as needed.

However, the archaic regulations established in 1978 by the then Liberal government say that “you must follow our cookie-cutter approach because we know best”. We do not know best. The government does not know best. We need to listen to seniors. The only way that can happen is if the government shows respect for seniors by allowing this to go to committee. Without that, it will be a sad day for seniors. They will not have a minister for seniors, they will not have a plan, and some time in the sweet by and by we do not know what will happen to seniors. They are not being listened to.

I hope the government rethinks its position and shows that it is willing to listen to and respect seniors by allowing the bill to go to committee. That will only happen if at the first opportunity to vote, the Liberals support its going to committee. It does not mean they are bound to support it through the whole process, but at least they will indicate that they respect seniors and are willing to listen to them.

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

Mr. Speaker, I will pick up the challenge put forward by the member about the importance of our seniors to society as a whole.

There is a wide spectrum of things we all do as elected officials to reach out to get a better understanding of issues of our country. It does not matter where we go, the issue of seniors needs to be given special attention. Not only do I think about seniors during election time, but I also think of seniors between elections. I have constant dialogues to try to get a better understanding of the different things government can do to provide not only a better future for the seniors of today, but also for the seniors of tomorrow.

I understand what the member is proposing in his private member's bill. I appreciate the initiative private members take to allow for a debate on what they perceive as important issues in their constituency, and in fact for all Canadians. Therefore, I applaud the member for bringing the bill forward, but I do not necessarily agree with it.

There is a better way of dealing with seniors and the way in which money is withdrawn out of RRIFs. I have found the current system effective. It seems to have stood the test of time. I know members opposite would argue that times are changing and people, on average, are dying at an older age, and that is true. However, I do not think the arguments I have heard this afternoon have changed my opinion.

I appreciate the member making reference to Pierre Elliott Trudeau and the role he played on the issue of pensions. It clearly demonstrates how this policy has proven to be the most effective when we put it in a holistic attitude of how we best deal with pensions. The private sector does play an important role.

When I speak with the seniors I represent, pension issues that consistently come up are primarily dealing with the CPP, GIS, and OAS. It is very rare that I hear many comments regarding RRIFs. Now, it does happen. If my memory serves me correctly, I can honestly say that I cannot recall someone from my constituency pointing out that there is a problem with this and that this really needs to be acted upon. I have been at this for a number of years, in excess of well over 20 years as a parliamentarian, close to 19 years in the Manitoba legislature and approaching six years in this beautiful chamber. What a privilege it is to be here.

When the member says that we should be sensitive and listen to what seniors tell us, I recognize the importance of the many different ways in which a senior can retire, have an income, and often supplement an income.

That is one of the reasons I spent a great deal of my time earlier today debating the budget and talking about some important initiatives that the government has already taken. It is important that we recognize that. The member appealed to the Prime Minister and government members to think about what seniors have to say. I believe we have been very aggressive in dealing with important issues related to seniors. I will highlight a few of those initiatives. One is that my colleague made reference to the guaranteed income supplement.

Maybe before I get to that, I will provide some background, if I can. The lifestyles of seniors vary immensely in virtually every riding. Every member of Parliament, no doubt, would be able to comment on the degree to which lifestyles among seniors vary. There are those who have, for a wide variety of reasons, a fairly high standard of living—it depends on how one defines the word “standard”, but I mean from a financial point of view—compared to those who are more challenged.

We could talk about the snowbirds. There are thousands. Winnipeg has a large number of snowbirds who go south. It is great that they have the financial means to do that and I would not want to take any of that away from them, but there are those who are a bit more challenged, and then those who are extremely challenged. I made reference to this in a speech earlier. There are many seniors in Winnipeg North who have to make decisions on whether to buy the medications that they require and their doctors tell them they need or to buy food that they also require.

The fees for ambulance services are astronomical. These are the types of real issues that seniors are talking about. When the member asks about seniors and whether Liberals are really listening to seniors, I want to assure the member that not only am I, but the government is listening to what seniors are saying in a very real way. As much as possible, we are doing what we can to address those needs.

When I talk about medications, even ambulance care, one thing I believe we do not talk enough about is the importance of a health care accord, because that would deliver many of those senior services. Why is that important? It is because, at the end of the day, if people with relatively modest pensions fall ill, the money to cover medications will quickly consume a great percentage of their pensions.

The issue of how much seniors should receive is something I constantly talk about. That is why I lobbied, wherever I could, to increase the guaranteed income supplement for the poorest of all seniors. That is why I argued, when I was in opposition, that we needed to decrease the age of retirement back to 65, as opposed to Mr. Harper and the Conservatives increasing it to 67. This is why we have to invest in CPP, because it is about the future of seniors.

