Finance Committee on April 22nd, 2010

[Serge Cadieux]

As I was saying a little earlier, according to current data, approximately four workers in ten have an employer-based pension plan. In terms of RRSPs, studies conducted in 2005 show that 70% of Canadians do not have an RRSP. The average value of it, for those who do have an RRSP and are between the ages of 55 and 65, is $60,000, which means a pension of about $250 a month. That is not enough to retire with dignity.

Doubling the Canada Pension Plan rate—from 25% to 50%—would result in an increase in contributions of less than 6%. That increase would be shared by workers and employers. These figures were approved by Mr. Bernard Dussault, who was Chief Actuary of Canada from 1992 to 1997. Therefore, the contribution would increase from 4.95% to 7.8%. We are proposing that this be done over a seven-year period, which would require an increase of only 0.4% in order to double benefits for all Canadians.

It should not be forgotten that 93% of Canadians contribute to the Canada Pension Plan. So, we are casting the net very wide.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

What about RRSPs and administrative costs? You provided some numbers. Do you have an idea of the cost of your proposal?

[Serge Cadieux]

I read that the cost of administering the Canada Pension Plan is 0.25%, as opposed to more than 10% or 20% in administration costs for defined benefit plans or even RRSPs. There are clearly economies of scale to be had in a public plan.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

I have a brief question for the witnesses from Nortel. We are all questioning why the Conservative government did nothing to help you. The three Opposition parties agree that something has to be done. At the same time, the Conservative government stepped in to help the auto industry. It provided billions of dollars in assistance, including protection for the pension plan. The strange thing is that they did it for that industry but have done nothing for you.

I would be interested in hearing your comments.

[Lee Lockwood]

Well, I sent a letter to Mr. Flaherty decrying the whole bailout of General Motors and Chrysler, saying they are market failures, let them go with the wind. Mr. Flaherty wrote back stating there was such a major infrastructure of businesses depending on the automotive sector that they couldn't allow it to go down. The labour automatically became a partial owner of the new venture.

We didn't have a chance to get a bailout, even though we had several product lines that were very successful around the world. I guess we're second-class citizens.

[Tony Wacheski]

From Nortel's perspective, we aren't asking for a bailout; we're asking for the laws to be changed to address the terrible injustices. I agree that the auto industry is important, and if the United States does it we have to follow suit. But with Nortel, there were so many terrible things that happened with respect to almost criminal behaviour in the company, and all we are asking is that we correct these laws that are perpetuating it.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Mr. Cadieux, you talked about amending the Bankruptcy and Insolvency Act so that employees are deemed to be secure creditors. I would be interested in hearing more on that.

[Serge Cadieux]

The example given by my colleague to my left is a telling one. In this country, it is abnormal for workers who have contributed to a pension plan—in other words, deferred wages—and are relying on pension income to get them and their family through old age to have to face a situation where the employer goes bankrupt but their pensions are not secured.

Let us take the example of GM. Their pension plans were 39% capitalized. If GM had gone bankrupt, it would have been a catastrophe for workers and retirees. There is a significant gap there.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

How much time do I have left, Mr. Chairman?

[The Chair, Conservative, James Rajotte]

You have 30 seconds left.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

In reality, we are aiming for more extensive public protection. The costs will be borne by workers and employers. If we pay less in defined benefits or under other kinds of plans, employers could contribute and build up the Canada Pension Plan. Is that your goal?

[Serge Cadieux]

Yes, exactly. It is actually a transfer of funds. The employer would not pay more; he would simply pay less for the defined benefit plan and more for the public plan—because most of these are registered plans.

[The Chair, Conservative, James Rajotte]

Merci.

Mr. Wallace, please.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman. And thank you, guests, for coming today.

I need to put this on the record. The Bloc member indicated that federal money went to GM's pension plan, which is absolutely not correct. We did provide some loan guarantees to get them over the hump, but they paid us back, actually this week. We all are owners of GM, and I hope they pay us back through a stock option that they're doing. Anyway, I just want to be clear that it's not the case.

First of all, just for my own understanding, I have a question for the Canadian Office and Professional Employees Union. I think you were very clear on what you're looking for, which I really appreciate. But who do you represent? I don't know who you are, who makes up your membership. I would like to know that, if I could.

[Serge Cadieux]

Our members work in both the public and private sectors. We have members across the country, from Quebec to British Columbia. We represent professionals such as lawyers, engineers and architects. We also represent people who work for school boards in Quebec and for B.C. Hydro in British Columbia—in other words, technicians, office employees and professionals. That is our niche. We do not represent any particular industry sector; rather, we represent many different fields of activity. However, we only represent white-collar workers—office employees, technicians and professionals.

[Mike Wallace, Conservative, Burlington, ON]

How big is your membership?

[Serge Cadieux]

We have 40,000 members.

[Mike Wallace, Conservative, Burlington, ON]

Thank you.

If I'm a lawyer, I can just sign up with you and pay my union dues to you. Is that how it works? Are they all within corporations, or are they private individuals too?

[Serge Cadieux]

They are not lawyers working for private law firms. They work for specific employers. For example, we represent the lawyers who work for the municipal court in Montreal, as well as government lawyers and B.C. Hydro engineers. They all work for a specific employer.

[Mike Wallace, Conservative, Burlington, ON]

I'm not trying to criticize you. I'm just trying to find out who you represent.

Have you surveyed your membership on how they feel about a doubling of the CPP, and if so, how did you do that?

[Serge Cadieux]

We held a convention in 2008 where a number of resolutions were passed. We looked at the issue of retirees, which is a major concern for our members, given that many of them have been affected by pension plan or solvency deficits.

Everyone has clearly understood that the way forward is to improve public plans. Defined benefit employer pension plans would remain in place, but it is important to go beyond the current 25% coverage under public plans, and also increase maximum pensionable earnings, which we feel do not reflect today's industry realities.

[Mike Wallace, Conservative, Burlington, ON]

Are most of your members in a defined pension plan?

[Serge Cadieux]

Yes, most of our members are covered by defined benefit pension plans. As I stated in my presentation, 80% of the members we represent have a pension plan. For most of those 80%, it is a defined benefit plan, but there are also defined contribution plans.

[Mike Wallace, Conservative, Burlington, ON]

I appreciate that. Thank you very much.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Mr. Chairman, I have a brief point of order.