Status of Women Committee on Nov. 19th, 2009

[Monica Townson]

The argument about generational equity or intergenerational equity is a familiar one. It was put forward when the reforms to the CPP were made at the end of the 1990s. The point was made that intergenerational cross-subsidization doesn't happen only in pension plans but throughout society. For example, the older generation pays for the education of the younger generation through their taxes, and they are still doing that.

[John McCallum, Liberal, Markham—Unionville, ON]

I'm sorry, but I do want to take the time to question the other witnesses.

Do you have any comments on what we were just discussing?

[Marie-Josée Naud, Union Advisor, Education Department, Fédération des travailleurs et travailleuses du Québec]

Yes. I would actually like to respond to what you said about voluntary contributions. In order to have an idea of who would be likely to benefit from voluntary contributions inside a public plan, it might be worthwhile to look at who currently benefits from RRSP tax exemptions.

It is interesting to note that statistics for 2005, published in 2008, show that people who earn less than $30,000 annually—in other words, low-income people, who represent approximately 60% of Quebec's population—received only 6.3% of tax savings, which is very little.

In terms of a voluntary contribution plan, it is conceivable that individuals earning $70,000 or more annually would benefit. So, again referring to the same statistics, only approximately 8% of taxpayers earn more than $70,000, and yet these same individuals alone receive more than 60% of tax exemptions.

It is partly for that reason that the FTQ is opposed to voluntary contributions, in particular.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you very much.

I believe I have one minute left.

Ms. Carbonneau.

[Claudette Carbonneau]

I agree with what has been said in relation to many of the objectives. I think there has to be intervention and obligations when it comes to pension plans.

At the CSN, we have obviously looked at the idea of doing this through the public plan, but what gave us pause were precisely considerations of intergenerational fairness. Increases in contributions were introduced very late, so that a youth entering the labour market now is paying far more than he can expect to receive in benefits. In our opinion, that is utterly unfair.

Furthermore, workers in general, and women in particular, deserve better. That is the reason why we are calling on the government to intervene, to impose the introduction of supplemental defined benefit pension plans, on an industry-wide basis, that employers would be required to sponsor. Of course, for the lowest paid workers, we also see a need for the public plan to be enhanced—for example, by increasing the Guaranteed Income Supplement and making other similar adjustments.

However, doubling the protection provided by the public plan, thinking that this will improve pension security for women and workers as a whole strikes us, unfortunately, as an unfair proposition from an intergenerational standpoint.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, madame.

[The Acting Chair, Conservative, Dave Van Kesteren]

Monsieur Desnoyers is next up to bat.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chairman.

Welcome to all our witnesses.

As you know, this Committee is holding hearings to find solutions to the problem of women living in poverty during retirement. We have heard some interesting things today—indeed, this week. Everyone agrees that older women are living in poverty, and everyone also agrees that women have longer life expectancy, meaning that it costs women more than men. Pension security becomes an important issue in the current crisis.

Both of you—I am referring to our witnesses from the FTQ and the CSN—talked about different ways of enhancing the public plan. I must admit that I was not able to get everything down as I was taking notes. So, I would like to give you a chance to say more about that, because a number of stakeholders have talked a great deal about improvements to the public plan. Indeed, it is the most significant income source for women when they reach retirement age.

So, I would be interested in hearing the views of the FTQ and the CSN.

[Marie-Josée Naud]

Perfect. Thank you, Mr. Desnoyers.

It may be worthwhile to come back to the statistics, which speak for themselves in terms of the public plans and women's dependency on public plans. The CSN referred to this as well. We have pretty well the same figures. In terms of dependency on public sources, we see that, in 2006, almost 55% of women depended on that income. Their other income was far lower than their male counterparts, and only 38% of men were dependent on public pension plans. In our view, that is a clear demonstration of what is important for women in terms of income replacement.

With respect to the QPP, the FTQ is opposed to cuts of any kind. We would obviously like to see the plan enhanced. We are also concerned about the CPP, because any changes there will affect us indirectly. We know that measures passed the day before yesterday are very likely to influence decisions that will be made in Quebec. That is a major concern for us. Furthermore, the Quebec Pension Plan is in worse shape than the CPP for demographic reasons, because of the employment situation, and so on.

What we would like to see is a doubling of current coverage under the plans, from 25% to 50%, similar to what the Canadian Labour Congress has proposed.

While that does pose a problem in terms of intergenerational fairness, as pointed out by the CSN, we believe it is a necessary change in the medium term. It is clearly something to consider, but not on the basis of reduced pensions. In Quebec—and this obviously has less to do with the federal plan—it is being suggested that the rules for calculating the pension amount be tightened up—in other words, a 15% cut, which was already part of that calculation. This is not something being done at the federal level, but there are plans to do it in Quebec.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Ms. Carbonneau.

[Claudette Carbonneau]

Ms. Joncas will take your question.

[Nathalie Joncas, Actuary, Confédération des syndicats nationaux (CSN)]

Good afternoon.

Indeed, women are highly dependent on public plans; you heard the statistics. One of the reasons for that is that they do not have access to defined benefit plans or good plans where they work. Because of the structure of industry, the major pension plans are sponsored mainly by large companies. Even though women have access to public programs, problems persists.

The Canadian system, as it now stands, is built on three pillars: the Guaranteed Income Supplement for the poorest, the Canada Pension Plan—which is a more universal pension plan—and supplemental pension plans. It is not a bad system. It is actually quite an effective system. However, we are now seeing—and this will soon be the case for men—that the private plan pillar is at risk because it was not adapted to meet specific needs. Women do not have access to this type of plan.

