Status of Women Committee on Dec. 1st, 2009

[Patty Ducharme]

Thank you for the question.

With respect to our members who work at the Museum of Civilization and the War Museum, they work for the museum corporation and do participate in the plan. Unfortunately, many of those workers are term hires, so they're not permanent employees and don't actually have full access to all benefits available to permanent and indeterminate staff. Obviously, if they're not working, they don't accrue pensionable time. That comes as no surprise; however, it is dismaying to realize that workers can be left out on the sidewalk for 72 days, quite honestly.

With respect to the question of pay equity, pay equity has a very measurable impact on the actual pension benefit on retirement. In 1999, following the large Treasury Board settlement and the $3-billion payout to public sectors workers current and past, for those whose salary was increased, for their final five years of work it had a really significant impact on their pension benefit as retirees. As you know, most of these workers worked in female-dominated work groups, which we sometimes refer to as “pink ghettos”, where women are working and the value of their work has not always been financially or economically recognized by the employer.

So those differences, those adjustments to their wages, made a huge difference for their pension benefits and their ability to participate fully in society as retirees.

[The Vice-Chair, NDP, Irene Mathyssen]

Thank you.

Madame Boucher, for seven minutes, please.

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

Welcome, ladies. Thank you for coming. Our committee is looking at pension security, a very interesting subject. We have heard from many witnesses.

There are more and more women in the labour force. The baby-boom generation and women between 40 and 60 years of age have better access to the labour market. In your view, what will be the impact of this on the poverty rate of these women after they retire?

[Patty Ducharme]

If we're talking about federal public sector workers who have the opportunity for an unreduced pension, so if they have not had to take leave without pay for assorted reasons or if they haven't entered into their career in the public service later in age, I would like to believe that our pension benefits will provide people with an adequate level of funding to enjoy their old age.

If you look at page 6, in both the French and the English, at table 4, you'll see a table entitled “Unreduced Pensions (Immediate Annuities)”. For people in 2008 who are lucky enough to have an unreduced pension, the average pension is—I'm just trying to see if we actually have a dollar amount—$32,936. Those people will hopefully be able to look after themselves with that amount of money.

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

I have another question. There has been a lot of talk about private versus public pensions. Some say that private pension plans are better for women and others are of the opposite view. Do you believe there should only be public pension plans, only private pensions or both at the same time?

[Patty Ducharme]

I would have to ask for some clarification with respect to what you mean by private pension plans vis-à-vis public pension plans. If you were talking about a defined benefit plan, as opposed to a defined contribution plan, I could answer that question more readily, but talking about a public versus private plan, I'm not entirely certain of what you are looking for.

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

The public service has its own pension plan and some private corporations have their own private pension fund. Some of our witnesses said that private plans in some sectors are better. However, in the public sector, benefits are much higher.

Do you believe we should have only one pension scheme in Canada that would be accessible to everyone? If we open up the CPP, should this be on a voluntary basis or should the employers be compelled to provide the funding?

[Patty Ducharme]

The larger the pension plan, the more spread out the risk.

I'm not an actuary. I want to say that very clearly: I am not an actuary. I am absolutely not a pensions expert. But I understand the concept that risk is diluted with more people in the pool.

We certainly support a defined benefit pension plan. Our staff has one, and we believe that sharing the cost of a defined benefit pension plan is fair and reasonable. As you can see again from the statistics and the information provided to you, federal public sector workers contribute 9.6%, I believe, of their pay on average to their pension plans. That is both in the form of the Canada Pension Plan or the Quebec Pension Plan and their benefits under the public service superannuation plan. It has been a successful plan, a beneficial plan, because it is such a large plan.

I think it would be really wonderful for people if they could participate in a very large plan and that people would have portability so that they could come from the private sector into the public sector, and on.

With respect to your question about private sector plans, I guess it's a question about whether a plan is better or not. I've never been a member of a private sector plan. I've been a public service worker since I was a kid. I suppose if I were making a lot of money in the private sector and getting paid a really large salary, there might be a correlating benefit to a bigger pension plan, but again I'm mindful of the fact that many private plans are not fully funded and aren't as stable financially in the long term.

So from where I sit, big defined benefit plans that distill the risk, that spread the risk out, definitely serve our members well. That serves the public well, and in the long term benefits the economy and society, because we don't have women in particular—since we're focused on women here, given that they have unreduced pension benefits—living at high levels of poverty.

[The Vice-Chair, NDP, Irene Mathyssen]

I am going to give myself a couple of minutes here.

I want to thank you again very much for the light you have shed on this issue, because when we began there was a great deal of information and it was very often confusing. You've helped us to sort out a great deal of that with your presentation.

You began by talking about the calculation for pension benefits. Currently, it's the rate of the consumer price index. There are two issues here. The first is that some years ago there was a miscalculation on the CPI, and that has negatively impacted pensioners to the tune of about $1 billion. Second, we heard from a witness that the calculation of pension benefit would be more appropriately based on a percentage of the average industrial wage, because that increases at a higher rate than the CPI. Do you have any comments on either of those two points?

[Patty Ducharme]

I have to be really honest, Madam Chair. I think it's really unfortunate when there is a miscalculation or an error made and the people who are supposed to be benefiting from whatever the program is pay for the error. I think that is really very unfortunate and obviously should somehow be corrected in the long term, although I can't speak to the specifics.

With respect to the average industrial wage, we've never really discussed that at PSAC as an organization. We've had broad discussions around pension plans and we're really committed to defined benefit plans. To date we've accepted the practice of basing the defined benefit plan on our members' actual earnings, but I think we would be open to a broader societal discussion about basing pension plans on the average industrial wage. It would definitely be a way of eliminating the issue of gender discrimination in old age if women and men were treated alike under whatever pension plan they're participating in.

