Mr. Chair, I'd like to—
Evidence of meeting #20 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was retirement.
A recording is available from Parliament.
Evidence of meeting #20 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was retirement.
A recording is available from Parliament.
10:40 a.m.
Independant analyst, As an Individual
It's a very important issue and I'd like to have my point—
10:40 a.m.
Conservative
The Chair Conservative James Rajotte
No. I'm sorry, Mr. Kolivakis. It's up to the members how they wish to use their time, and I asked him if he wanted to ask you, and he wanted to ask another question.
Mr. McCallum, please.
10:40 a.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Thank you very much.
I have a question, and I think it's principally for Susan Eng.
It's about something that I think you're not recommending, and I just want to confirm that because I know you have access to thousands of people's views. Unless I'm missing something, you're not recommending any change in the amount that people are allowed to put into RRSPs to tax deduct...I think it's $18,000. I guess I wouldn't be surprised if that were the case, because I note that only about 30% of people choose to use it at all, and only about 10% or so of the total tax room is taken up.
I know that in some quarters people are making that argument, partly on grounds of equity between public sector pension plans and private sector. So my question to you is, did you consider that? Did you recommend that?
10:40 a.m.
Vice-President, Canadian Association of Retired Persons
Absolutely. I think there is a need--and I think it was mentioned here before--for some financial literacy among our whole population as to what it costs to prepare for your own retirement. As also has been mentioned, nobody starts to think about this until it's too late, really, to save up enough for your retirement. However, the calculations are there and we do sample our members. We sent out an e-mail to some 80,000 members, and some 3,700 people responded. They all indicated a need to have retirement income of 70% of their pre-retirement income. They understand that, but they were only prepared to put up 10% of that income in order to save for it, and the math doesn't work. You do have to come up with close to 18%, which is currently the set rate for RRSPs as well.
It is a tipping point. People are not prepared to put more aside for their retirement, and it is a level at which we need to be able to construct a pension system that will provide them that retirement.
10:45 a.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Okay. Just for clarity, you are not proposing that the $18,000 amount that can be tax-deducted for RSPs be increased. You're not proposing that. Is that right?
10:45 a.m.
Vice-President, Canadian Association of Retired Persons
In its current state, no, because it doesn't solve the problem.
10:45 a.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Okay. Thank you.
I have one final question, and I think this one would be for Mr. Lamoureux. I asked a few questions at the same time and I didn't get an answer to this one, so I'd just like clarity.
If we're going to enhance the Canada Pension Plan, let's say to double the amount the person would get from approximately $10,000 to $20,000, I would assume that this increase would only occur after at least 20 or 25 years and build up. So it would affect younger people, but people of, say, 50 would not get very much of that increase because they would not have had enough time to contribute. Can you tell us approximately the timing of the coming into effect of any increase in CPP?
10:45 a.m.
Special Advisor, Canadian Institute of Actuaries
I think it should be prospective, unless the government has a lot of money that it wants to give away. Don't forget that when the CPP started, people who were older got quite a benefit at that point. People should remember that. My father contributed about two years to the CPP and he collected a pension for something like 35 or 40 years. So if you do it prospectively, it doesn't cost the government a lot of money; otherwise your pension liability will go up tremendously. Again, the people who are never at the table are the young people. They're the ones who will have to pay for this. I think that's what we always have to keep in mind, that nothing is free in this world. Essentially I think that if we do it and say we'll do it for everybody above a certain age, that's very costly. Who is going to pay for it?
I will even tell you something that we have not discussed here. I think that the CPP should increase their retirement age. The expectation of life at age 65 is increasing a month a year. When we look at most countries, they've increased their retirement age. Canada has not done so, and I think that is something we should consider. I think it would be helpful for everybody in the long run.
10:45 a.m.
Liberal
John McCallum Liberal Markham—Unionville, ON
Right. Well, I'm an economist; I think I understand that things in general are not free.
I think you're telling us that basically it's a political decision as to how much subsidy you want for the people who are now older, and that the subsidy will be effectively borne by those who are now younger. If the government decides to have such a wealth transfer or subsidy, then it can introduce the benefits quickly; otherwise, it will take many years to materialize in any significant way. Is that a fair summary?
10:45 a.m.
Special Advisor, Canadian Institute of Actuaries
Yes, but there is an other interesting thing. Holland is a country where they've made a lot of changes in their plan. They had a lot of young people to participate in the plan. One of the things they've done there is that for older people, once they've retired, inflation protection is not guaranteed. It's really contingent on having a surplus, if you want, in the plan, and at least it's a way for the retirees to share in the risk. When you do that over a long period of time, you reduce the overall cost of a pension plan, and the more you can share the risk with a larger population, the better it is.
10:45 a.m.
Conservative
April 21st, 2009 / 10:45 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
Thank you, Mr. Chair. I didn't know it was going to be my time. I appreciate it.
Thank you for coming.
Just a few minutes ago, Ms. Eng answered a question about surplus. There seemed to be some confusion on this point, and I wanted to give you an opportunity to comment on it.
10:45 a.m.
Chief Financial Officer, NAV CANADA, Federally Regulated Employers - Transportation and Communication (FETCO)
Thank you.
The question was whether or not a company, as plan sponsor, is permitted to contribute more than 10% surplus threshold. I believe the answer is no. It's not only a question of a company not being able to avail itself of a tax deduction; I believe there is a proscription against a company contributing more than 10%.
10:45 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
Thank you. That was just so that we are clear.
I'll be frank with you: pension issues are relatively new to me. At 45, I'm right on the bubble of a zoomer, I suppose, but I haven't paid a whole lot of attention, as you were telling me most Canadians have done.
My questions are for Ms. Eng, because she has some recommendations here.
I have a copy of the survey you did after the budget. The numbers here in your report show about 80% supporting what we've done, and so on and so forth. You have another survey here for today's topic. I was hoping it would be attached, but it's not. Is it public?
10:50 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
It's public. Did I hear you say you've mailed out 80,000? Is it a mail-in program for households--
10:50 a.m.
Vice-President, Canadian Association of Retired Persons
It's actually e-mail. As you know, we have 330,000 members; however, only 80,000 of them have subscribed to the online newsletter. At the push of a button, we reach 80,000 members--
10:50 a.m.
Vice-President, Canadian Association of Retired Persons
About 3,700 replied within the last two to three days. There was a high level of interest and support for a universal pension plan.
10:50 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
Okay, I'm going to get to that.
I've been working on issues with the OAS and GIS. Do you know approximately how many of your members collect OAS or GIS?
10:50 a.m.
Vice-President, Canadian Association of Retired Persons
Well, all people over 65 are entitled to OAS--
10:50 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
Right, but I want to know how many are actually collecting it.
10:50 a.m.
Vice-President, Canadian Association of Retired Persons
--but we don't have the exact numbers for how many of them get the full amount.
For the GIS, I think it was something like 37%, but I don't have those numbers in my head. Quite a sizeable number of people are reliant on GIS, which is the supplement, and there are estimates of about 246,000 Canadians living in poverty over the age of 65.