When we look at what Bill C-301 would do, it really is not consistent with the basic retirement income objectives of tax deferrals provided by RRSP or RRIF savings. It would create significant inequities in tax deferral opportunities. My colleague, the Parliamentary Secretary to the Minister of Finance, picked up on that point.

Suffice to say, we have today a government that is genuinely concerned about a wide spectrum of issues, including the issue of pensionable income. It is a government that is open to it and is prepared to do whatever it can in many different ways.

This is a bill that I cannot—

[The Assistant Deputy Speaker, Liberal, Anthony Rota]

The time provided for the consideration of private members' business has now expired and the bill is dropped to the bottom of the order of precedence on the Order Paper.

The House resumed from November 16 consideration of the motion that Bill C-301, an act to amend the Income Tax Act and to make a related amendment to another Act (registered retirement income fund), be read the second time and referred to a committee.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Speaker, I want to thank the member for Edmonton West for bringing this private member's bill forward. Many times the member and I do not see eye to eye, but I certainly have a lot of respect for him, and I enjoy listening to him.

It is my pleasure to rise today to speak to the private member's bill, Bill C-301, an act to amend the Income Tax Act and to make a related amendment to another act, which will affect registered retirement income funds, otherwise known as RRIFs.

The NDP is supporting the bill at second reading because we feel it deserves to be sent to committee for further study. The issue of mandatory minimum withdrawal requirements is an important issue for retirees trying to maintain an adequate income in their retirement.

It is our view that a detailed examination of the rules regarding RRIFs is necessary to help ensure that seniors are not outliving their savings. Retirement insecurity is reaching a crisis level in Canada, as many Canadians do not have adequate savings to maintain their lifestyle upon retirement. Any measures that will make it easier for seniors to maintain an adequate income must be looked at.

Much more needs to be done to help our seniors live with the dignity they deserve. The high cost of housing and drugs, the clawback of the GIS, and the indexing of pensions are just a few immediate issues. The government also needs to keep its promise to introduce a new seniors price index to make sure that old age security and the guaranteed income supplement keep up with rising costs.

Of more immediate concern is that the government must immediately fix the flaw in its new plan for enhanced CPP benefits. I am sure that members have heard the discussion about the mistake that the government made in Bill C-26 and how the exclusion of dropout provisions in the bill would have a negative impact on those who take time to raise children, especially women, and on those living with a disability. The government will have its chance next week at the finance ministers meeting to fix its mistake. We will all be watching.

This private member's bill will remove the mandatory minimum withdrawal requirements from registered retirement income funds and will change the retirement income fund definition. Registered retirement income funds, known as RRIFs, can be thought of as an extension of a person's registered retirements savings plan, or RRSP. An RRSP is used to help people save for retirement, while a RRIF is used to withdraw income during retirement. RRIFs are similar to RRSPs in several respects. Each allows for tax-deferred growth, offers several investment options, and is government regulated.

A major difference between an RRSP and a RRIF is that with an RRSP, a person can make annual contributions as long as they have earned income and have contribution room available. Withdrawals are optional and will be taxed. With a RRIF, contributions are not allowed, and a person must make minimum minimum mandatory withdrawals each year. RRIF rules and withdrawal rates were introduced in 1978, and then increased in 1992.

In 2015, the Conservative finance minister lowered the mandatory registered retirement income fund withdrawal amount to 5.27% from the previous 7.38%. Also, previous to 2007, the age limit for converting an RRSP was 69. The 2007 budget changed the age to 71, in order to strengthen incentives for older Canadians to work and save. When RRIF rules came into effect, lifespans and time spent in retirement were much shorter than they are today. RRIF holders now face the considerable likelihood of running out of money in late stages of retirement.

The NDP has long been in support of lowering these rates. In 2015, the NDP pension critic John Rafferty introduced Motion No. 595. It read:

That, in the opinion of the House, the government should review the Registered Retirement Income Fund mandatory minimum withdrawal thresholds and amend them to ensure they do not unduly force seniors to exhaust their savings too quickly.

The problem with the RRIF withdrawal schedule is that people are living longer, and if the schedule is followed then it is very likely that an account holder will run out of savings by age 92. At that point, the person who had saved diligently throughout their life will see their quality of life decline at a delicate time, through no fault of their own.

There are also concerns that RRIF rules can cause clawbacks on people's benefits from OAS and/or GIS. We know that people are living longer, and this fact will have an impact on seniors and on their ability to have enough money to see them through their retirement. In this context, it is interesting to look at some facts about today's seniors.

