Madam Speaker, I appreciate the opportunity to respond to the bill introduced by my colleague from Esquimalt—Juan de Fuca.
I have always been interested in pensions, actually long before I was a member of Parliament. Part of that was due to the fact that I was involved in staff relations, union activities and staff associations, and at various times different negotiations took place with respect to the future pension benefits of the people whom I represented.
The other reason I was interested in it, and members may get a chuckle out of this, was for purely mathematical reasons. To watch an annuity grow over time is truly quite an interesting mathematical phenomenon.
I remember when I was teaching at the college level at the Northern Alberta Institute of Technology, there were various times when we got into taking numbers to powers, called exponential functions. We did that when they first invested electronic calculators. I did it in my computer programming courses. I also did it when I taught sections on logarithmic and exponential functions.
I used to have quite a bit of fun with my students. I would write down an expression on the board and have them evaluate it. Then of course we would first have a debate about what the right answer was, because when we had 30 students, usually there would be about 20 different answers to the questions, so we had to first reconcile what the answer was.
One of the examples I used to give them was a function for which I wish I had a visual aid here so I could show it to members. It was quite a complicated function from the mathematics of finance showing the growth of an annuity to which money was deposited regularly.
I would have the students evaluate this and then I would ask them if they knew what they had computed. I would go through this and ask them what they thought 365 was. They would answer that it was the number of days in a year. I would tell them they were right. Then I would ask what they thought 65 minus 20 was. They would need a little prompting on that, but I would tell them that we expected them to graduate and get a job when they were 20, and they would retire at age 65, so that would make an interval of some 45 years during which they presumably could contribute to their pension.
Five dollars was the amount at that time of a package of cigarettes. Then I had the 0.1 in there which represented 10%, which was a possible return on some RRSPs in those years. These students were always amazed because when they evaluated the function, it came out to, and I just did it again here so I would have the accurate number, $1,312,001.33. That was the total accumulated value of one pack of cigarettes per day over a working lifetime, from age 20 to age 65.
I challenged my students by saying to them that instead of smoking, why not put it that into an RRSP. If they did that, they would have $1.3 million in their retirement fund when they retired. I used that as an example.
That is one example of how one can provide for one's future by making regular payments into an annuity, beginning when one is very young. I am sure members have heard people who sell retirement plans and investments talk about the magic of compound interest, and that indeed is one of the examples of it. That is one of the reasons why I have been interested in this over the years.
There are two fundamental questions which need to be answered. When we deal with retirement plans, the first question is, to what extent can those retirement plans be diverted into other necessary plans? For example, we have right now a component in Canada pension which has to do with disability.
Let me emphasize that I have absolutely no problem with having a public social system to assist those who are disabled and who need financial assistance in order to pay for their day to day needs. However, we should honestly ask the question whether that should be administered through a plan like the Canada pension plan, which originally was designed to provide for retirement income.
As I said, I want to emphasize the fact that I am not opposed to helping those people who are disabled. I do not want that point to be misinterpreted. I am not opposed to helping those people who are disabled, but I am not at all sure that we should put it into the mix of a retirement plan. That should be a separate plan and administered separately for the benefit of those who have true needs. It could be a needs assessed plan.
The other fundamental question that I think one should ask with respect to retirement plans is this one: Should income for a person's retirement be derived from payments that are made by the present generation? In other words, if I were to retire--and I know there are some Liberals in here who wish I would--should my retirement income be paid for by the young people of this generation? When the pages in here get a job should they have to pay taxes in order to pay me a retirement income? Or should I have contributed to that retirement income myself?
In other words, who should pay for my retirement income? Should I pay for it in those years leading up to my retirement or should the present working generation have to pay for those who are in retirement? This is one place where the Canada pension plan, I believe, was wrongly based foundationally right at the beginning.