Evidence of meeting #36 for Status of Women in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was plan.
A recording is available from Parliament.
3:55 p.m.
Liberal
3:55 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
I'm a strong believer in the Canada Pension Plan. By this I mean it's a very well-designed pension plan. A lot of people think it's the best-designed plan in the world, and I agree with that.
The only thing is this. If I had been asked to be involved in the decision made in 1966, the main thing I would have changed is not the benefit design, because it's designed as well as could be. There is nothing perfect, but it's very well designed. The point is in respect of the financing. In those days I considered there were two deficiencies in that respect. This is why our children today are paying much more than they should to the CPP. The real full cost of the CPP is about 6%. As you know, our children are paying 9.9%, because they have to pay for the deficiencies that have been built up over the years.
There are two reasons for these deficiencies. The first one is that the full cost of the CPP is 6%, and from 1966 to 1986 the contribution rate charged was only 3.6%. The second point is that normally a fully funded private pension plan—the CPP is not a private pension plan—does not provide benefits immediately to people who have just retired, who are already retired. As most of you must know, by 1977 all people who contributed to the CPP over only 10 years were entitled to full benefits. This is the second point that gave rise to those high deficiencies of the Canada Pension Plan, the high liabilities that have not been paid for, and it's our children who pay for that.
If we had to start it over again, I would say, well, I understand that for starting a new plan 6% is a lot of money, but let's do it immediately, otherwise the problem will be even bigger later on. That's what happened, because having charged 6% rather than 3.6%, that would have represented 2.4% more, but now our children are paying 4.4% more. We have created a big problem that is more expensive to resolve today than it would have been if it had been done in this manner in the first instance.
4 p.m.
Executive Vice-President, Canadian Labour Congress
Yes, I think you asked the question of us as well, the question of the self-employed. It is our understanding that yes, the self-employed are covered. But again, as Monsieur Dussault has pointed out, it's on the basis of declared earnings.
I'm glad that Mr. Braniff raised the question of the summit. I think if there are other reasons we need to look at in terms of the self-employed, that's why we need a summit. We need to be bringing together not just governments but also women's organizations, trade unions, groups that represent immigrants, equality-seeking people, so we can have a real discussion about who needs to benefit from the pension plan and how we can all do it together.
4 p.m.
Liberal
Anita Neville Liberal Winnipeg South Centre, MB
I have another question, but let me come back to the summit.
What I'm hearing you proposing is a government-convened summit to look at both public and private pensions with all of the various stakeholder groups. Is that correct, Mr. Braniff?
4 p.m.
Chair, Georgian Bay Chapters, Canadian Association of Retired Persons
Yes, that's correct. I would add to the list that the CLC mentioned that pensioners should be there.
4 p.m.
Executive Vice-President, Canadian Labour Congress
Yes, and I apologize.
I think what we're looking for is this. We don't want to have a discussion about people who are concerned about pensions and retirement over here while governments are having discussions over there. There's no point in federal, provincial, and territorial governments getting together if you're not going to have the people in the room who really need to add to that discussion.
What we're saying is it is time for us to have a national summit on pensions. Obviously, we have a key interest in the Canada Pension Plan, but there will be discussion, you can be sure, on the question of private pension plans because everybody's seen, by and large, theirs take a hit, if not just go in the tank altogether. So that has to be part of the discussion.
4 p.m.
Chair, Georgian Bay Chapters, Canadian Association of Retired Persons
May I add a point there? The reason to—
4 p.m.
Liberal
4 p.m.
Chair, Georgian Bay Chapters, Canadian Association of Retired Persons
Okay, that's all I need.
Mr. Dussault pointed out the reason why you need a summit. If we knew at that time and we were involved at that time when that decision was made, I think it would have been a different decision.
4 p.m.
Bloc
Nicole Demers Bloc Laval, QC
Thank you, Madam Chair.
Thank you very much for being here this afternoon, ladies and gentlemen.
On my way to the meeting this afternoon, I was listening to a conversation between Mr. Nadeau and our analyst, Ms. Cool, in spite of myself. They were right in front of me and were speaking loud enough for me to overhear. Something in their conversation really struck a chord with me. I started wondering whether we were approaching this issue all wrong. Isn't it time to be innovative and to look at the bigger picture?
On a personal level, the reason I was able to attain the standard of living I currently enjoy is because my mother had six children. She did not have 1.5 or 2.5 children, she had 6. And she stayed home to raise us. She did not start working outside the home until she was 50 or 55 years old. Her six kids work and pay taxes. So that is wealth she contributed to through our upbringing. Yet, today, she receives the Guaranteed Income Supplement.
Isn't it time to start taking the attitude that governments, the state and businesses should have a program to ensure that we make payments to those women who have chosen to stay home to raise more children? Having a daycare program is very important. It is also important to provide everything that women need so they can work and have well-paid jobs and decent pension plans, but we also need to provide everything that women need to make real choices.
Things today are different than they were in the fifties. When women worked in those days, it was a second income said to be used to buy luxury items. That is no longer the case nowadays. That second income is essential for paying rent and buying groceries.
