Thank you very much, Madam Chair.
This was brilliant work by my colleague Mr. Jackson. He and I came in the same class, and I would expect no less from him as we look at a subamendment to CPC-13 to look at the intergenerational impact of the changes to CPP.
This ties into the stress testing in the sense that, if we're looking at sustainability for the program as a whole, what it means is that we need to have a level of respect for the subsequent generations that are going to come in.
I won't let us get ahead of ourselves. The next subamendment that I suspect may need to be moved, to ensure that we're capturing all of these problems, will look at some comparisons with other countries. I think some others have done something that has made it quite effective for this particular aspect, which is the intergenerational impact.
Now, I want my Liberal colleagues to understand that, when we talk about generations, this isn't a political frame; this is an actuarial necessity. The CPP is not a savings account. This is effectively a mechanism in which every change to contribution rates or benefit structures produces winners and losers. This is true of all policy. These are distributed across age cohorts. When the government tables a report on the impact of contribution rates and the financial state, as the amendment suggests, without a generational lens, we're only answering half of the question.
The financial state of the plan in aggregate can be perfectly healthy while simultaneously being unfair to a specific cohort. Those two facts are not in tension. You have a plan-level solvency assessment that will never reveal if there is, in fact, a distributional problem, so I think that needs to be part of the conversation.
The subamendment reflects a structural reality. We're not asking for anything that should not already be—and to be honest, I don't think is, but it shouldn't be—excluded from the process altogether. It just says to go back to what the amendment is. When the minister tells Parliament how the plan is doing, which should be the responsibility of the minister, not just the chief actuary, the minister also tells Parliament how different groups of Canadians are doing with that plan.
When we talk about the economics of this, one of the problems, when we get to younger and younger generations, is that these are the generations least likely to have access to an established pension plan. It used to be, certainly for the baby boomer generation, that someone would have a job for decades, and they would have a pension. That is not reflective of what work looks like for a lot of younger people in today's economy. You have even full-time jobs that, fundamentally, do not offer pensions. You have people who are stringing together part-time jobs, the gig economy and self-employed people. For those people, even if they have CPP, which is not necessarily a given—or not at the level they would need—that is the only thing they have. If we don't understand these generational dynamics in the CPP, we're missing a huge part of what will become the government's problem decades down the road as these different cohorts age in.
I'll give a bit of a history lesson. CPP reform has always had a generational dimension to it. I learned this as we were researching for the meeting today. When CPP was designed some decades ago, in the middle part of the last century, it was explicitly structured to benefit early participants disproportionately. They had only paid into it for a short time, but they received benefits calibrated as if they had contributed for a full career. It was deliberate, and given the circumstances in—I forget the exact year, but in the 1960s—it was a defensible political choice. It was also a choice made at the expense of younger workers, who then had to bear the brunt of it. They came later, and they had to pay full freight for full benefits. Parliament, at the time, understood this trade-off, but the question before this committee is whether the 45th Parliament, the Parliament in 2026, should be equally well informed, and whether, by extension, Canadians should be well informed about the generational trade-offs in the current amendments.
We're not even proposing changes to how CPP is structured. We're asking if this should be a part of what is communicated to Canadians. Should this be a part of what the Minister of Finance has to do?
When we had the CPP enhancement that was legislated, I believe, in 2016—you, Madam Chair, would have been there then, so you would have a better recollection of this than I—it was acknowledged that young Canadians entering the workforce would see what the government stated was the largest increase in benefits, because CPP income replacement levels were going from 25% of a worker's pensionable earnings, I believe, to 33%. The government of the day made that generational argument. This is something our Liberal colleagues were leaning into then but seem to be shying away from now.
