Finance Committee on June 8th, 2026

[Andrew Lawton, Conservative, Elgin—St. Thomas—London South, ON]

Oh.

[The Chair, Liberal, Karina Gould]

You don't have to if you don't want to.

[Andrew Lawton, Conservative, Elgin—St. Thomas—London South, ON]

You know, it's hard to follow Mr. Majumdar, but I will do my best as the mover of this subamendment.

I thank you, Madam Chair. I also thank Mr. Majumdar.

To contextualize the expertise that he offered there, I first encountered Mr. Majumdar when I was working in media. When you could get him—because he was always so busy doing work—he was always one of the most tremendous guests, because of his analysis of matters—not just of what's going on in the world but clearly how pensions work, as well. It was a bit of a throwback, hearing his comments today, which were very welcome and very thoughtful and I hope will move our colleagues, who so far have not shown a very collaborative spirit on our subamendments, to support this one, which is very important.

What I'm getting at here is that we want a report from the Minister of Finance, but we also want to make sure that the report is valuable and offers information that will help Canadians and help parliamentarians, by extension. That's why, as subamendments have come up, we've thought of ways that we could be...not restrictive—I don't want to say that—but prescriptive, yes, on what sort of information would be helpful for that report. I think that our previous witness alluded to some of the challenges that you.... I'm sorry. I don't want to put words in his mouth. He pointed to the report that was already done by the chief actuary. In reviewing that report, we see areas where Canadians, I think, would benefit from having more information. One of them is a basic comparison of different systems around the world.

Some of the information that would be in that would address what I don't want to say are complicated questions, because they're pretty simple ones, but are important questions, such as this: Is the plan fully funded, partially funded or pay-as-you-go?

We know that in a Canadian context, it's partially funded, with large assets that have been accumulated in advance. If you look at the U.S. Social Security system, it takes a very different approach. It's primarily pay-as-you-go with trust funds. You have Australia's superannuation, which is fully funded through individual accounts. Again, that's a very different approach. Then in Scandinavia, which Mr. Majumdar referred to, you have a combination of notional accounts and a funded component. I would note that in Scandinavia they have sovereign wealth funds, but unlike the sovereign wealth fund that the Liberals have proposed, in Scandinavia they have wealth to put in the fund, so it's not an apples-to-apples comparison. Ours was proposed by the Prime Minister to be funded through debt, which is the opposite of wealth, one might say.

Some of the other questions that come up when you're comparing these systems are questions that would be answered in the report if our subamendment were passed—I'm feeling optimistic, so I'll say when our subamendment is passed—and they include this one: Are contributions invested in markets? In Canada, yes, they are, through the Canada Pension Plan Investment Board. In the United States, with Social Security, it's very different. The investment in markets is very limited. You have trust funds mainly holding government securities. If you look at Australia, yes, there are investments. They're through private superannuation funds. In Sweden, yes, they are, but only for the premium pension component. That's a point of distinction that's very relevant.

Then we look at one of the other questions: How important is investment income to paying future benefits? This is one of the changes, interestingly enough. I may be playing fast and loose with the word “interesting”, seeing the reactions from my Liberal colleagues, but it is important, if not fascinating and riveting. In Canada, it's actually growing—the importance of investment income for future benefits—whereas in the U.S., they don't have as much exposure. Their social security system, which is, I'd say, a lot less stable as a result, is relatively limited. In Australia, it's essential: The system does not exist without making gains on the investment income. In Sweden, it is important as well, in particular when you look at the funded component.

One of the other questions that I think should be answered by this report is whether future benefits are backed by accumulated assets. On this one, there's a fair amount of similarity between different systems. It's partly so in Canada and less so in the United States, whereas it is largely but not exclusively so in Australia. In Sweden, I think it's at a somewhat comparable level to Canada, but don't quote me on the exact numbers.

