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.
1:10 p.m.
General Director, Tax Policy Branch, Department of Finance
That will be deductible in the same way the current contributions are deductible.
1:10 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
There's also the aspect of the higher CPP contributions if the employer reduces, on the RPP side.... There will be no impact. That's the explanation I was looking at.
1:10 p.m.
General Director, Tax Policy Branch, Department of Finance
Yes, it is possible for employers as well as for individuals, through their RRSPs, to substitute. If they're already at the point where they believe that their level of savings is adequate, they can decide to contribute less, for instance, to their RRSP or, through the employer, to the pension plan, which is also a key reason that the additional CPP contributions for the employees are made deductible.
1:15 p.m.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
As a final follow-up, in terms of actuarial analysis, my understanding is the CPP is actuarially sound for the next 75 years, according to the last review.
1:15 p.m.
Glenn Purves General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
That's correct. For the core CPP, the last actuarial review, which was the 26th review, was conducted in 2012, and the contribution rate of 9.9% was found to be sustainable for the next 70 years.
1:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Yes, it's 70.
1:15 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
Thank you very much, Mr. Chair.
Thank you very much for being here. I have some questions regarding the legislation around the Canada Pension Plan, so I'm going to be quoting from that. You guys have somebody there who can help me with process.
I bring it up because there's a process that has been in place for the last 20 years, as noted in the most recent annual report of the Canada Pension Plan. It was tabled by Minister Morneau.
What it says is very specific in setting out for Canadians what the process is to ensure the financial sustainability of the CPP, which was the question you were just asked.
It says very clearly that every three years the ministers, federal and provincial, will meet in order to make recommendations as to whether benefits and/or contribution rates should be changed. They base their recommendations on a number of factors, including something called the Actuarial Report on the Canada Pension Plan, which is prepared every three years.
My understanding of the process, from looking at the section on the financial review, is that after 1997, once every three years everybody shall review the financial state of the Canada Pension Plan. Then there's a process about how you make any changes.
This is my question: was this process followed this time for these changes?
1:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Thank you for the question. Let me answer it in two parts.
The first part has to do with the actuarial report or review, and you are correct that there's a regular process for reviewing the actuarial soundness of the CPP. The last one, as I said to the member, was done in 2012, so we can expect the next one, the 27th report, to be completed sometime this fall.
The process is that it's provided by the Office of the Chief Actuary, meaning the chief actuary himself. It is provided to the Minister of Finance. The Minister of Finance then has a certain time frame—five business days—to table it within Parliament.
That's distinct from any process for dealing with an enhancement to CPP, which I think is the second part of your question. In the case of an enhancement to CPP, there are rules in the legislation about how to carry out an enhancement. There are guidelines saying that the CPP enhancement has to be done on a fully funded basis. Then there are guidelines in terms of changes to legislation, and then what the responsibilities of provinces are with respect to orders in council. On the process basis, that's how it's done.
1:15 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
Okay. I understand that, and we're talking about the same part of the act, but my understanding is that there has to be a formal response in the form of a triennial review. Has that happened?
1:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Once the 27th actuarial report will be tabled—
1:15 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
No, I mean for the last one, because we're still in the open period for the last one. Is this the process?
1:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The last triennial review was completed in 2015, I believe.
1:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Just to be clear, the tabling of the actuarial report is what triggers the launching of the next triennial review.
1:15 p.m.
Conservative
1:20 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
The main finding, of course, was the sustainability of the plan. The provinces and territories and the federal level get together and decide what items they would like to review for the period, and for that period, not many items were identified.
1:20 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
This concluded in 2015, as you said. Somewhere in the last nine months, something fundamentally changed from what the provinces and the federal government had concluded, since we now have these very large changes to the Canada Pension Plan. Is that why we're not going to be waiting for the next actuarial report instead of going through the triennial process?
1:20 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Typically, the triennial review does review different aspects of the plan. It looks at retirement benefits. It looks at secondary and ancillary benefits and at all the plan's components. The view was that the calibration of the core CPP was on a sustainable basis and there was no decision to make changes at that time.
1:20 p.m.
Conservative
1:20 p.m.
Liberal
The Chair Liberal Wayne Easter
I know, but that's too bad. You should have asked it earlier.
I am going to fit in a question if I can throw it in here.