Status of Women Committee on March 27th, 2007

[The Chair, Liberal, Yasmin Ratansi]

Committee members, we have a life that revolves around votes. Because we have votes, we will have to ensure that we start on time and finish at about five o'clock. So if there is any committee business, we can do that.

With that, I would like to invite Mr. Braniff and Mr. Wilson to begin.

We are the Standing Committee on the Status of Women. We are studying the economic security of women, and we would like your expertise in helping us resolve some of the issues. You will have 10 minutes of presentation, after which we will go around and ask questions, and then you will have one minute each to wrap up. Then we will finish at five o'clock.

Mr. Braniff, would you like to start first, for 10 minutes? I'll give you my signal if you're going over time.

Thank you.

[Daniel Braniff, Chairman, Georgian Bay Chapter, Canada's Association for the Fifty-Plus]

Thank you for inviting me.

I speak as a non-partisan volunteer, and yes, I'm here to address the inequities that women suffer in the senior years. My objective in being here is to try to give you some ideas, not necessarily scientific or tested, because it was short notice, but some ideas for closing the gap, and I don't think I have to explain that there is a gap.

I have 50 years of experience, many of these in my work life long ago when I worked within the women's movement and was in a position of some authority to act in it. I also have done some work in the volunteer sector, and currently I'm the chairman of the CARP chapter in Georgian Bay. I'm also the liaison and the organizer of a common front on pension splitting that encompasses 25 organizations, something in the order of three million-plus members, all pensioners and seniors.

That's been bothering me for the last four years. We coined the term “pension splitting”. I look at pension splitting--and by the way, Jim is going to specifically deal with it, so I'm going to skip a lot of stuff, if you don't mind, or else you'll hear it twice. He's from CAPS. His organization is one of the 25, but one of the early ones and one of the most strongly oriented to that issue. He has the technical background, even though he's very shy about it.

I look at pension splitting as an entitlement for women. It's a women's issue. It always has been. Yes, there are tax breaks that are shared, but in principle, it is an entitlement of women, and I think you'll see the precedent in that in family law, the sharing of CPP, QPP, and the spousal RRSP. The precedent was established before we got into the act.

I want to talk outside of pension splitting, but I think you have to understand some of the peripheral benefits. At last we've got a good reason to get married, because if you look at pension splitting and what it does, it's going to change and formalize relationships that have been disrupted by the disincentives of old age security. Believe it or not, there are seniors who are living together but aren't announcing it formally. While this will do a lot for current married women, it's not going to do anything for widows. It will in the future, because they'll retain in the family some additional equity that won't be eroded by taxes.

What I'd like to talk about today, and I hope your interest goes my way, is the senior unattached women of today, and some remedies, so that we won't have more of them, so that we can close the gap.

I'll start with the survivor's option for pensions. As you know, we have it in some pension plans but not all. Many pensions die with the pensioner, and that leaves the widow with that income vanishing. I think that should be looked at, and if we get into it, I'll be willing to discuss how that might be done.

The residual impact of decades of discrimination has left today's senior woman at a great disadvantage. She's the one who has been discriminated against in terms of pay, advancement, benefits, recognition in the community, and recognition for her contribution to the community, whether it's at paid work or in the community itself at home.

The inequalities of divorce.... I don't think it's any surprise for you to hear that I might say men have a great advantage. If you look at StatsCan 2006, men have two times the university education of women. That goes with other status the man has in the household and his links to the community and his resources.

The remedy I would look for is that we've had women disadvantaged with what I call a “headwind” of discrimination, and I would like to propose that we put some wind at her back, to give her a catch-up opportunity.

You might read this as reverse discrimination, albeit it might be, but I think we have to make the cure. I think we have to start earlier than age 65. We'll have to deal with women who are less than seniors, or not quite seniors yet. There are many ideas I have that I would like to explore that we've used over the years in the women's movement.

I worked on the other side of the scene. I was one of the orchestrators. I headed up personnel. I had a staff of 4,000 employees. I know what happened in that period, and we did a lot of things that we could do now for senior women and women coming into their senior years: internships, coaching, counselling, selective placement, star polishing, publicity. Do it right. Find the stars and make them be examples. We can do that.

I don't think I have to talk to you about networking. I look over and I see mostly women here. I'm sure you have a network working among you that makes you productive, that advances the women's movement, where you're sitting here.

I'm representing CARP here, but as I said, I'm also liaison for three million. But I have checked with CARP, and they're quite prepared to work to facilitate this particular idea. In other words, how can we work to present seminars that will allow women to get the advantages they are lacking with respect to finances?