Here's where you get to the crucial part of sustainability, and I think this goes back to the essence of the amendment itself, in that we want sustainability to be a key part of the report. Does the system rely mainly on future workers paying for retirees? In Canada, fortunately, the answer is less so than in traditional pay-as-you-go plans, but it's not a total “no”. In the U.S., that's entirely the case. That's one of the reasons the demographic calculations are so potentially harmful but also why they are so important.

In Australia it isn't because it's primarily individuals' savings. That's where I think you'd probably have, on a spectrum, polar opposites—between the Australia approach and the United States approach—whereas, in Sweden, it's a bit of a mixed bag.

One other question is, does the system have an automatic sustainability mechanism? This is what brings us, exactly, to Bill C-30. We have contribution rates that can be adjusted through the statutory review process, but the reason that statutory review process is so important is that we, as parliamentarians, need to access the information required to change the statute. I don't see why we would limit the amount of information we have available to us by not taking the opportunity to compel the Minister of Finance to produce a report in three months, and also one in five years—a retrospective review that takes into consideration what we've learned, what we've seen and how we go from there.

In the U.S., there is no strong automatic mechanism. It's Congress that has to act, and that's why you have these very dramatic showdowns in the U.S. Congress over this issue. It's always been described as the political third rail, because of all that's implicated in that. In Australia, it very much depends on contribution rules and account balances—again, it's more individualized—whereas in Sweden it's actually automatic, as they've managed to come up with an automatic balancing mechanism.

I think that, when we look at one of the other questions that should be addressed in this report, “Are benefits defined by statute or by accumulated savings?”, well, in Canada, it's a defined benefit, and this changes every year.

Certainly, from my perspective, as members of Parliament we strive for incredible customer service with our constituents. It doesn't matter how or whether or not they voted; we represent all of these people, and I think we take that responsibility very seriously. We have constituents coming to us with a great deal of concern about their retirement—if they're even able to retire, which is a whole other can of worms that's been aggravated by the last 10 years of Liberal mismanagement of the economy.

With defined benefits, there's at least some predictability: You know how much you're going to get, and you know what that looks like. However, the problem with a defined benefit is that you need to then contextualize it and make sure that the fund has enough to pay those benefits. It's also a defined benefit in the U.S. social security system; whereas, in Australia, it's the defined contribution. Again, those are the two ends of the spectrum here. In Sweden, it's a bit mixed, and that's one of the things that have come up.

These are just a few, just a light smattering, if you will, of the differentiations among systems—and I looked at just four countries. I looked at Canada, the United States, Australia and Sweden. If my colleagues would like, I'm happy to look at some other countries, but I think these are four relatively good pillars that give us a pretty reasonable sense of what's happening.

I would ask, just fundamentally, if we were to get the minister to include these data in this report, which I think we should, how does the Canada pension plan's funded ratio compare with peer public pension systems? That is a bit of a mouthful to say, “peer public pension systems”, but I think we can all spit it out. Is CPP closer to Australia's funded model or the U.S. pay-as-you-go model?

Where do we want to go? What are we striving for there? We should ensure that is the frame through which we limit this discourse. What percentage of future CPP obligations are expected to be financed from existing assets versus future contributions? Again, these are very instructive questions for a minister—for all Canadians, basically, and for all parliamentarians, certainly.

Then, on advanced funding, how much of the CPP's current asset base exists because Canada moved away from pure pay-as-you go financing in the late 1990s? Another question is, how unusual is CPP's advanced level of funding among OECD countries? Which comparable countries have accumulated larger or smaller pension reserves relative to annual benefits?

You know, there are some questions we could ask on investment income as well, for the countries that rely heavily on that, as Canada does. What proportion of future CPP benefits are expected to be financed by investment returns rather than contributions? We could also look at the report, hopefully, for an answer to this question: How does CPP's reliance on investment earnings compare with Social Security in the United States? Another question is this: Would CPP remain sustainable if future investment returns were lower than projected?

