Thank you, Mr. Chairman.
On behalf of the Canadian Office and Professional Employees Union, which is affiliated with the CLC, I would like to thank the Committee for its invitation to appear today. COPE represents members in both the private and public sectors. Many of its members are in work places that fall within federal jurisdiction, particularly all the employees working for the Laurentian Bank of Canada.
Because of its concern for the financial security of its members, our union has, over time, succeeded in negotiating private pension plans for approximately 80% of its members. However, the financial crisis has severely affected what we considered to be a secure benefit. Despite all of our efforts, difficult negotiations, compromises and sacrifices, we are now seeing significant declines in terms of retirement income replacement. A deterioration in the fiscal position of pension plans has intensified employers' attacks on defined benefit plans. thereby contributing to workers' insecurity, as they are left to deal with market risks and volatile interest rates on their own.
We think it is important to point out that our pension plans, like most private plans, do not include provisions that protect retirees from inflation. We believe that our prospects of enhancing protection of future retirees' purchasing power are, at the very least, jeopardized. We still believe it is important to establish, maintain and enhance our registered pension plans, despite current difficulties. Employers are neither interested in or able to individually support plans when the number and volatility of those plans may be an obstacle to their potential profit margins.
The problem has far more to do with the inability of public plans, such as CPP and QPP, to provide more than 25% of maximum pensionable earnings. We firmly believe that a public, universal plan that provides better coverage could be achieved in the current environment. Full indexation, universal coverage, risk-sharing among society as a whole, portability and protection from job insecurity or discontinuation, as well as economies of scale in relation to administrative costs, all militate in favour of such reforms.
In that sense, we fully support the proposals made by the Canadian Labour Congress, which are intended to double CPP and QPP benefits. We are also of the view that the way to improve economic conditions in retirement is definitely not to add a second level to the CPP and QPP plans in the form of voluntary RRSP-type contributions. In order to meet our goals, factors such as mandatory plans and plans that can provide indexed predictable pensions are critical, in our view. We also believe that the amount of maximum pensionable earnings must be adjusted upwards, which would allow many workers to benefit from a more acceptable replacement income, in relation to the wages they were earning prior to retirement.
With respect to the financial security of our active and retired members, we are also calling for better protection of monies invested in pension plans in the form of deferred wages, as well as protection for retirees' pensions. We cannot afford not to guarantee protection, from the uncertainties surrounding a business' financial health, of savings accumulated over a lifetime. There is a cloud of insecurity over workers in the pulp and paper industry, and the same applies to people working in companies which are having financial difficulties, are in the process of restructuring or are threatened by globalization. Social security must be reviewed.
Finally, for the benefit of all Canadians, we believe that a social security system worthy of the name must afford the most disadvantaged members of society the financial protection that will raise them above the poverty line. Unfortunately, not all of them have had an opportunity to contribute to a pension plan. It is our duty, through the Old Age Pension and Guaranteed Income Supplement, to ensure the welfare of these individuals who have contributed to our society's advancement. Therefore, immediate and significant enhancements are necessary.
Our union organization has held consultations with its constituency and has passed resolutions that support the CLC proposals. These proposals have been greeted with enthusiasm because they represent accessible reforms that can be gradually implemented. We can do better and we must do better.
COPE is proposing to double defined benefits under the CPP and QPP, in order to guarantee a better minimal pension for all Canadians. It would be funded through a minimal, gradual increase in contributions over a seven-year period. Increased contributions would double the average amount of replacement income provided by CPP pension benefits, raising the maximum benefit to $1,635 per month, in 2009 dollars, but over a seven-year period. Because CPP benefits are indexed to the cost of living, stable and portable from one job to the other, they would provide everyone with a minimal pension income in the form of defined benefits.
We are also proposing to raise the Guaranteed Income Supplement benefit by 15% in order to keep seniors out of poverty. This would stimulate Canada's and local economies in these difficult times. This would be done on a continuing basis given that low-income seniors, who are paid that additional amount every month, would be more likely to spend it to meet essential needs.
We are also calling for mandatory pension insurance, similar to other types of insurance available in Canada for critical assets. A pension is one of the most important assets a worker can have. That insurance would be funded by pension plans and by a 0.1% tax on financial transfers of securities in Canada. Speculators who were responsible for the recent financial chaos would thus be required to protect pension funds.
COPE also believes that other measures are required, in addition to the three previous proposals. With respect to private pension plans, there is a need to amend the Bankruptcy and Insolvency Act in order to make workers who contributed to the pension plan secured creditors.