Evidence of meeting #2 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was employers.
A recording is available from Parliament.
Vice-President, Research and Standards, Certified General Accountants Association of Canada
I may have lost the thread, but in terms of what these numbers will look like going forward a year and what we've talked about here today, there's no reason to believe they're going to improve a lot. In fact, they have to worsen.
If we're talking about CPP, I think that opportunity merits consideration. Now, this is a personal opinion, but supplemental CPP programs with opting-out provisions is a very interesting--
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Why would you make a distinction between public pensions and private pensions?
Vice-President, Research and Standards, Certified General Accountants Association of Canada
Because I see them as very different instruments funded by very different contingencies. Private plans are struck between employers and bargaining units, and they're part of a collective agreement, very typically. They're brokered by very specific people, whereas the CPP program--
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I understand that, but you're looking at some pretty awful numbers, and employees have to come to some pretty serious considerations as well in their bargaining. Surely what's good for the goose is good for the gander. Why not across the board?
Vice-President, Research and Standards, Certified General Accountants Association of Canada
I would suggest that I don't have the expertise to give you a revealing answer on that. All I can share with you is that in our discussions with people, with employers, and with sponsors, there is a concern that we're not going to help those who most need the help. In other words, whether they're private programs or public programs, the executives and the higher-income earners will be able to opt in more easily or with greater privilege than those earners under $35,000, as I cited earlier in response to Mr. Menzies' question.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Let me just direct that question to Mr. Charbonneau.
What's your reaction, from an actuary's standpoint?
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
It's a very complicated question. How many minutes do I have to answer that?
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
There is a difference between the public plans and the private plans. His numbers were for private employer plans.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
The legislation across Canada protects accrued rights. When he's looking at liabilities for somebody who is actively employed and they look at 30 years, they say they'll pay your pension at age 60 if you have 30 years of service. Of course, if they change that promise and say they'll pay you your pension at 65 instead of 60, it would cost a lot less, probably half the amount. But you can't touch it. It's an accrued right.
If you change the rule for the future and say that from now on their extra credit is going to be paid at 65 instead of 60, the costs will go way down, but like he said, it's part of the bargaining process. If they say they'll cut the pension next year, it can be viewed by the unions as a cut in their salary or compensation, so they're going to bargain for something else.
So yes, the retirement age is the number one...well, one of the very, very key considerations in the cost of a plan.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
But you almost seem to think it's a sacred cow, almost beyond touching.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
I'm not saying that. That's what the legislators have said across Canada: for what you've accrued so far, if you have a promise at 60, don't change it in the course of employment.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
There are ways of changing it within certain limited situations. For example, certain laws say that if employees sign an agreement to cut back on accrued pensions, it can be done. In some cases, they could say if you haven't earned the complete right to that pension and you're not yet 60 years of age, we can cut it. But the employer would then have to impose cutbacks, and you'd have to find a way to make it palatable to the employees.
It's not a sacred cow. If legislators can change it, that's great. It would be a way to improve the funding stress of the employer's schemes, but it would be at the expense of benefits that go to employees.
Conservative
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
Thank you, Mr. Chairman.
Thank you for your presentation. I was expecting to hear more French when I saw the number of francophone names on our list. However, you have the right to give your presentations in French, so don't be shy about that. It would certainly help the native French speakers.
What I remembered from Mr. Georgetti's statement was his recommendation that we double the Canada Pension Plan. As members of Parliament, we have obviously heard from voters who have been affected by their pension losses. So that is basically what we are looking for: how to help them better protect their retirement investments. After hearing the presentations, it has become clear that there is no easy solution. Mr. Benson said that it was ultimately the highest wage earners who were the most protected with the best plans. So what we, as parliamentary legislators, are seeking is a minimum threshold of protection for all Canadians.
So one solution could be to double the Canada Pension Plan. In Quebec, that would be the Quebec Pension Plan. This is a mandatory pension plan administered by the government which automatically forces us to save. We receive a certain amount at retirement. It is independent of private sector plans. I would like to know what each of you thinks about this approach, which may be part of the solution. What do you think of improving mandatory public plans in a similar way? I will ask Mr. Charbonneau to go first.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
Thank you, Mr. Carrier. I apologize for not having spoken more in French. I just wanted to make sure that everyone would understand. We did not have much time to prepare, but all of our documents are published in both languages. Our statement and the white paper, which we have brought with us, are also in French.
In fact, the white paper looks at alternatives, namely increasing the QPP and the CPP. There are pros and cons. I don't know whether you would like me to go into detail, since that will be the subject of another meeting, at which we hope to share with you our solutions. One of the drawbacks to such an approach, and this is something everyone agrees on, is that low wage earners do not have to save more. They are already sufficiently protected under current plans. If QPP rates were to suddenly double, if contribution rate schedules, which now vary between $3,500 and $46,000, do not change, these people will be forced to save when most observers say they do not need to do so now. However, there are other approaches to the CPP and the QPP, such as increasing the QPP, but not for low wage earners. We could simply ask for premiums to kick in from $35,000 to $40,000. There are several solutions and several ways to achieve this. As I have been saying from the start, theory depends on practice. A solution is not intrinsically good or bad, it all depends. As we say in English, the devil is in the details. There may be an upside to an approach, but there may be downsides, as well. We have laid all of those approaches out in our white paper.
Bloc
Legal Counsel, Bell Canada, Canada Post, Canadian National Railway Company, Canadian Pacific Railway Limited, MTS Alstream and Nav Canada, As an Individual
If you are considering a significant increase in public pensions, you have to set things in their proper context and look at the issue from different angles. First, regarding employers who integrate their own pension plan with a public one, it is clear that if you increase public pensions, you will decrease the cost of the private plan, so you won't get any push back from the employers. The difficulty with increasing public pensions, either by increasing the public pension rate or by increasing the share of the salary which will be covered, is that, today in Canada, these plans are voluntary. Private pension plans are voluntary. So, it is clear that when you increase premiums—and there's been talk of a 40% increase in premiums—small- and medium-sized enterprises will perceive this as yet another payroll tax. Whether you agree with this or not, that is how it will be perceived. So there will be a problem of competitiveness, a problem of costs, which will be harder to bear than one might think.
On the employer's side, at least, there will be a major problem, especially for companies which, for now, for all kinds of reasons, have chosen not to provide a pension plan. This becomes a serious issue.
Conservative
Conservative
Mike Wallace Conservative Burlington, ON
Thank you, Mr. Chair.
I want to thank the panellists for coming today. We're just starting this study, and it has been a very good start.
Because I have only five minutes, I would like to focus on one of the suggestions from the Canadian Labour Congress. I'm not familiar with it, but it's the insurance aspect. You talked about the insurance piece. I have a few questions that maybe you can answer for me.
First of all, the insurance program you're suggesting would be managed by government. Is that correct?