Then we have the long-term implications. Again, all of us, I believe, want a sustainable system here. We want something that can live out the 75 years in the chief actuary's projections.

Over a 75-year horizon, how does the CPP's actuarial status compare with major pension systems in the United States, Australia, Sweden and other like jurisdictions, even if they have different approaches to the question of how to structure their pension system? Which jurisdictions have automatic mechanisms to maintain sustainability, and does the Canada Pension Plan have comparable safeguards? Finally, for now, what lessons can Canada draw from countries that have faced pension funding shortfalls?

I hope that, with Canada Day approaching in just a few weeks, all of us understand that we live in the greatest country in the world. We want to preserve everything great about this country, and continue working and continue striving. That should be a shared goal that all of us have.

I talk to people from other countries, whether they live here or abroad, and we can all celebrate and love Canada. Whatever policy disagreements and debates we have, we want our country to be better at doing all of the things that we need to have a citizenry that is thriving. We want to make sure that people have the dignity that comes with being able to retire—being able to enjoy spending time with your family, spending time with your grandkids. To have a sustainable pension system is so crucial.

When we look at the structure and design of this, a design that is being recalibrated through Bill C-30, we just want to make sure we have the best information available. If there are things we can learn from other countries, I think we should welcome that in the report that the Minister of Finance should have to do. If there are things that other countries are doing that we need to run far away from, that is also just as useful to know.

I think it's important to run away from much of what the Liberal government has done in the last 10 years economically, which has got us into this mess where CPP is so disproportionately necessary for Canadians getting up in age, relative to the past, when people had stronger pensions and savings to rely on. These are things that have been gutted by....

Some of the Liberal colleagues across the way are new members, so their hands are cleaner, but for others in the Liberal government right now, they're not. Some of them have been here a while. This is why we're trying to safeguard for future generations, and we should all want that.

We have proposed a report in this subamendment, which would very simply force the minister, when drafting a report to Parliament, to compare the Canada pension plan with those of the U.S., Australia, Sweden and other jurisdictions. Basically, we want a pretty reasonable assessment, and I think it's a very reasonable requirement.

The subamendment gets at a key challenge. International comparisons are informative, even if there are fundamentally different philosophies behind these different systems. This is not to change the system in Canada. This is simply to ensure that we are proving the benefit to Canadians, proving the benefit to Canada, and learning what's working and what's not.

If we're going to go through the process, as I hope we will, with the passage of our amendment of having this report to Parliament, I want to make sure it has all of these key details in it to ensure that Canadians have the greatest information available.

Now, if you, Madam Chair, or any of my colleagues have any questions on it, I'm happy to answer those, but that was why I moved that subamendment. I hope we'll find unanimous support from this committee.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Lawton. I don't have any questions for you, actually.

[Andrew Lawton, Conservative, Elgin—St. Thomas—London South, ON]

I'm glad I was exhaustive in my—

[The Chair, Liberal, Karina Gould]

Mr. Jackson, you have the floor.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Thank you, Madam Chair.

I'm glad that Mr. Lawton mentioned that.... At the end, of course, I wasn't exactly sure who had moved this subamendment. I'm glad to know, so that I can thank him for moving what I think is fairly reasonable in a long list of reasonable subamendments to a very reasonable amendment that we have put forward here over the last short while, in terms of the discussion regarding Bill C-30.

Now, I am really struggling, after hearing just the tail end of Mr. Lawton's speech, to understand what the Liberal opposition to this subamendment may in fact be. It reads as pretty common sense to me. We simply want the inclusion of other pension plans that exist across the globe in like-minded countries.

I don't know why it would be a bad thing for Canadians to have that included in this regular reporting scheme that we're seeking to establish here under CPC-13 in terms of the reporting requirements that we would put forward for the Minister of Finance to prepare.