I'm going to suggest some revolutionary things. With respect to widows, I think we should look at a retroactive tax adjustment for the widows who were left out of pension splitting—I'm assuming that pension splitting is going to pass, by the way. I think we need to look at the actuarial factors, because actuarially, women live longer than men, and I ask the question, why is there one set age to convert to a RRIF from an RRSP? Maybe there should be a later age for women. They live longer. Seventy percent of the population over age 90 are women. Maybe women should be allowed to collect their CPP, their QPP, and still work if they choose.

I think we need more options for pension survival programs. Again, look at the actuarial tables. Can we justify it? Even if we can't, I'd say let's put some wind at the back of the women.

Some of these fixes require money, but I think most of that money is already in other programs and it's in the community. It's in volunteer non-profit organizations. EI has money for this kind of program, and I suggest that it should be plugged in, in this way.

That's a quick summary, Madam Chairman, and I'd be happy to answer any questions.

[The Chair, Liberal, Yasmin Ratansi]

Thank you very much.

We will now go to Mr. Wilson for 10 minutes.

[Ken Wilson, Vice-President, Canadian Activists for Pension Splitting]

Thank you for the opportunity for CAPS to be able to make this presentation to you.

I just want to remind you that CAPS, the Canadian Activists for Pension Splitting, is a single-issue advocacy group on behalf of pension splitting. While there are 23 different organizations that are involved in the common front, this is the only one that has this as a single issue. I would just like to put that into perspective.

First of all, we'd like to assure you that we're not barging an open door. We are aware of and very pleased that the government has introduced the tax fairness ways and means motion, which includes pension splitting, and we are convinced that it will become tax law, notwithstanding the fact that this initiative has been bundled with several others, including the income trust initiative.

We are optimistic, and that may be borne out in the third reading of the budget today, but we recognize, although it is well on its way to final approval, it is not yet tax law, so we remain both vigilant and cautious. Despite our caution, this presentation is not designed to convince you of the inherent fairness of pension splitting. That has now been recognized by the government, by the media, and by the Canadian people, who have expressed strong support for the initiative.

Our intention today is to make it clear to you why pension splitting is a significant benefit for senior women. To understand why this is so, a brief explanation of pension splitting provides the basis for this assertion. The following excerpt from the Finance Canada website states, under pension splitting:

Spouses are assumed to split eligible pension income so that each spouse reports an equal amount, subject to the maximum allocation of 50% of this income.

For example, if one spouse has $40,000 in eligible pension income and the other has $10,000 in eligible pension income, it is assumed that both spouses report $25,000 in eligible pension income for tax purposes.

You will see attached to the presentation a table that was prepared for us by one of the chartered accountants associated with CAPS, and it shows the impact of pension splitting based on the 2005 tax year. As you will see, while not a large amount, this additional tax relief will go a long way to assisting senior couples living on pension income.

CAPS believes that this income tax reform will benefit senior married women whose income is lower than their husbands. Current seniors formed their division of labour within their households at a time when it was common and traditional for a married couple to have a breadwinner and a homemaker. The motives for this division of labour included the well-respected belief that it was best for raising children.

Even if those women wanted to work, they lived in a generation when careers for women were limited by the glass ceiling and gender discrimination was rampant. Many had little or no opportunity to develop a pension or RRSP nest egg of their own, and in many occupations women were excluded. In teaching, for example, we laid them off when they became visibly pregnant. There was no paid pregnancy leave.

Women who held key jobs during World War II were expected to resign to make room for breadwinner veterans. In some occupations, for example, telephone operators, women were required to train the men to become their bosses.

Even as late as the 1960s, there were some major employers who would not employ married women.

So it was in good faith that many couples starting out committed themselves to essentially a single income then and thus largely a single retirement income now.

It was not until the 1988 tax year that the income tax formula changed in such a way as to increase the single-income penalty to a significant amount for many couples. By that time, today's seniors had committed themselves to their household division of labour and career paths and it was too late for those in the traditional stream to salvage their tax prospects much, both while employed and for retirement, even with spousal RRSPs.

In contrast, younger couples who started out after 1988 and who were better acquainted with a government-blessed, dual-income lifestyle could take the prospect of a lifelong single-income penalty into account in choosing their division of labour.

There are currently ways to avoid some of the single-income penalty in retirement: RRSPs, spousal RRSPs, CPP. However, these came too late for many current seniors to take advantage of; CPP contributions began in 1966, and RRSPs began in 1988.

Senior women are discriminated against, as far as CPP is concerned, in that most of the current senior women either came through the system before the introduction of the CPP and/or came through the system when women were discriminated against in the workplace. Because CPP does not recognize the economic value of the work that women perform when they stay at home, these senior women now draw either a minimum amount of CPP or none at all.

