Mr. Speaker, I am pleased to participate in the debate to amend the Canada pension plan.
In Etobicoke—Lakeshore there are many seniors who have written, who have spoken with me and who have attended consultation meetings where we discussed the changes and the need for changes to the Canada pension plan. The plan is a primary source of income on which many Canadians rely in retirement.
Indeed, Canadians are greatly concerned about any changes to the plan which might have an adverse effect on their economic stability.
As members of Parliament, it is our duty to ensure that the financial future of all Canadians is secure and that Canadians will continue to have confidence in the Canada pension plan. The Liberal government is taking the responsibility for the future direction of the plan seriously by initiating the proposed changes. The changes are reflective of the Liberal government's belief in assisting, providing and protecting those in need.
I support Bill C-2, the legislation to amend the plan because that legislation will ensure that we have an improved and effective public pension plan that protects individuals in retirement. In an age where a wide variety of financial instruments are available to Canadians to prepare for retirement, not all Canadians can afford or have the protection of RRSPs.
Experts on CPP have drawn the government's attention to the fact that in light of national realities such as an aging population, the decline in population growth, that the plan needs to be tailored to match the demographic realities of our country. We are facing up to the demographic realities by securing the future of the CPP.
The proposed changes were the result of a lengthy consultation process with provincial and territorial governments, professionals in the actuarial and insurance professions, representatives of social planning organizations, seniors, young people and other Canadians.
From this process, one thing was clear: Canadians want a national pension plan even if changes are necessary to ensure its viability in the future.
It has been established by repeated government studies that payouts lagged behind the contributions. We need to have payouts and contributions in line so that Canadians can have a plan beyond the year 2015. This means that in order to maintain the current benefit structure, contribution rates need to increase by 14% of income by the year 2030.
It is interesting that the consultation which I held in Etobicoke—Lakeshore, individuals were talking about 15%. A 14% increase in CPP premiums is a rate that most Canadians would find difficult to manage. There needs to be a middle ground in relation to what Canadians are willing to pay into and receive from the plan.
Under the legislation, marginal increases to contribution rates will be slowly phased in over a seven-year period. Contributions will be increased by .4% of income this year and will go to 9.9% of income by the year 2003 as compared with the current rate of 5.85%.
As evidenced, the increase in contribution rates will not be dramatic and therefore Canadians can have a secure CPP that is affordable.
I would like to reiterate the facts of the proposed changes that the hon. Minister of Finance has given on numerous occasions in the last Parliament and which are echoed in this Parliament by many colleagues. My constituents would like to hear that current benefits such as CPP retirement pensions, disability benefits, survivor benefits or combined benefits are not affected by the amendments in Bill C-2. Any Canadian over age 65 as of December 31, 1997 who elects to receive CPP as of this date their pension will not be affected. Likewise all benefits under the CPP except death benefits will be fully indexed to inflation. If Canadians choose to retire at age 60 or 65 or up to age 70, these ages of eligibility for retirement will remain unchanged.
These are the principal tenets of the CPP that will remain intact. As the government embarks on rebuilding a sound CPP plan, Canadians who are not now in receipt of CPP need to know that there will be future changes. Future beneficiaries who will be in receipt of retirement pensions will see a change in benefits because calculations will be based on five years of pensionable earnings instead of the current three years.
The disability component of CPP will be affected by the proposed changes. An applicant who is eligible to receive disability benefits would have to contribute to the CPP in four of the last six years instead of two of the last three years or five of the last ten years which is the current contribution requirement. Benefits for these applicants will be calculated based on the applicant's maximum pensionable earnings at the time of disablement instead of at age 65. I know that these are issues that many of us deal with in our constituency offices.
Changes will be made to payments of death benefits. CPP contributors will continue to receive death benefit payments under the plan, but again the benefit will continue to be based on six months of retirement benefits. They will see a decrease and this decrease is due to the fact that we want to address the problem of income disparity by ensuring that low income Canadians are not adversely impacted by the proposed changes.
These proposed changes to the CPP will ensure that Canadians will continue to have an economically viable and stable pension plan that meets their future retirement needs. The intent of these changes is to give us better options and to ensure the viability of the plan.
I call on all members at this point in time to support this initiative for the benefit of all Canadians.