At the present time, we are seeing a lot of these plans collapse because they no longer meet needs. Even if people can still access the Canada Pension Plan and the Quebec Pension Plan, the third pillar needs to be reviewed and updated, in any case, to be certain that it is appropriate. The fact is that, unless we consider introducing a plan such as the one that exists in France—a universal plan providing extremely costly universal coverage—we will have no choice but to address the issues around the third pillar in order to enhance retirement protection. This time around, women must have access to that system.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Now that both of you have made reference to private plans, I have a second question. You talked about defined benefits and defined contributions. These are new ideas we are hearing about. The FTQ is talking about the RRFS and the CSN is talking about industry-wide or provincial plans.

How could these systems be set up, and what has to be done to enhance women's access to these kinds of plans?

[Marie-Josée Naud]

Yes, the FTQ has set up a new retirement plan called the Régime de retraite par financement salarial. Changes were made to the Quebec Pension Plan rules to allow such a plan to be introduced. As the representatives of the CSN were saying earlier, this is a multi-employer plan that meets the requirements of the smallest companies, while responding to the need to ensure that people have financial security in retirement. These are defined benefit plans wherein risk management is tightly monitored.

Currently, this plan is only available to companies in Quebec that are provincially regulated. However, discussions are now underway to make the plan available to people working at the federal level, as soon as agreements are signed by the different levels of government.

This is a defined benefit plan for the participant—the beneficiary. However, it is a defined contribution plan for the employer, meaning that the risk is shared jointly by all participants, in terms of potential indexation and contributions. It is a plan that may be a little easier to negotiate now under certain circumstances, and one that is more advantageous than what is currently available in companies where group RRSPs or defined contribution plans have been negotiated.

This is an FTQ initiative, and it was the first to set up such a plan. It is also a plan—I don't know whether you have already submitted a brief—which was subsequently put in place by groups of women. Indeed, 80% of the members are women. Thus it has been possible to increase women's coverage in Quebec.

[The Acting Chair, Conservative, Dave Van Kesteren]

Merci. No, I'm sorry, you're well over your time.

Madame Boucher.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

Good afternoon, everyone. Thank you for being with us today.

Your comments are very instructive, and we now have a lot of material.

I have a question for Ms. Carbonneau from the CSN. You referred earlier to intergenerational unfairness, as regards the new reforms proposed by the Canadian Labour Congress. I'd like you to expand on that. How do you see that unfairness?

I would also like you to explain—many Committee members are from Quebec, but there are others from other provinces as well—the differences between the provincial, territorial and federal governments? How can we work together to enhance current legislation?

[Claudette Carbonneau]

I'm going to ask Ms. Joncas to answer.

[Nathalie Joncas]

Good afternoon.

In terms of enhancements to the Canada Pension Plan and Quebec Pension Plan, I just want to point out that there is currently a very significant intergenerational transfer. Indeed, young people are paying almost 200% of the value of the benefits they will receive. Often we don't question certain social principles established over the years—for example, the fact that benefits were paid out when the QPP was first set up, or paid to people already close to retirement. Those individuals contributed less to the plan, and contribution rates were much lower. In many cases, their contributions represented only half of the value of the pension they were ultimately going to receive through the Quebec Pension Plan.

We have noted that, over time, there have been different contribution levels for the same benefits. We believe the social consensus around the QPP is still fairly fragile, because young people are contributing a lot more, considering what they will be receiving. We think it would be difficult to make additional enhancements to the plan. It could be done prospectively, but past experience has shown that, as soon as you improve the plan, it becomes very difficult not to include other individuals who have contributed—in other words, not to retroactively improve benefits for people covered by the plan. In our opinion, there are significant intergenerational transfers. Tackling the third pillar might be easier and fairer. There would be no need to question the many social principles that have been established over the years, from one generation to the next.

[Claudette Carbonneau]

Also, we do not feel it is appropriate for companies and the bargaining process alone to affect these realities. We need legislation to require the across-the-board implementation, of defined benefit pension plans. I would just like to add that the model which is strongly promoted by Quebec is one of the most important ones to have been developed in recent years. I refer here to the plan for daycare services. We are talking about 50,000 people who are covered by an actual defined benefit plan. There are risks that the participants are not liable for. The employer is also a stakeholder.

In my opinion, the fact that it was possible to cover 1,400 companies, even though we are talking about small workplaces with fewer than 30 employees, should provide some food for thought. This is a model. This is not utopic, since we have been able to negotiate these conditions. In fact, we are very proud of that. We believe that should serve as inspiration as we attempt to provide better protection to Canadians.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

Would you like to add something?

[Marie-Josée Naud]

No.

[Danielle Casara]

No, that's fine.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

I am from Quebec. The other provinces have not necessarily made the same advancements, in certain areas.

CARP is urging the federal government to legislate so that retirees take precedence in cases of bankruptcy and insolvency. What do you think of that idea?

[Marie-Josée Naud]

That's a very good question. The FTQ is currently holding consultations with its affiliates with a view to developing a policy. The CLC currently has its own policy. There is a whole debate going on because of the fact that each of our affiliates has its own views on that issue. It is clear that this will have to be considered carefully, in order to determine what should be done in cases involving bankruptcy.

Should the pensions be protected? As creditors, will pension plans be the first in line? There are several different options. For the time being, we have not taken any position on this, but we should be able to do so in the coming months.

[Sylvie Boucher, Conservative, Beauport—Limoilou, QC]

Do you think this falls within provincial or federal jurisdiction? At the federal level, it is important to avoid interfering in areas of provincial jurisdiction.