The probability today of a 71-year-old female reaching age 94 has almost doubled compared to 1992, from 13% to 24%. The probability of a 71-year-old male reaching that age has more than tripled, from 4% to 14%. There are 265,000 Canadians who are 90-plus years of age today. With the baby boom generation reaching these ages, the number of people living beyond 90 is expected to rise dramatically. By 2021, there are projected to be 355,000 Canadians aged 90-plus, including 80,000 people over the age of 95.

Most Canadians do not have alternatives to private savings for retirements besides CPP, OAS, and GIS. When RRIF rules were first put into place in the 1970s, Canadian households saved about 15% of income. By 2011, the household savings rate plummeted by a factor of five, to just above 3% of income. Canadians between the ages of 65 and 69 today hold only an average of $40,000 in RRSPs, which is a very modest amount. In 2011, workers aged 55 years and over accounted for 18% of total employment, compared to 15% in the 2006 census. This was the result of an aging baby boomer generation and increased participation of older workers in the labour force. Mandatory minimum RRIF withdrawals are becoming irrelevant as women and men are living at least twice as long, and staying in the labour force longer.

As I said earlier, the NDP intends to support this bill at second reading, as we feel it should be sent to a committee where the issues of RRIF withdrawal and income security for seniors can be properly studied. I am disappointed to hear that our Liberal colleagues will not be supporting the bill and are not in favour of this issue getting further study. However, then again, maybe I should not be surprised. The Liberals have made some progress on the issue of retirement insecurity with their modest increases in the GIS and their modest increases in benefits in the enhanced CPP proposal. That being said, the government has also launched a tax on some Canadian pensioners. Its failure to include dropout provisions in the enhanced CPP is certainly an attack on women and those living with disabilities.

We also have Bill C-27, which is clearly an attack on every worker and retiree who has invested in a defined benefit pension plan. It is a policy on which the former Conservative government did consultations and eventually decided not to move forward with it. Now it looks like the Liberal government is going to finish the work that the Conservatives started. The current government's plans are inconsistent and confusing. The strategy for dealing with the retirement income crisis is uneven, inadequate, and at the end of the day will be ineffective. Canadian seniors will be hurt as a result.

I urge all members to support this bill, so we can refer it to a committee where we can study how to better help Canadian seniors live with the security and dignity they deserve.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Mr. Speaker, it is my great pleasure today to speak in favour of Bill C-301, which was introduced by my colleague and friend from Edmonton West. I would like to thank him for the work he has done on this bill and very important issue that affects millions of Canadian seniors.

At this time, I also want to thank my NDP colleagues who have indicated that they will support this legislation and send it to committee, so witnesses, financial experts, and, most of all, Canadian seniors, can weigh in on the merits of this legislation. As a good rule of thumb, any time that a bill introduced by a Conservative is adopted by an NDP and opposed by a Liberal, it must mean we are on the right track.

The issue of mandatory minimum withdrawals from registered retirement income funds has long been a thorn in the sides of Canadian seniors. Many seniors who have diligently saved for retirement and invested wisely are well within their right to ask that mandatory minimum withdrawals from their RRIFs be completely eliminated.

It was just a couple of weeks ago that I spoke in the House against the Liberal government's heavy-handed approach of forcing Canadians to put more of their own money into the government-controlled Canada pension plan. At that time, I spoke about how the Liberal government's approach, however well intentioned, was a direct blow to Canadians who prefer investing their own money into savings vehicles and want nothing to do with putting more of their disposable income into CPP.

It comes as no surprise that the Liberal government is opposing this legislation, and it was highly discouraging to read the Parliamentary Secretary to the Minister of Finance's speech, in which he dismissed the legislation outright. While the parliamentary secretary patted himself on the back for the recent changes to the Canada pension plan and old age security, my hon. colleague from Edmonton West was completely right to call out the erroneous information in his speech. The changes that the Liberal government has introduced will not help seniors today. Its recent legislation will not affect the vast majority of seniors currently living in Canada.

I support the legislation, Bill C-301, for three very important reasons. They are, one, that Canadian seniors should have complete and utter control regarding their own financial investments; two, the life expectancy of Canadians has increased dramatically since mandatory minimum withdrawals were introduced way back in 1978; and, three, financial markets are volatile and unpredictable. Seniors should be able to cash in on their investments when it is most advantageous for them.

Bill C-301 will have an immediate benefit by finally removing the archaic and outdated legislation that forces seniors to make mandatory withdrawals regardless of their own financial situation or the current state of financial markets. Far too often, governments, of all stripes, forget that the money invested in RRSPs or RRIFs is not their money. The money belongs to the hard-working Canadians who have earned it.

I firmly believe and have long advocated that the government has no business in forcing Canadians to divest themselves of their RRIFs. Canadians should be given the benefit of the doubt that they know what is best for their families. Millions of Canadians have financial investments, which range from mutual funds, stocks, and various other assets. Many folks have the assistance of financial advisors while, in some cases, they make their investments solely on their own. Financial literacy in our country has grown in recent decades. However, there is still much more to do.