Therefore, isn't it time that we start taking an innovative approach and seeing things in a different light, looking at the bigger picture. I think that a summit is one possible way, among many, to study this problem with the bigger picture in mind.
4:05 p.m.
Executive Vice-President, Canadian Labour Congress
Oui, nous sommes d'accord. This comes into so many places, whether it's child care, employment insurance, parental rights, and all that sort of stuff. We look fondly to Quebec and say since they brought in $7-a-day child care, since they provide for extra parental benefits, since they provide that fathers get five weeks of parental benefits, that makes a big difference, and in fact I believe the birth rate has gone up in Quebec. So there's a big difference.
I believe there was a parliamentarian here one time who said that government has no business in the bedrooms of the nation. Well, the government is in the bedrooms of the nation, because as long as people can't get access to child care or to parental benefits at an appropriate rate of EI, as long as they can't deal with Canada Pension, then quite frankly, people are going to make decisions that are going to be limiting the size of their families. Whether that's where they want to be or not, it becomes “What can I do for my family now?” and also “What will my life be like 40 years from now?”
So we would certainly say yes, there need to be comprehensive programs.
Joel?
4:05 p.m.
National Representative, Social Economic Policy, Canadian Labour Congress
The only thing I would add to what Barb said, in response to the excellent points that were made, is that one of the reasons why we have proposed three key demands that we're trying to orient the pan-Canadian labour movement around is because our pension system is so fragmented. We almost have to approach it that way. It would be great if there was a one-shot deal to fix it, and we do believe the Canada Pension Plan is an enormously powerful vehicle, but the reality is it's not going to help workers aged 58 to 64 who have serious pension needs right now, particularly people whose employers are in bankruptcy, as we're seeing with the Nortel pensioners, the Canwest situation, and AbitibiBowater. That's why we need pension insurance for those folks, so that we have the same priority assessed to people's pensions as we currently do for their homes or their bank deposit accounts or their job with WCB or EI contributions. OAS and GIS are also very important. One has to make, as a senior, less than $11,000 a year to qualify for GIS, and 1.6 million seniors in this country, predominantly women, do. What a statement, in 2009.
So that's why we support that 15%. It will put another $110 in the pockets of low-income seniors per month. If you want to talk about economic stimulus, that's economic stimulus.
October 27th, 2009 / 4:10 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
Your question is somewhat along the same lines as an earlier question that I did not answer, that is, whether the Canada Pension Plan could do more to offset the insufficient income of women. To my mind, the Canada Pension Plan, like any other plan, really cannot do any more in that respect. The plan already has provisions to that end in terms of the amount of time that women spend raising children.
However, you make a good point: women make a big contribution to the economy by raising children. Instead of using a pension plan to recognize that work, I think it would need to come from the government. Women should be paid for that work, because raising children is the most important job in the country.
4:10 p.m.
Chair, Georgian Bay Chapters, Canadian Association of Retired Persons
I would add that the proposed expanded universal plan, the expanded CPP, would save additional money in payouts from GIS, as it has done. Canada, right now, ranks among the lowest participants in the world for supplementary plans like we have, because we have the CPP and other provisions. It seems to me there's going to be a net saving to the taxpayer, and this could be used to enhance in the direction you're proposing.
As an alternative, I have no trouble looking at an idea that you would give some partial credits of some sort, some formula, to bona fide caregivers who are looking after aged parents or disabled family members, whatever. As I proposed in my notes to you, we also think we should extend the option of pension splitting to situations where we have a caregiver and a disabled person or an elderly person in the family. I don't think that would be an outrageous kind of proposal. I think we all have some degree of understanding and sympathy for people who are providing unpaid caregiving.
4:10 p.m.
Liberal
The Chair Liberal Hedy Fry
Thank you very much.
Ms. Cameron, feel free to jump in whenever you wish.
4:10 p.m.
Managing Director, Private Pension Plans Division, Office of the Superintendent of Financial Institutions Canada
Yes.
4:10 p.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Chair. Thank you all for coming.
This is, indeed, a very important study that was undertaken. I, too, am an advocate of the CPP system. It's a model for the world. I wasn't aware of those statistics that you brought forward about what happened in the early 1960s. However, I should add at this point that all pension plans should follow the CPP model. The reason we're running into all these problems you mentioned is that we put our pension plans at risk when we move in another direction. I'm an advocate of following the example of CPP.
We had a number of witnesses before us, I believe it was last week. I don't have the statistics in front of me, but we talked about ratio to workers and to retirees. I believe back in the 1980s I was seeing something like 7:1, and now we're moving towards 6:1. What was most shocking was that by 2050 we're looking at a 2:1 ratio.
I understand that the Canada Pension Plan works in such a way that it's funded by contributions. I believe a segment of that is invested, but the majority of it is funded by contributions.
We all want better things for our seniors. The only thing I can see is that if we as a government, as a people, were to significantly raise that contribution.... I guess I want to ask--and it might not be a bad thing--both you, sir, and possibly labour, if they would go on record as saying that we need to raise the contribution by workers. If anybody else wants to jump in, go ahead. I mean, that's the first. We have to start at that point.