Mr. Chair, on behalf of the CSN, representing nearly 2,000 unions active mainly in Quebec, I would like to thank you for allowing us to appear before the Standing Committee on Finance on the important topic of the future of Canada's pension plans.
From the outset, I want to commend the initiative and the elements of the bill because they are designed to improve the financial security of Canadians when they retire. We think this is a very important goal. When they retire, most Canadians rely on the Canada Pension Plan as their main source of income.
The bill contains two main measures, which we support. The goal is to increase the income replacement rate from 25% to 33% and to increase the salary considered in the income replacement rate.
While we support those two measures, we feel that it should take a little less time to implement them. For many years to come, the majority of Canadians with a significant lack of income at retirement will not benefit before all this is fully implemented.
While this is a step in the right direction, we believe it is important to consider some other elements and to significantly consolidate the other pillars of the retirement income protection, private plans and other aspects, such as the guaranteed income supplement and the old age security program.
For the poorest workers, it would have been desirable that the preferred measure to guarantee the improvement of their income should not be fiscal, but rather integrated into the pension system, since they are not immune to much faster and frequent changes in tax rates. If perhaps we had taken a little more time, we could certainly have looked at options to raise the income level, while not imposing any form of additional contributions for lower income workers. The latter are those whose income is less than 50% of the maximum pensionable earnings.
The other measure that is of great concern to us is the integration with private plans. In our view, the current proposal is a step forward, but it is basically an upgrade, considering that the last few years have been rather difficult for pension plans with the many cuts and reductions.
Right now, employers must also maintain their company's pension plan. Where none exist, we think steps must be taken to establish them. The main challenge we face is to ensure that, for all the pillars of retirement income, we do not receive something from one hand that is taken by the other. We must not end up in a situation in which the retirement income of the worst-off workers is not improved, when all is said and done.
In conclusion, we welcome the bill. However, although this reform is not enough to solve all the problems within Canada's pension system, it is a step in the right direction. Increasing the income replacement rate from 25% to 33% is a step in the right direction, but this will not allow a large proportion of workers to reach the levels of savings required to ensure adequate income replacement upon retirement.
Several recent reports have noted the challenges of private pension plans and Canadians' low level of savings. It is believed that Canadian employers are increasingly shirking their obligations, which include putting adequate pension plans in place and contributing to their employees' retirement savings. This is because no law exists in Canada requiring employers to pay into a company plan as is the case in a number of OECD countries.
Requiring contributions from workers and employers encourages the establishment of adequate pension plans, which is not achieved by strict reliance on individual savings. International experience demonstrates not only the ineffectiveness of voluntary and individual saving measures, but also the difficulties people encounter while trying to understand, manage and determine the contributions required and the best investment choices on their own. All of that speaks in favour of strengthening the three pillars of Canada's pension system.
For all those reasons, we welcome the initiative and we look forward to further reflection to continue moving forward and ensure that all Canadians have a better retirement income.