Including the comparative jurisdictions of the United States, Australia and Sweden makes sense to us and to most Canadians. We often compare ourselves to these countries in many other ways, whether it's our sports, our demographics, our health systems—you name it. These are countries that we often compare ourselves to. I think it's fair that we do that with our pension system as well.

In terms of advancing funding levels, advanced funding and reliance on investment income—you pick the topic in terms of how pension funds are set up and how they're invested, operated and managed by federal governments across the western world, if you will—that's something that is important for Canadians to see.

It comes back to the principle in this discussion we've been having for most of the day about language that's accessible to Canadians. Most Canadians aren't actuaries. They're not pension fund managers. They just want it to be there when they need it. Ensuring that it is, as well as the demographic information we were talking about when I last intervened at this committee.... It's important for Canadians to see how that's managed and what the comparatives are across like-minded nations.

We could be doing better. We could be doing much worse, but we could be doing better. If that analysis isn't provided in a language that's easily consumable to Canadians across this great country. Whether it's reliance on investment income.... You can pick the topic, but it is important that some of this language be included in the subamendment.

[The Chair, Liberal, Karina Gould]

I question the relevance, Mr. Jackson. This is subamendment five.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Yes.

[The Chair, Liberal, Karina Gould]

That is an amendment you've already dealt with, so if you could, please stick to the topic at hand. Thank you.

[Grant Jackson, Conservative, Brandon—Souris, MB]

Subamendment five is about including comparisons to the United States, Australia and Sweden. Is it correct that this is the subamendment we're on?

[The Chair, Liberal, Karina Gould]

Yes. Please stick to the topic at hand.

[Grant Jackson, Conservative, Brandon—Souris, MB]

I'm with you, Madam Chair.

It's important that this is included. It's an important subamendment. We're looking forward to Liberal support. We'll see if we get it.

[Some hon. members]

Oh, oh!

[Grant Jackson, Conservative, Brandon—Souris, MB]

I'm not sure what the new member who has joined us across the way said.

Are you going on the speaking list?

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

My magic eight ball says no.

[The Chair, Liberal, Karina Gould]

You have the floor, Mr. Jackson. You can keep going.

[Grant Jackson, Conservative, Brandon—Souris, MB]

That's good. I'm glad you're reminding our Liberal colleagues of that, Madam Chair.

I'm not sure what the reference to a magic eight ball by the member for Hamilton West—Ancaster—Dundas has to do with the subamendment or the discussion on CPC-13, but I digress. I'm sure we'll have lots more amendments and discussion on this subamendment from him in the time to come.

I would leave my comments at that. It's a great subamendment. I look forward to interventions from colleagues across the way and to unanimous support for it moving forward.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Jackson.

Shall amendment five to CPC-13 carry?

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

I'd like a recorded vote, Madam Chair.

[The Chair, Liberal, Karina Gould]

We'll have a recorded vote.

(Subamendment negatived: nays 6; yeas 4)

[The Chair, Liberal, Karina Gould]

We're back to CPC-13.

Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

Thank you very much.

One thing that has come up through our discussion is the need to have a greater level of clarity with respect to some of the technical terms that govern the CPP.

Specifically, there is a term called the “statutory contribution rate” or the “contribution margin”. While I'm sure these are well understood by actuaries, I think most Canadians, including me before doing the appropriate research for this, wouldn't understand what they mean. That's why we need to provide additional clarity.

For that reason, I would like to offer a subamendment. I move that the amendment be amended by adding after proposed subsection 43.1(1) the following:

(1.1) The report prepared under subsection (1) and the report prepared under subsection (3) must include an explanation of the minimum contribution rate required to sustain the Canada Pension Plan, the difference between that rate and the statutory contribution rate, the margin of safety provided by that difference and the circumstances under which future contribution-rate increases could become necessary.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Lawrence. Can you please submit that in writing?

[Philip Lawrence, Conservative, Northumberland—Clarke, ON]

We will, Chair.