How, then, does pension splitting benefit senior women? First of all, Statistics Canada has observed that five years after the death of a spouse--which normally is accompanied by the loss of at least 50% of the deceased's pension--a widow's income generally drops by more than 15%. Because these women tend to be the ones who took time away from paid work to perform caregiving roles at home, they generally have access to only a lower pension or no pension. With the death of a spouse, 5.1% of widowers are in the low-income bracket, but 8.7% of widows are in the same category.

The following example will help illustrate the unfairness of the current tax regime as it applies--and hopefully this soon won't be the current tax regime--to couples drawing pension income. I have provided two examples. Group A are two seniors, both pensioners, each with $30,000 in pension income, for a total of $60,000. Group B are two seniors, one pensioner, with $60,000 in total pension. Both groups earn $60,000 income in pensions. Suppose one of the pensioners in group A dies. The survivor receives their own pension of $30,000 plus half the other's pension, for a total of $45,000. If the pensioner in group B dies, the survivor receives half, or $30,000, of the deceased's pension to live on, while at the same time they have been paying more in tax for those preceding years. The scenario for non-pensioner survivors is unfair. Group A pays less tax and receives more than the pensioners in group B do.

The single-income penalty paid during all the years that group B were together has depleted their nest egg, leaving the survivor, most often the woman, with less wealth to live on. Pension splitting will help alleviate this by helping the couple avoid depletion of their wealth by the unfair single-income penalty during their retirement years. Since the survivor is more often the woman, the impact of pension splitting on senior women becomes clear. It is ironic and especially cruel that having suffered discrimination in the workplace throughout the productive years, senior women have to endure further prejudice when they are at their most vulnerable, after the death of their lifetime mate and breadwinner.

Thank you.

[The Chair, Liberal, Yasmin Ratansi]

Thank you, Mr. Wilson.

We will go to the first round of questions for seven minutes, starting with Ms. Minna.

[Maria Minna, Liberal, Beaches—East York, ON]

Thank you very much, Madam Chair.

This is a good discussion, actually, because both gentlemen have touched on an issue that I have been discussing for some time, and some of us have discussed it back and forth for quite a number of years now.

I just want to make sure that when we talk about pension splitting, we mean the same thing exactly. If I'm not mistaken--and someone could correct me--the current budget for pension splitting is only for the purpose of taxation. So it's not really splitting money. That doesn't really do very much, and it doesn't accomplish--I don't think-- what you're suggesting, Mr. Wilson.

True pension splitting would mean that when the couple retired, the actual pension would be split, just as if they were divorcing, and a cheque would go into her hands and a cheque would go into his hands. So she now actually has an income that she can handle. We forget sometimes that in families where there is either abuse or difficulties throughout life, they don't necessarily disappear when people retire; they continue. However, regardless of that, if the woman's pension is lower--and in most cases it has been and probably will continue to be--for all of the reasons that both of you have stated, and I don't want to go over that territory, splitting pensions for the purpose of taxation doesn't really help the woman, nor does it mean that when the husband passes on, a portion of that pension actually goes to the wife and is not taxable and what have you. She does become poorer.

We had an organization in here last week. That organization, Senior Link, has about 2,600 seniors whom they serve. Seventy-five percent of them are single women. It goes to show you a bit of what that population looks like.

So help me understand. Do you mean pension splitting in the way that I'm describing it, where you actually split pensions, or do you mean simply for the purpose of taxation, which I don't think will do what you're suggesting it will?

[Ken Wilson]

We are talking about pension splitting---

[Maria Minna, Liberal, Beaches—East York, ON]

You mean for taxation purposes.

[Ken Wilson]

---for taxation purposes. I agree with you. Yes, you're right that women's incomes will be reduced when the spouse dies--that can't be denied--but the pension splitting will permit couples to retain more of their income during the time they're both alive, and they won't be eroding the nest egg she might have for her later years.

[Maria Minna, Liberal, Beaches—East York, ON]

With all due respect, though, I think I'm going to disagree. I'm hoping Mr. Braniff has a different view. The reason is that, yes, they may be able to save some, but it depends on how much pension they have and whether they're very high, or medium, or low. Their savings will be dependent on that.

I've seen senior women I've worked with who do deplete savings very quickly, because housing is high and they still have to pay the same rent if they're living in an apartment. They have medicines, attendant care, and what have you. It doesn't really go to the core of what I consider to be women's economic security. Saying they will actually save is like going on a hope and a wing and a prayer, and we don't know whether they will save to the extent we think they should save, because when people are healthy, they tend to not always think about that. Hopefully, after one passes on, the other one has saved enough.

