Mr. Speaker, let me begin by paying tribute to Stanley Knowles and letting the members of the New Democratic Party know that a couple of years ago I hosted a reception on Parliament Hill to help launch the Stanley Knowles chair at St. Paul's College at the University of Waterloo. We are involved in raising money for the project and I really hope that the New Democratic Party will help us make sure that wonderful chair continues.
Besides paying tribute to Stanley Knowles, let me pay tribute to Paul Martin, Sr. who was the minister who brought in the Canada pension plan along with Lester B. Pearson. I think it is important and we all owe a debt to those Canadians for their forward thinking in making the issue a reality in Canada which has greatly improved the lives of seniors.
People have been talking about slowing down the process. The fact is if Canada pension is to be sustainable, we have to deal with the changes and with the issue.
I have my householder here from December 1994, in which I consulted the constituents of my riding about changes to the Canada pension plan. It had a much better response than any other survey I have done. We have been dealing with these changes for a long time.
Almost 50% of my constituents are under the age of 30. It is imperative to their future that this Liberal government do something now to fix the Canada pension plan and to ensure that it is fair, sustainable and viable for the future. The government has done just that. The changes contained in this bill represent one more element in the larger policy agenda that the government has pursued since its first day in office, an agenda aimed at ensuring the well-being now and in future of our young people.
That policy agenda includes encouraging economic growth and job creation by getting our fiscal house in order and ensuring affordable, sustainable and fair social programs capable of serving Canadians both today and in the future. As part of this, we have undertaken a number of initiatives to promote the well-being of all Canadians.
For instance, we introduced EI reform. In addition to being fairer and more effective it has allowed many part time workers to be eligible for benefits for the first time. We also introduced the youth employment strategy to give young Canadians the training and work experience they need to make the transition from school to work a little easier. We recently announced our intention to introduce a national child benefit to fight child poverty.
The bill before us today represents one more element in this strategy. It is a balanced package of measures that will establish a new investment strategy and adjust contribution rates and benefits so the Canada pension plan can continue to serve Canadians well in the future as it does today.
There are those who complain because rates will increase slightly and benefits will decrease slightly. Yes, this is true. However, it is also true that the chief actuary has projected that if the status quo were maintained, premiums would have to go to over 14% in order to preserve the Canada pension plan. This situation would threaten future prospects of young Canadians.
It is because this Liberal government has looked ahead to the future and is taking action now that premiums will increase incrementally over the next five years to a ceiling of 9.9%. This increase will be shared by employers and employees equally. This is substantially lower than the 14% increase we would have if we sat on our duffs and did nothing, as the previous Conservative government did.
These modest increases teamed with small adjustments to benefits and improved management of the plan's assets will sustain the plan for future generations of Canadians. The proposed changes in this legislation reflect the ideas expressed during Canada pension plan public consultations.
I consulted with my constituents on the future of the Canada pension plan in the winter of 1994-95. Sixty-three per cent of the respondents said they supported an increased rate of contribution. Almost 70% were opposed to privatization, which is what the Reform Party is proposing.
We have listened to our constituents. The proposed changes also reflect negotiations with our provincial and territorial partners and the recent work of the House of Commons committee that studied the bill.
Ensuring an affordable, sustainable and credible plan also means looking at the benefit side of the Canada pension plan. However, during consultations Canadians told us to go easy on changes to benefits. Eighty per cent of my constituents were against the elimination of survivor and death benefits. Seventy-five per cent were opposed to increasing the benefit age.
We have listened to them. The proposed changes are moderate and they will be shared among all groups and be fair across generations so that no one is unduly burdened. Moreover, current retirees who are not able to adjust their retirement plans will not have their current benefits affected by the changes.
Those changes that will affect future retirees are modest. For instance, there is a new formula for adjusting previous earnings and calculating retirement pensions. This change will only affect benefits payable to future retirees. For example, retirement pensions will be based on the year's maximum pensionable earnings of the last five years instead of the last three years.
The changes resulting from Bill C-2 in terms of benefits will be small. For example, the maximum monthly pension based on this year's figures would be $724 instead of the current $736. The eligibility criteria for disability pensions will be updated. Future applicants will have to have contributed to the plan in four of the last six years. This is a reasonable requirement given that Canada pension plan disability is not designed to be a lifetime income replacement. Currently, recipients must have contributed in two of the last three years or five of the last ten years.
There are also changes to the retirement benefit formula for disabled beneficiaries. Like retirement and survivor benefits, Canada pension plan disability pensions will be fully indexed from the time they are put in play.
During the public consultations Canadians, including persons with disabilities, told us that people should have to work longer to qualify for disability benefits. So this bill requires a stronger workforce attachment. It also brings disability pensioner benefits in line with other Canada pension plan benefits. Effective administration measures have already been taken to strengthen the administration of the disability program. As a result the disability caseload has been substantially reduced. There are new guidelines for determining disability. We are doing more follow-up work to ensure continuing eligibility and we are using new technology to manage cases. We have launched a pilot project to enhance rehabilitation efforts.
Another change affecting the future benefits payable involves combined benefits. Some beneficiaries can currently stack disability and survivor benefits, or survival and retirement benefits.
Under the current rules combining disability plus survivor benefits, beneficiaries can receive up to $185 more per month than other disability beneficiaries. Under this bill the combined total would not exceed the maximum disability pension.
As well, the rules for calculating combined survivor retirement benefits will change. These changes would bring the rules closer to those which existed before 1987 when the rules governing stacking provisions were relaxed. Like other benefit changes, these reforms do not affect people already receiving benefits under these provisions.
This bill would also adjust the death benefit. Currently the benefit equals six months of the contributor's retirement benefit or 10% of the year's maximum pensionable earnings, which is $3,580 in 1997. The formula would reduce the ceiling to $2,500 and freeze it at that level.
About one half of Canadian workers already have similar coverage through private sector insurance. It is important to remember that the death benefit was never intended to cover 100% of the cost. It was designed to be combined with other financial planning efforts to meet individual needs.
The changes in this bill will ensure fairness and sustainability of the Canada pension plan. That is what Canadians have asked us to do, fix the CPP where it needs to fixed so that it will always be there, Canada's legacy to our future generations. The plan will ensure our seniors are always taken care of. That is the KW way, that is the Liberal way and that is the Canadian way.
Administration of the plan will be improved, funds will be invested and managed professionally and the plan will be able to serve our children and grandchildren when they need it. For this reason I urge all members to support this legislation before us today.
I also pay tribute to the Minister of Finance who is continuing the legacy of his father by bringing the financial affairs of this country in order so we are able to have social programs like the Canada pension plan.