Evidence of meeting #55 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was enhancement.
A video is available from Parliament.
5:15 p.m.
Director, Economic Studies and Policy Analysis Division, Economic and Fiscal Policy Branch, Department of Finance
Since our two systems are fully integrated between the CPP and our pension plan, the increased contribution to CPP is going to be offset by a decreased contribution to RPP, so my feeling is that it will be zero for the federal government.
5:15 p.m.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
That's the retirement plan for civil servants. Is that correct?
5:15 p.m.
Director, Economic Studies and Policy Analysis Division, Economic and Fiscal Policy Branch, Department of Finance
Yes.
5:15 p.m.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
One of the issues I always had, when I was in the army, was that we had this superannuation act where you pay your money in, and then you retire at maybe 55 or 60, after 25 or 35 years of service, and you get 2% a year. Once you hit 65, though, you actually see a decrease in the CPP amounts you receive, even though you paid into it, and you paid into your military pension. I understand this is with all civil servants.
People now in the military aren't joining at 19 years old as often. There are people who are even in their forties, and you can join into your fifties. I'm just a little concerned that they're not going to see the full benefit of this enhancement for all civil servants because they'll still have that cutback or that taking away from them.
5:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Just to add to Claude's first question on the CPP enhancement, the answer is that this legislation is intended to put it in place. There is a long trajectory to have it ramp up. There hasn't been any decision taken on how it will impact on the public sector pensions. To say that it's an automatic adjustment is not the case with respect to the enhancement, so it's very difficult to conclude that at this point. It's something the government will have to consider and take into account.
5:15 p.m.
Liberal
5:15 p.m.
Liberal
The Chair Liberal Wayne Easter
You have more time.
I'll interrupt you for a second, though—and I won't take the time from you.
Mr. Purves, on your response, are you suggesting that this is a matter of negotiation with the public service unions or whatever?
5:15 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
I think that over time, effectively, once legislation is put in place and these changes to pensions occur, there will naturally be a reaction by any other party that's involved or impacted. I'm saying that it's impossible for me, here in this position, to project what that impact would be; but it would happen in the private sector or anywhere.
5:20 p.m.
Liberal
5:20 p.m.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
In your consultations, I was just wondering if you could describe what the reaction is from the labour unions, employers, employees, and other groups you've come across so far in your discussions about implementing this new enhancement.
5:20 p.m.
General Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance
I think that since the legislation has come out, there has been engagement with employers and so forth in terms of reaction to the legislation. I would say broadly that it's been quite positive.
I would say that British Columbia did a consultation, for instance, that came back quite positive, and this was very late in the process. Manitoba is doing a consultation on the triennial review right now that isn't linked to the enhancement, but so far, I would say that broadly we have not received any explicit negative reaction.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you, Mr. Chair.
Thank you to all of our witnesses for the work you do for Canada.
I'm just going to make a quick comment, and then I'll get right into my questions.
Mr. Purves, I appreciate the work you do. However, I would say that, unlike Mr. Montambeault, who actually came and made sure we had a briefing here, it's disappointing when parliamentarians cannot have.... I was able to get a copy of your statement. Part of it is English and part is in French, and I think that puts other members at a disadvantage. I would hope that, in the future, anyone from Finance Canada who comes in will make sure this committee actually has their statements ahead of time so that we can be more informed and ask better questions.
I'll start first in regard to the working income tax benefit on a dollar-for-dollar ratio. Mr. LeBlanc, if someone is, let's say, working, low-income, will they receive that benefit dollar for dollar so that it compensates for any loss of income?
5:20 p.m.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Sure. What I can do is give you an example. I'll start with one example for 2019. Take a worker who is making $15,000. We're projecting that they'll receive about $150 more in WITB. We're projecting that their employee contributions to CPP, they'll pay about $100 more net of tax. That's about fifty.... Now, it will vary. I picked a particular income level, so it will vary, but that's an illustration.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Do you feel this is going to allow people who are working and on a low income to be able to provide for themselves despite the added contribution rate?
5:20 p.m.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
The idea is to provide a general offset for that additional contribution during their working years.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
We received from the Library of Parliament a briefing note. On page 2, it talks about the following:
When the period during which second additional contributions have been made is less than 480 months, the proposed SAMPE would equal the total of monthly adjusted second additional pensionable earnings, divided by 480.
My understanding is that people who are putting in that second additional pensionable payment will be putting more in. When they go to receive it out, then they will be getting less compared to someone who's been in for 40 years. Is that correct? Could someone explain it?
5:20 p.m.
A voice
Yes, if possible.
5:20 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Sure.
It says:
When the period during which second additional contributions have been made is less than 480 months, the proposed SAMPE would equal the total of monthly adjusted second additional pensionable earnings, divided by 480.
At 480, with 12 months in a year, then that's 40 years. If someone makes 40 years of payments into it, then obviously they would get that amount back, but if someone does not put in the 40 years and only puts up...they still are divided by 480. Why is that?
5:25 p.m.
Liberal
5:25 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Maybe they can look at it, Mr. Chair. I'll just go on to someone else, and we'll come back to it.