Mr. Speaker, I will be splitting my time with the hon. member for Wentworth—Burlington.
It my pleasure to speak today on the employee benefit improvements that will ensue from the legislation before us. The first thing I must do is clarify that as far as retirement benefits are concerned, improvements are the only effects that will ensue from the government proposals.
It has been alleged that the government proposals will somehow diminish the pension benefits of federal retirees and employees. I want to make it clear that this is absolutely false. Public service pension benefits are protected and guaranteed by law. Nothing in the bill will or can diminish those benefits. They will continue in full and be fully indexed for inflation as before.
Far from diminishing benefits, they will actually improve the employee benefit package in several concrete ways. As members may recall, two of these improvements have already been discussed in the House. They were introduced in the recent budget bill and will come into force on passage of that bill. Both involve changing the formulas used for calculating benefits and both changes favour the plan member.
The first formula to be changed is the basic one used to calculate retirement benefits for the public service pension plan. Up until now, that formula has been based on the plan member's average salary over six consecutive years of highest paid service. Other public sector pension plans use five as the number of consecutive years in their formula. From now on, under the amended legislation, so will public pension plans. In most cases, averaging over five years instead of six will mean greater benefits for plan members on retirement.
The second formula relates to the integration of the public service pension benefits with those of the Canada and Quebec pension plans. This new formula will produce a somewhat smaller reduction in benefits at that point. Two small changes in formula amounting to two concrete improvements to benefits for current members of the public service pensions.
The legislation before us today further improves the pension benefit package for federal employees. A proposed change will allow a survivor to waive entitlement to benefits after a member's death in specific circumstances.
Another change facilitating the administration of survivor benefit provisions will allow a survivor who cannot be located to be disentitled to survivor benefits. Currently, final determination of the payment of survival benefits can be delayed indefinitely when a survivor cannot be found. This is clearly unfair to those other persons whose benefits are affected.
Finally, for cases where two survivors are entitled to an annuity in respect of one plan member, the method of determining the percentage of the annuity payable to each survivor will be set out in the legislation. Specifically, each survivor will receive an amount that is directly related to the length of time he or she contributed with the deceased contributor in relation to the total amount of time the deceased cohabited with both survivors.
The bill also proposes changes to the supplementary death benefits and term life insurance to employees and retirees payable under the Public Service Superannuation Act. For example, the paid up benefit will be increased to $10,000 from the current $5,000. This paid up benefit will also be extended to another group of pensioners. Persons who retired on or after April 1, 1995, with an entitlement to an annual allowance payable within 30 days of ceasing to be employed will, if they elected to retain their SDB coverage, have entitlement to the paid up coverage at age 65.
Another change would see the coverage reduction of 10% per year delayed until age 66 rather than beginning at age 61. This means that the basic coverage of twice the salary for employees and the covered pensioners under 61 is extended by five years and that benefit coverage would not finally reduce to either one-third of the salary for employees or, in the case of pensioners, to the basic paid up amount of zero until age 75.
The new coverage reduction schedule would apply automatically to those employees and pensioners who have already reached the aged of 61. However, those persons who would prefer to remain on the current schedule would be given the opportunity to do so.
The benefit improvements also include the removal of the provision in PSSA and Canadian forces plans whereby persons dismissed for misconduct could be denied access to any benefit other than a return of contributions.
Finally, there is to be another noteworthy improvement to benefits in the larger sense of the term. It is the new cost sharing dental plan the government intends to establish for present and future public service pensioners.
I will not elaborate here because strictly speaking the new dental plan does not form part of the legislative package but rather will be introduced under the authority of the Treasury Board once consultations are complete and full details are finalized. I merely mention the new dental plan in order to place it in a context to which it truly belongs, significant improvements that public service plan members can expect from their benefits package.
The public service pensioners of the present have no need to fear the proposed amendments to the public service pension plans. Their benefits are defined and guaranteed in law and will in no way be diminished. Today's pensioners can rest assured that the usual cheques in the usual amounts will keep coming as they always have.
As for public service pensioners of the future, they too have no cause to worry. The proposed amendments will leave their future benefits safe and intact. Plan members will continue to receive on retirement all that their pension plans have promised them. In fact, with the improvements currently proposed they will receive even more.