You also have to look at the five cohorts in the subamendment. We have retirees, near retirees, generation X, millennials, generation Z—zed. I always get that one a bit wrong. Each one of these matters for its own reasons. For example, current retirees are no longer contributing. Their benefit entitlements are established. Contribution rates may change, but that's not going to have any relevance to them. That's one point of differentiation this subamendment seeks to address. I don't think even that analysis is fully complete, because CPP pays survivor benefits and disability benefits. It isn't just retirement benefits. Some retirees may have spouses who are still in the workforce, so their families are affected. Retirement security, as we all know here, is affected by rate and benefit changes.
If we look at this at a household level, or at a family level, it's a much different conversation than just looking at it on an individual basis. Also, current retirees are a bit of a reference cohort, you could say. They're a lifetime contribution to benefit ratios. They serve as a baseline against which we can look at subsequent cohorts to this. If the minister's report only discusses the financial state of the plan and misses out on these key cohorts, these key demographic details, it tells us nothing about whether the plan is treating each generation with the level of—I don't like using the word, because it means different things to different people—fairness or of intergenerational equity, you could say. That is what this subamendment will do better. We also are relying on our Liberal colleagues to support the amendment, to put this reporting requirement in place.
Then we're looking at near retirees, like people who are planning and hoping they'll get the chance to retire. By the way, I have talked to so many people who a decade ago, looking at the economy that was left by the Stephen Harper government, would have thought retirement was a possibility. They were looking forward to that, maybe even early retirement. Now you have an increasing number of people thinking they're never going to retire. Near retirees are a group that, in and of itself, is relying on an economic comeback that we're not seeing. I fear we're not going to see it for a while, with the government on its current track.
People who are looking at retiring, whether it's within 5, 10 or 15 years, are the ones most affected by this rate change because they're close enough to retirement that their benefit entitlement is going to be significantly determined by their contributions to date up to this point. They'll benefit from having payroll reductions reduced for the remaining years of their working life, but they will not have had a materially lower contribution rate for long enough to affect their benefits in either direction. If, conceivably, a contribution rate reduction is basically reduced payroll costs with no corresponding reduction in benefits, what is the value transfer? Where is that money coming from?
It's easy for younger people to fear—and this is why it needs to be included in the report from the minister—that they're going to be the ones paying into this seemingly increased benefit at the older end of the scale for near retirees. This is, again, one thing that we're missing out on by not having the generational impact addressed here.
Another point when we look at generation X—this is the Friends generation, people born from the mid-1960s to the early 1980s—they're in a really precarious situation because this is the generation that started to see working dynamics changing from what I described earlier as the boomer and earlier approach to the more gig economy approach. They were very much in a transitional period. Again, this is why I think the generation-specific CPP analysis is rather important; generation Xers are old enough to have seen the decline of defined benefit employer pension plans over the course of their careers, but they're young enough that the enhancements we've seen in the past are basically the primary source of retirement security beyond other programs like old age security. Employer-sponsored pension plans have been in decline for basically the last 50 years, meaning that more and more workers will only have OAS and CPP to assist them during retirement unless they have private savings.
We also know that generational wealth transfers are becoming harder and harder to make. People are living longer. People are struggling more with the rising cost of fuel, food and housing. Both of these factors mean that they have less to hand over to their children or grandchildren.
It's not even as though you have an added layer for most people. Certainly, for the middle-class or middle-income people that most of us represent, they're expecting some windfall when their parents or grandparents pass away after living a long life.
For generation X, the CPP is not a supplement to a robust private pension. In many cases, it is the pension. It is the retirement plan. I would hope that we as a committee could do a careful analysis of their contribution and benefit trajectory under the amended rate structure. It's not just an academic exercise. It's certainly not a political exercise, because these are crucial questions at foot.
I'm struggling to understand why we wouldn't want to think of the generational impacts of this, why we wouldn't want to consider and contemplate how this is affecting generations.
When I look around the room, I see representatives from almost every one of the generation groups in question. It's a great tribute to our Parliament that we have that generational diversity. I see some volunteers for.... I'm not pointing anyone out for demographics, but I see some people voluntarily assigning themselves to—