[The Vice-Chair, NDP, Irene Mathyssen]

Thank you.

With reference to the defined benefit plan, we've heard a lot of contradictory testimony. It's very clear that the defined benefit plan is a superior plan because of the reduction in risk, but there has been this argument that it creates an unacceptable or difficult burden on the employer.

Yet when you talked about the public service plan, you talked about the fact that back in 1999, the government took $30 billion out of the surplus. From this discussion about the defined benefit plan being very rich in times when the economy is decline, it would seem to me that if the employer might find it very difficult to meet the obligations of the defined benefit plan, then the protection of the surplus would go a long way toward ensuring that those ups and downs are covered, and that the superiority of the defined benefit plan is such that we should be pursuing that kind of area.

[Patty Ducharme]

I have to agree, and it's my understanding that some changes have been made to broader pension legislation quite recently with respect to the funding of pension plans--I believe it's private sector plans--to ensure that plan trustees will be able to keep larger surpluses on the books for longer periods of time, as opposed to having to resort to pension holidays, payouts, or increased benefits. The plans are not hit hard when there are fluctuations in the market, and people are not caught flat-footed when there are situations like the economic crisis that we've seen around the world in the last 18 months.

[The Vice-Chair, NDP, Irene Mathyssen]

Thank you.

One last question before I give up the chair.

I was quite taken with the statement about retirees who, with a sufficient income, are able to contribute to the economy because their pension benefits are such that they're not in poverty and they are actually active members of the community.

You mention in your brief that they won't need to collect the guaranteed income supplement. It seems to me that, in addition to this, the health problems and mental health issues would be avoided, as would emotional insecurity, and the reality of not being able to live in your own home because you don't have sufficient income to do that. This would underscore the need for decent pensions and making sure that there is no retiree in our country who is in that jeopardized situation.

[Patty Ducharme]

I completely agree, Madam Chair.

I think the statistics show in Canada that the higher your socio-economic class--for lack of a better word--the better your health is, the better your full participation in society is, and you are better able to function more fully. That's definitely what we're committed to seeing, not only for our members, but truly for all Canadians.

[The Vice-Chair, NDP, Irene Mathyssen]

Thank you very much.

In the next round, Madame Neville for five minutes.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Thank you very much for being here once again.

I hope I haven't missed the question. Do you have any comments on survivors' benefits for your pension plan, for CPP, and whether those should be changed?

[Patty Ducharme]

The survivors' benefit for those who participate in our plan--and I had to refer to my technical expert, and I apologize for that.... Our members accrue a benefit of 2% per year of full-time work, and the survivors' benefit is half of that. So if I had a spouse and I had been married to my spouse for ten years and something unfortunate happened and I died, my spouse would get 10% as a survivor's benefit.

I guess the question then becomes, what's reasonable? I think there does have to be some bridging. I appreciate that in many jobs people do get a death benefit as well. That's the equivalent of two years' salary, which would help people out in the short term transitionally.

Quite honestly, if you have kids and you've been unfortunate enough to get terminal cancer or AIDS--it's World AIDS Day--and you die, and your spouse is left with kids, and you have a 10% benefit, it's not particularly helpful in advancing your standing. Economically you're supporting your survivors--your kids or your spouse.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

I'm flabbergasted, to be perfectly blunt. You're saying you need to be married 50 years to get a 50% survivor benefit. Is that what you're telling me?

[Patty Ducharme]

No, you get 50%... If I had worked 35 years and I had a full pension, I would have a 70% pension, and my spouse would get 50% of my pension. Using the table that we had, table 4 on page 6, if any of the individuals in the final column in 2008 were to die--and were married prior to being 65--their surviving spouse would have the benefit of 50% of what that pension is. So rather than $32,900 or whatever it was, you'd get around $16,000.

That's pretty low. I've got to say I don't know if anyone in this room could live on $16,000, but I'll be really honest, I sure couldn't.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

Can you comment on the CPP survivor benefit?

[Annette Marquis]

To be honest with you, I don't know the rate that the CPP is paying in terms of survivor benefits, whether it's a fixed amount or a percentage. We have to keep in mind that if we compare what the CPP pays to a person who worked for 30 or 35 years, the contribution that comes from the CPP is deemed to replace only 25% of the salary earned during the person's working life.

As I mentioned, I don't know the rate that the CPP pays to survivors, but I've never seen any pension plan, whether it's public or private, that would give full benefits to the survivor.

Survivors of people who rely only on CPP and OAS are poor. We don't have to know the percentage that the survivors get. As long as we know that the retiree gets a very low benefits cheque, we know that the amount given to the survivor is going to be lower. You cannot expect more than $10,000 or $11,000 from CPP per year.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

In your own plan, given that a disproportionate number of survivors are women, who tend to live longer, is this an issue you have been dealing with, the issue of survivor benefits? I'm quite surprised when you tell me what the reality is.

[Patty Ducharme]

There's an interesting dynamic in a union environment. We hear from our union members. We don't oftentimes hear from our union members' surviving spouses. We have a free life insurance policy that our members access and we hear from members' surviving spouses when there are any problems accessing that free benefit.

But I have to be really honest. I as a vice-president here in Ottawa have not heard from survivors asking for assistance in securing their benefits or ensuring that they're getting the full benefit they're entitled to. I'm not sure if that's because people are more mindful of people when there has been a death, if pay compensation advisers in the workplace are really attentive to those people. I really can't answer that.

[Anita Neville, Liberal, Winnipeg South Centre, MB]

But have you heard from your members?

Is my time up?

[The Chair, Liberal, Hedy Fry]

Yes, it is.