Thank you very much. I have with me Dr. Joel Harden, our expert on this issue.
We were of the view that this hearing was about federally regulated pension plans, but I sure appreciate the comments I've heard so far.
I want to talk first of all about federally regulated plans. The pension plans of a few large employers, federally regulated, account for most pension plan coverage in Canada, and the solvency funding for these employers is well above the average. It's greater than 85%, so in the overall scheme of things, they're doing not badly relative to most. The presentation from the actuaries was completely consistent with our concerns as well.
We're saying that the federal government did announce some positive measures recently to improve pensions in the federal sector, including a requirement for employers to fully fund pension liabilities when plans are wound up and for immediate vesting rights for workers upon joining a workplace pension plan. We continue, however, by saying that fixing federal sector pensions isn't enough. We say that Canadians are looking to Ottawa as well for more details on this pension consultation announced in the budget of 2010, and we'd like to know when and where these hearings are happening. We know there are hearings starting, I think, in April on financial literacy, and I'll talk about those in a moment.
In Budget 2010 there was also an announcement about promised bankruptcy law changes. What is the scope of these changes, and is the government prepared to consult on these changes before it puts them in place?
We'd also like to know your thoughts on pension reform heading into the finance ministers' meeting in late 2010. Minister Flaherty did announce consultations, as Mr. Benson said, but to date we've heard nothing in terms of when, where, and how. We are having our own pension consultations, and let me tell you that we can't find rooms big enough. They fill up awfully fast with people who have concerns about their security.
After saying all that, despite the short notice that you gave us for these hearings, I want to talk about a couple of things. I certainly agree with the actuaries when they talk about enhanced protection of employees' rights to a pension that they've invested in. We have a plan in place, and you can see it in our brochure. For a very small amount of money--in fact, for $2.50 per person per year--we could provide pension insurance, for a benefit of $2,500 per month for life. That's pretty cheap insurance when you think about all the insurance aspects of life. We have to insure our cars, our boats, our trailers, our houses. Even our savings accounts are somewhat insured, yet there's no form of insurance, except for Ontario, for pension plans to ensure that people get the benefits they're entitled to. We'd like to see some action on that.
I want to tell this committee as well that despite some of the hyperbole you heard out there, today 1.6 million Canadians are living on less than $15,000 a year. These are people who worked all their lives to try to get by and are living on less than $15,000 a year. I dare say that's not very much money if you're living in any Canadian city today, but that's what happens.
As well, there are significant shortfalls in our pension system right now. There's no doubt about that. I don't have the exact numbers; my friend with the actuaries does, but let me point out something about all those registered DB plans that he talked about. Did you know that 40% of those DB plans belong to less than one percent of the population, and that 47% of those plans are registered to groups of 10 or fewer people? I don't have to tell you who most of those people are, but most of them work on Bay Street or on other streets like that around Canada.
I'll mention Don Stewart, the CEO of Sun Life, who is heading up your financial literacy task force across this country. His company just closed its DB plan last year to new employees. They only get DC plans. However, Mr. Stewart is entitled to a DC plan of $1.4 million a year indexed for his life, and he's telling employees who are starting to work for him that they're not entitled to the same kind of plan that he gets. You get a DC plan, and if the market is up when you retire, you're okay; if the market is down when you retire, as it was in 2008, well, that's your tough luck as well.
Is that financial literacy? Is that what we're going out to teach Canadians about? I think it's coming to the point that there are two systems: there's one for the haves and another one for the have-nots.
I must say that the members I represent are lucky enough that we have, as Phil said, deferred some of our wages into pension plans that will, we hope, deliver a benefit that we want. But the vast majority of Canadians don't.
I challenge you as members of the committee and also as MPs to listen to some of your constituents' stories about how much dignity they lose when they find themselves not only without a job but without a pension and without a way to earn income. We hear them every day when we go on our hearings, from people who have to decide whether or not they're going to feed the cat and dog, or feed themselves.
I think this issue is not about numbers. This issue of pension security is about people. I encourage the committee to talk to real Canadians about the struggles they are seeing. Talk to some of those Nortel workers who thought they had something, which disappeared because the guarantee they thought they had wasn't there.
We could give you all sorts of information, but the best approach, which I want to leave you with, is to increase the best pension plan that exists in Canada today, and that's the Canada Pension Plan. It has the lowest administrative cost, it's portable, it's indexed, and it's guaranteed, for all intents and purposes. For an increase of 40 basis points—that's four-tenths of 1%—per year for seven years of increased premiums, people starting on that plan today would retire with a double CPP benefit of $1,635 a month, which would put them at about $22,000 a year in today's dollars.
For people who have pension plans that are integrated, it would actually save employers and governments, over a course of a person's lifetime, 5% of the cost of delivering a pension plan. It would give every employer in Canada who wants a defined contribution plan exactly what they want. All they have to do is make a contribution every month, and every employee in Canada would get a defined benefit plan.
It's the best-managed plan in Canada, which has delivered the only real security Canadians have today and the guarantee of a cheque when they retire.
Thank you.