Finance Committee on March 30th, 2010

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Carrier, you have five minutes.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you, Mr. Chairman.

I have a question for Ms. Eng regarding the various results of the poll she has showed us.

At question No. 2, it says that most people would prefer a voluntary supplementary CPP system, rather than doubling mandatory premiums. In your presentation, I understood that you would rather double and substantially increase mandatory premiums, rather than have a supplementary program.

The result indicated at question 2 reflect precisely the problem we want to solve. Not enough people are covered by a retirement plan. This is why most people prefer a voluntary system which they will not have to contribute to.

Therefore, would you rather recommend that we substantially increase our pension plan in the interest of solving the problem, despite the fact that most people want something else?

[Susan Eng]

Thank you for that.

You have to understand that in that question we were asking members to distinguish among the different options there. You're quite right to point out that if we simply went on the basis of this, we would only be recommending a supplementary CPP. However, the point we're making here is simply that if you look at the whole thing, only 3% say do nothing at all. That's the most important message.

As to the different ways of getting to the kind of coverage we want to see, there are many ways of going about it. We are just saying, in terms of covering everybody, that the most obvious way of doing that is to make it mandatory.

A simple way might be to use the CPP, although we are not only recommending doubling the CPP. There are all of these other options on the table, but the essential point is that there must be coverage of the entire gap left after the current public systems are accounted for.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

So you prefer a voluntary plan. You said "mandatory". I am not listening to the interpretation, but I think that means "voluntary".

[Réjean Bellemare]

It means mandatory.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Oh, mandatory. So it's the opposite.

I agree with you on that point. You are looking for a solution which involves a mandatory contribution. You seem to share the position of Mr. Bellemare from the FTQ.

However, regarding that solution, don't you think it works against low-income earners and small businesses, neither of which have very high revenues?

This question is for you, Mr. Bellemare.

[Réjean Bellemare]

It is based on a percentage of one's salary. A low-income earner will contribute a smaller amount, but will still receive enough to replace his salary. If a worker is already below the poverty threshold, that will not change. There is also a social aspect to this issue, which can be covered by a government contribution, if it wishes to subsidize very low-income earners.

But I am referring to a plan which both employers and employees would contribute to, and which would replace plans which, in my view, are more expensive.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

There is a problem as far as low-income earners are concerned. Throughout their working lives, they earn so little that they can barely meet their own needs. It is hard for them to put a bit of money aside. That is why many of them don't save. If we doubled the Quebec Pension Plan—this would apply to Quebeckers, of course—these low-income earners would be forced to save for retirement. They would only receive old age security or their pension when their working lives are over. But don't you think that these people really need money during their working lives?

[Réjean Bellemare]

The point of having a mandatory plan is to force people to contribute. As someone said earlier, when it's voluntary, you get what we see today: very few people are covered by private plans.

I understand what you are saying about low-income earners. Does this call for special measures? We can look at that and talk about it. I have ideas about how to provide coverage. For example, you cannot contribute to the Quebec Pension Plan or the Canada Pension Plan unless you earn more than $3,000. That's one way to ensure coverage. However, employers and employees subsidize the system, and I'm wondering whether it is their place to subsidize low-income earners. Perhaps that should be the government's role. These are all issues we can discuss.

[The Vice-Chair, Liberal, Massimo Pacetti]

Merci, Monsieur Carrier.

Mr. Menzies, for five minutes.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Chair.

First of all, thank you to all the witnesses, and thank you, Mr. Sproule, for coming once again. On a personal note, could you please keep my office apprised of how this goes? You surprised me a little bit with some of your comments today. I didn't realize the changes that had happened, so I'd appreciate it if you could keep us up to speed.

[Donald Sproule]

I think that's a promise I can keep.

[Ted Menzies, Conservative, Macleod, AB]

Thank you.

Ms. Eng, speaking on behalf of Wayne Marston, I would ask why you didn't ask questions about Wayne Marston's private member's bill and get comments and feedback from your membership on that.

[Susan Eng]

Well, I will.

[Voices]

Oh, oh!

[Ted Menzies, Conservative, Macleod, AB]

You owe me one, Wayne.

I was just wondering about that, if we were going to analyze all of those things.

[Susan Eng]

To make a point about Mr. Wallace's question, you'll find that this sub-sample of our membership is a strong supporter of the Conservative Party, and this makes its recommendations even more forceful.

[Ted Menzies, Conservative, Macleod, AB]

And more credible of course.

[Voices]

Oh, oh!

[Ted Menzies, Conservative, Macleod, AB]

Just a little jest there, Chair.

Mr. Perkins, I'm not sure if I got this number right, but you said you represented somewhere around three million pension participants or members throughout your associations?

[Scott Perkin]

That's correct. It's through our membership, who are primarily individuals who work for plan sponsors or plan administrators. So we're looking at the size of their pension plans.

[Ted Menzies, Conservative, Macleod, AB]

I'm just trying to compare that number with Ms. Eng's 300,000. Not to diminish it, but you're bringing different messages. We're here to understand what Canadians want, and I will argue that's why we're still out there consulting, because, frankly, we're getting different messages from different groups. However, I do appreciate these.

Ms. Eng, I'm sure I heard you mention the 19% before, and in your survey question 15 you talked about 6%. If 19% is going to be the cost, what are those people not going to purchase: food, mortgage payments? That's a big chunk out of their pay cheques.

[Susan Eng]

It is a large amount of money but one that we didn't pull out of a hat. We did consult with Bernard Dussault, who helped us come up with that number. Of course, as you know, David Dodge has also repeated that number in the C.D. Howe Institute's recent paper, indicating that regardless of how you do it, you have to set aside from 10% to 21% of your ongoing income, whether it's as you go along or all at once, in order to have amounts sufficient to take you through retirement. Now, as to how—

[Ted Menzies, Conservative, Macleod, AB]

If I could interrupt, you're saying that we must save 19% to provide that income. A study by Baker and Milligan states that:

...retirement income need not be nearly as large as working income since accumulated wealth would finance retirement consumption.

Who says it has to be 70%? Who says it has to be 80%? Going back to Mr. Perkin, I believe, he said one size does not fit all.

[Susan Eng]

That's accurate, and the numbers range, but there is some agreement in the literature on it being anywhere from 60% to 70%. Even the research papers sent out by the provincial finance ministers based on Mr. Baldwin's report indicated that it was anywhere from 50% to 60%.

These are not numbers on which we can actually make a judgment. That is for the pension summit. However, the point remains that whatever the number is, we're not meeting those targets at the present time, and something needs to be done to ensure that we have those kinds of savings.