Veterans Affairs Committee on Nov. 17th, 2009

[C/Supt Alain Tousignant]

If I may add, on our website we have a pension calculator. When you use it, when you put in the numbers, it gives you the two numbers, up to 65 and after 65, so it's in black and white. I was recently playing with numbers, and I would say that most members, before retirement, will go to this pension calculator, which is very user-friendly, and will get the information. Again, it's very black and white: up to 65, here's what you're going to receive; after 65, here's what you're going to receive. And it explains the difference between the two. I think that tool has really enhanced the communication with our membership at large.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

You probably don't have a very definitive answer to this, but in terms of the number of people who see their total pension benefit reduced at 65, when the bridge benefit disappears and CPP kicks in and they go from one source to two, our information is that for most people, their total benefit, which is what we are really talking about here, does not decrease. In fact, it stays the same. In my particular case, it's going to go up by $300 a month because I've contributed to CPP from 47 to 65.

Do you have any feel for the numbers for folks who do get less?

[Michael Cape]

The only comment I would make is that there's a retired members' website. One of the things they've put on this website, where they talk very frankly about issues is, why is this up here? We were told that this was going to happen.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

People are aware.

[Michael Cape]

I think in the RCMP people are generally aware of it. That doesn't mean.... There's always a potential for a gap; someone gave out the wrong information to one individual or a group of individuals. I think we've done a pretty good job in the RCMP.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

People focus on the bridge benefit they're losing, but they're not talking about the CPP they're receiving, and that is the whole package.

[Michael Cape]

Correct.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Hawn.

Now over to Mr. Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

Thank you, as well, for appearing before the committee and answering our questions. My questions will be brief. They may have already been asked, but I will ask them anyways.

Do you know of any groups in the federal public service who receive the same consideration that is being called for or highlighted in Bill C-201, that is, who receive their old age security pension at 65 without having their retirement benefit reduced?

[Michael Cape]

On that stacking of the benefit, there was only one case I've ever heard of, and it wasn't Canada Post. It was probably the Bank of Canada or a smaller organization. They stopped doing it because it was expensive. The members had to contribute more to pay for it. That's the only one I'm aware of. As I said, it doesn't exist any more.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

In your research, did you find that they do things the same way in the U.S. or England? Apart from Quebec and Canada, do you know what the situation is in other countries? For this group specifically, can you give us examples from your research?

[Michael Cape]

We haven't done any exhaustive research on this. I can tell you in the States the movement isn't to deal with defined benefits; it's to go to defined contribution, which means, don't worry about what you're going to get in terms of a guaranteed income at the end, you'll get whatever your money generates when you retire. That's the movement, to go away from that defined benefit, which puts retirees more at risk.

[Lynne McKenna-Fleming]

I would also add that it's not necessarily comparable because pension is part of the total compensation package you get. So perhaps in other countries they might get paid a little less, and their pension might be better, or vice versa, depending on what's appropriate in their culture.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

If Bill C-201 is passed and comes into effect, do you think it would prompt other groups of workers within the public service to demand the same thing?

[Michael Cape]

I really can't comment. The only thing I can think of is that if the public sector is going to lead the private sector in the pension world, it might have an impact, but I can't really comment as to what the impact would be. I don't know. We haven't researched that.

[The Chair, Conservative, David Sweet]

Now we'll go back over to the Conservative Party, and I understand this is the final questioner.

Mr. Lobb, for five minutes.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you very much, Mr. Chair, and thanks to the guests who've come today.

Just to Mr. Bouchard's point, we did a study in the spring on veterans' benefits among our G-7 or G-8 partners. I think what Ms. McKenna-Fleming mentioned is that there are various differences among countries, but definitely Canada puts a high value on our CF members when it comes to all benefits and pensions.

I'd just like to make another comment. We as parliamentarians have found that Canadians, generally speaking--not just pointing out the CF members or RCMP members--have a pretty low level of financial literacy. It's something you have to work at every day, and we know many Canadians don't do that.

One of Mr. Stoffer's disputes with this bill has been the actual upfront cost, which is $7 billion. We heard the number referenced today. I wondered if you could comment, Mr. Cape, on your confidence level that this number would be in that range. We would even give you a plus or minus of 10%, but it's generally speaking in the multiple billions of dollars.

[Michael Cape]

I would expect it's in that range. The OSFI witnesses who were here the other day would be the ones who could probably give a more definitive answer on that question.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thanks very much.

The other thing that is astounding to me within the bill, or at least in the discussions that followed the bill, is the comment about employment insurance actually funding a pension benefit and the fact that, potentially, CF members would not ever collect employment insurance. We know they collect certain employment insurance benefits. The precedent concerns me a little because anybody could potentially say, “I would rather not pay into employment insurance. I would like to take that money and put it into my own self-directed or self-benefit pension plan.”

I wonder if you could comment on the idea of employment insurance or the Canada Pension Plan as a universal, global concept for all Canadians.

[Michael Cape]

I think that's beyond my scope as the director of pensions for the RCMP, but I will comment on the fact that anytime we play with any aspect of the compensation equation, it impacts our members. If you take away one or you add something here, it impacts us in terms of where we're at in the overall scheme of things with compensation for police officers. To me, the whole chain has to be looked at.

[Lynne McKenna-Fleming]

I would reaffirm that. I would suggest that with any kind of scheme like a pension plan, what happens to individuals within the plan is going to vary. But what happens to the population is how they determine what the contribution rates are going to be, how much it's going to cost, and what kinds of interest rates they will have to achieve to pay for benefits into the future.

So if you drop out of the plan, then you basically undercut the plan design and you may as well have no plan.

[Ben Lobb, Conservative, Huron—Bruce, ON]

I have one final comment or thought. My grandfather was a CF member and he retired at about 48. He went on to work as a court clerk in London for many years, until he retired at 65.

I wonder if you could comment, to follow up on what Mr. Hawn said, about your experiences with members who have retired. Do they generally receive more benefit or a higher pension after 65 if they've worked for a number of years after their first retirement?

[Michael Cape]

I'm not sure.... So you're saying they worked at another organization--

[Ben Lobb, Conservative, Huron—Bruce, ON]

For example, in Mr. Hawn's example, he worked until 65. I'm not saying that's for everybody. He worked until 65 and his experience is that his actual benefit has increased by roughly $300 from what he had. Is that generally what you would see in a typical case for someone who has a second career after retirement?

[Michael Cape]

I think for the RCMP, we have members who retire at a relatively young age and generally start a second career. The opportunities for them to create a pension package for themselves when they reach 65 is a very positive situation.