Evidence of meeting #32 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was retirement.
A video is available from Parliament.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
I have a couple of quick questions, mainly for my own information.
When someone retires, there are other programs for retirees, especially if CPP is their only retirement income. Can you elaborate on what those are and what they would pay as maximum amounts on a monthly basis?
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
That's true. There are many pillars. There are three pillars of retirement. In terms of the CPP, the maximum, which is called YMPE, yearly maximum pensionable earnings, would be $13,100. I think the minister mentioned that already. That doesn't include any enhancement that would come forward; that's just the core.
On top of that, it really depends on your income. There is an income-tested program called OAS—
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Let's assume there is no additional income. What's the maximum OAS?
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The maximum OAS would be $6,880.
Conservative
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Then with GIS you're looking at about $10,000 on top of that.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Effectively, at maximum those two subsidy programs today are higher than the CPP benefit, right?
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
This is assuming someone does not earn anything and has no working income in retirement.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Those are all government-funded programs. Those aren't employer-employee programs; they're effectively government subsidized.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
They're government programs.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Right.
It allows the government at some point in time, as these numbers start to come, to potentially bring that down. Is that a fair assessment? Would some of that gap be filled by enhanced CPP?
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Yes. Effectively, there could be a recovery tax rate. As more income is generated, the amounts could come down, specifically on the GIS portion.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
Part of your responsibility, I presume, is to ensure that the minister has the broad range of information to help make decisions.
I asked the minister who he had consulted on this issue. Frankly, I didn't get an answer, so I have to conclude he consulted no one.
Does the department get what I would call stakeholder input before embarking on a major decision like this? Would you have met, for example, with the Canadian Federation of Independent Business and with labour unions? Did those kinds of meetings take place?
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
At the official level, depending on the policy file, we have numerous discussions with all sorts of interested parties. There's a CPP committee involving provincial officials with whom we're in regular contact. There are regular engagements with stakeholders that happen on a whole host of different policy issues. There are budget consultations that continue to go on. It's a normal feature of any department to do that.
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
What would be the consensus that you might have come to after those meetings?
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
It depends, on a policy-by-policy basis.
Conservative
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
On this policy specifically, the outcome in June is a reflection of, as the minister said, the engagements at the finance minister level that they've had together. I can't speak to any private engagements that they've had or—
Conservative
Ron Liepert Conservative Calgary Signal Hill, AB
He seemed to indicate he didn't have any.
I'm not interested in your discussions with other finance departments across the country. The business community is eventually going to have to pay for this, so I'm asking you, as a department that's charged with giving the minister advice on policy decisions whether those kinds of discussions took place specifically on this issue.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
CPP—
Liberal
The Chair Liberal Wayne Easter
Excuse me, Mr. Purves.
Maybe Mr. Champagne could shed some light on the political side of this equation, rather than putting you on the spot about the consultations.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Thank you, Mr. Chair, for putting me on the spot.
I think the minister was clear when he said he did consult widely on this issue. He had a number of town hall meetings this summer, as he mentioned, where he consulted. That's part of our role. We consult on an ongoing basis about all policies. As you know, we did that on a pre-budget consultation, as the officials said. We consulted with constituents and with business throughout the summer. I think the minister was very clear. To suggest otherwise is not in line with the record.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
Thank you, Mr. Chair.
I was just looking at some of the rates. We heard a question about rates and how competitive Canada is.
I was just looking at the OECD report from 2013. In fact, Canada has some of the lowest contribution rates in the world. If you look at Austria, you'll see it was around 22.8% in 2012. In Estonia it's 22.8% as well. In France it's 16.7%. Even the United States has a contribution rate in 2012 of 10.4%. Mexico, really our only competitor in North America, actually has no contribution rate and essentially no pension plan or protection for their workers.
What efforts have you made in looking at some of the different rates in other world markets, whether in Singapore, Hong Kong, or Taiwan, and how do they relate to Canada and what we're doing?
September 19th, 2016 / 1:50 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Overall, I'd say that leading up to this there's been a lot of looking at different benchmarks in different retirement systems. The minister highlighted that Canada has a world-class system, and I think that's recognized at the OECD.
There are considerable challenges facing young workers. In terms of the demographics, for instance, young workers are going to be living longer, and there's a question of whether market returns will be at the same level they were in the past. In addition, if you look at the evolution of defined benefit plans, in many jurisdictions you'll see that defined benefit plans are moving away from the private space and many of the jurisdictions that you noted are actually looking at defined contribution plans.
A lot of this enhancement is about trying to bolster the portion of a defined benefit plan that is within a Canadian retiree's portfolio—