Mr. Braniff, do you agree that it should be...or were you talking about pension splitting the way I mean it? I'm trying to clear this one, because it's not---

[Daniel Braniff]

I'm close to you on this. I would have preferred the cheque.

[Maria Minna, Liberal, Beaches—East York, ON]

Okay.

[Daniel Braniff]

But it would bring on a whole raft of other complications.

[Maria Minna, Liberal, Beaches—East York, ON]

I understand that, but life isn't easy, right? And women are paying for it every day.

[Daniel Braniff]

Exactly. I coordinated 25 organizations on this, and, like you, I had to reach a consensus. The consensus was to “keep it simple, stupid”.

You still have the facility to rearrange this. There is a requirement that the spouse receiving the transfer would sign off. I would like to see her get financial advice when that happens. I would like her to take satisfaction in the fact that she's not getting this for any other reason than entitlement. I see it as an entitlement issue, so my suggestion is that we should make that point very clear.

I've been to many meetings and I have come from this angle--that there's an entitlement and that this is a women't privilege. In my own case, my wife put me through school. She was the one who, because she couldn't go anywhere, put her energy behind me. In those days they called it the woman behind the man--unfortunately, because she probably would have done better than I. She's here as a witness to this.

I agree with you. I don't know an easy way to do it, but I do subscribe to the idea that you should make it very clear that the reason this is put in place is for entitlement. She earned this.

[Maria Minna, Liberal, Beaches—East York, ON]

Thank you.

I agree. I think any pension--CPP, RRSPs that are subsidized by a government tax-based structure--should be actually split and they get 50%. I think we can get to that. That would really resolve the issue of poverty--it wouldn't resolve it entirely, but it would certainly go a long way in helping.

I have a couple of other questions. Some of the other suggestions you were making have to do with the time period before women become seniors. You mentioned collecting CPP, maybe allowing them to work for a while, and RRSPs later.

We have talked in this committee about things like the Canada Pension Plan dropout rate, allowing them, so that they don't lose out on those years they're looking after a sick child or a relative. We do now have it for child-bearing, but we don't have it for caregiving--80% of which, of course, is done by women today--unless the government wants to pay for that and let the women be able to go back to work. That's one area.

The other is a stay-at-home contribution, figuring out a way to help women who do stay at home to make a contribution towards a pension for the future--an actual structure, not just allowing it to happen that if you have money, you do have a bit of an RRSP, and if you don't have money, too bad.

[The Chair, Liberal, Yasmin Ratansi]

Would you like to ask the question?

[Maria Minna, Liberal, Beaches—East York, ON]

One suggestion would be that maybe the personal exemption could be put forward towards a pension.

[The Chair, Liberal, Yasmin Ratansi]

I'll give you some time to answer it. I caution you to be not more than a minute.

[Daniel Braniff]

You'll see in my brief that I've made some suggestions on how you might do this, and I've only scratched the surface.

I believe there are many things these women can do to help themselves if we give them the opportunities. We need to put in place some seminars, mentoring, and internships. Telecommuting is the way of the future, and it saves the environment at the same time. So these are things we should be doing.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

If you want to respond to that one, I'll give you an opportunity when you make your closing remarks.

Ms. Deschamps is next for seven minutes.

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Thank you, Madam Chair.

Good morning, gentlemen.

I listened closely to your testimony on the economic circumstances of older women. Personally, I think the government should bring in urgent measures and legislation aimed at helping older women. However, I still have one concern. Basically, the population is aging and health care costs are also rising at an alarming rate.

Not long ago, I read a recent report by the Senate Standing Committee on Banking, Trade and Commerce which dealt with the demographic time bomb. It is estimated that by 2030, for every 100 people of work-force age, there will be 40 retirees. Therefore, discrimination toward older women will continue to be a problem for those generations set to retire within the next few years.

Can you see where I'm going with this and can you appreciate the demographics of our time? With respect to state-funded plans, currently people contribute to the Canada Pension Plan and to the Quebec Pension Plan. However, the plans will not be able to support the massive influx of new retirees.

[The Chair, Liberal, Yasmin Ratansi]

The question she asked is really an actuarial one. Are you in a position to answer it?

[Daniel Braniff]

I heard you say we have this big wave of baby boomers coming, and how are we going to be able to afford it? Is that basically correct?

[The Chair, Liberal, Yasmin Ratansi]

She's saying that retirees are coming. The CPP has been funded for 75 years; it is sustainable. I think she's asking you a very actuarial question. If it is not within your purview, you can say so and we will proceed with something else.