In my recent speech regarding the Liberals heavy-handed approach to the Canada pension plan, I mentioned specifically how improving financial literacy rates should be at the forefront of every conversation regarding retirement savings. By empowering Canadians through education and innovative savings vehicles, such as the tax-free savings account, we can provide the tools needed so folks can retire with a high standard of living. Removing mandatory withdrawals from RRIFs is the logical next step to provide that much-needed flexibility.

When Canadians are asked if they want the mandatory minimums to be eliminated, the resounding answer is yes, they do. According to the Canadian Association of Retired Persons, 66% are calling for this elimination explicitly, and 78% say that offering retiree's complete control over their RRIFs is a more important goal than government recouping deferred taxes through mandatory withdrawals. I, for one, will stand up for Canadian seniors rather than giving this spend-happy Liberal government any more money. A dollar in the pockets of Canadian seniors will be far better spent on their priorities and needs than the Liberal finance minister could ever do.

In respect to the issue of the life expectancy of Canadians, people are living longer, healthier lives. This is just one more reason why this legislation needs to be enacted. If we do not pass it and make the necessary changes, there is a very real possibility that seniors will have completely depleted their retirement savings by age 91, only 20 years after converting their RRSPs into RRIFs.

Many of us in the House know very active seniors, who, by the grace of God, continue to live healthy into their 90s. As of right now, there are over 265,000 seniors living in Canada who have reached the wonderful age of 90 years old, and that number will only continue to grow in the years ahead.

Now to the issue of providing more flexibility for RRIFs, in many circumstances seniors continue to work part-time jobs for either financial reasons or because they are not ready to completely retire. Many seniors, who choose to work still, and do not need income out of their RRIF at that moment, should be given the option of foregoing mandatory withdrawals. Seniors are living longer and, in many cases, in their own homes, so it only makes sense to allow their RRIFs to increase in value until need those funds. If for some reason a senior has serious health concerns and needs to move into assisted living or needs home care, it can be a tremendous strain on one's savings. Rather than ushering seniors into care facilities, due to the high costs of living independently and the costs associated with home care or health care aides, removing mandatory minimum withdrawals for RRIFs might allow a senior to continue saving so they could afford those higher costs later in life. The longer an investment can accrue interest, the more money seniors will have in their pockets.

For my Liberal friends who are concerned about the government's foregoing the capital gains taxes, the government will collect more in taxes if the investment continues to grow even larger. Now the issue of capital gains taxes is a much larger battle for another day, but in this circumstance, the Liberals' concern about the government's not collecting its fair share of taxes is moot. The government will still be able to tax the profit of a RRIF when it is cashed out. This issue should not be about the government's worrying about the loss of revenues, but about providing seniors with the freedom to control their own financial investments.

Further to my last point about why mandatory minimum withdrawals should be eliminated, the stock market has been extremely volatile since the great recession. When the market crashed in 2008 and 2009, our previous Conservative government introduced a one-time 25% reduction in withdrawal rates. It was my desire that this be dealt with at the time, but alas it was not, and now due to this legislation, it provides all of us in the House an opportunity to finally repeal this injustice.

While previous Parliaments have tinkered around the edges and slightly adjusted the minimum withdrawal rates, it is up to us in this chamber to enact the necessary changes. Giving seniors the freedom to divest their savings on their own accord will remove the pain of selling assets that have seen extreme swings in the financial markets.

Due to low interest rates and the sluggish economy, investments are not growing nearly as fast as they once were. For example, on long-term Government of Canada bonds, the interest rate has fallen from 8.5% to 3.1%, which is not that good a return when calculating inflation.

I also believe we can completely eliminate the needless headaches caused by cashing in RRIFs on a yearly basis when determining GIS or OAS rates. If people want to withdraw their savings of their own free will, they should be able to do so and at least have the peace of mind that the government's antiquated rules are not to blame for any clawbacks. If the Liberal government is serious about helping seniors, they will vote in favour of this legislation. If they want to do something meaningful to provide immediate assistance, then let us pass this bill.

While the Liberal government has already clawed back people's tax-free savings accounts, which has diminished seniors' ability to save without paying capital gains taxes, the least it can do is to give seniors greater financial flexibility in retirement. While the era of burdensome regulations continues to thrive, I believe this very minor change could send a powerful message, that Canadians do not need to be told what to with their own financial investments.

In closing, I urge my Liberal colleagues to break ranks with cabinet and vote in favour of this legislation. Stand up for seniors; stand up for individual freedoms; stand up against excessive and outdated regulations; and most of all, stand up for your constituents and do what is right.