Mr. Chair, I am pleased to have this opportunity to speak in the debate on pension and retirement income issues and to speak to what our Conservative government has accomplished in this important area in recent years.
My riding of South Surrey—White Rock—Cloverdale has one of the highest concentrations of retired Canadians of any community in the nation. Therefore, I am particularly pleased to participate in this debate which is focused on improvements to Canada's retirement income system, including the ongoing dialogue between federal, provincial and territorial governments and consultations with all Canadians.
Let me start by stating that our government shares the deep-rooted concerns of many Canadians about their retirement security. We understand the importance of a secure and dignified retirement, especially after a lifetime spent building a better Canada through hard work.
For that reason we have been aggressively focused on working to improve our retirement income system. Indeed, we have already taken major action to strengthen Canada's retirement income system.
What have we done? In recognition of their lifelong contributions to our country and our government's core belief that Canadians should keep more of their hard-earned money, we dramatically lowered the federal tax bill for seniors and pensioners.
Since forming government in 2006, our enviable record includes more than $2 billion in annual targeted tax relief, such as: an increase to the age credit amount by $2,000; doubling the amount of income eligible for the pension income credit; increasing the age limit to 71 for maturing pensions and registered retirement savings plans; introducing the tax free savings account, which is particularly beneficial to seniors as it helps them meet their ongoing savings needs on a tax efficient basis after they are no longer eligible to contribute to an RRSP.
Jonathan Chevreau, a noted financial commentator, has declared the TFSA is “a welcome tax shelter for Canadian seniors”.
Another thing we have done is we have provided pension income splitting since 2007 and subsequent taxation years. Jamie Golombek, managing director of tax and estate planning at CIBC and a financial commentator has noted, “pension splitting is probably one of the biggest tax changes in decades, in terms of the amount of tax savings this can mean for pensioners”.
What is more, our record also includes important improvements to several specific retirement income supports, such as dramatically increasing the amount working seniors can earn before facing a clawback under their guaranteed income supplement, allowing them to keep more of their hard-earned money. As well, we have increased the flexibility for seniors and older workers with federally regulated pension assets that are held in life income funds.
What else have we done? We have taken major steps to reform the legislative and regulatory framework respecting federally regulated private pension plans. Indeed, this represented the most significant reforms in nearly 25 years.
Announced in October 2009 after extensive cross-country and online public consultations held in the months beforehand, the reforms included: enhancing protections for plan members; allowing sponsors to better manage their funding obligations; making it easier for participants to negotiate changes to their pension arrangements; improving the framework for defined contribution and negotiated contribution plans; and modernizing the investment rules.
These key reforms were warmly applauded across Canada. A diverse and broad group of public interest groups ranging from the National Association of Federal Retirees, the Association of Canadian Pension Management, the Canadian Institute of Actuaries, CARP, Canada's Association for the Fifty-Plus, the Common Front for Retirement Security, the Canadian Life and Health Insurance Association, and even the Canadian Labour Congress all welcomed and expressed their pleasure with these changes.
A Globe and Mail editorial heralded the reforms as a “good step”.
Even John Manley, former Liberal member of Parliament, finance minister and deputy prime minister, declared them to be “significant reforms that will enhance protection for plan members”.
However, those reforms to federally regulated private pension plans were only one step in a much larger process.
That leads to the final area where we have made some improvements. We are focused on improving retirement security and pensions in Canada by working with our provincial and territorial partners.
While many Canadians may not realize it, the vast majority of pensions are regulated by the province. Only 10% are regulated federally. In other words, the federal government only has the constitutional authority to make laws related to the private pension plans of federally regulated workers, such as those who work for the airlines, chartered banks and so on, which employ less than one in ten workers in Canada.
That is why to address larger pan-Canadian concerns about pensions, we have been examining the relevant issues with our provincial and territorial counterparts in a co-operative and constructive manner, not by imposing unilateral or fragmented solutions as some would have suggested even here tonight.
In the words of Ontario Liberal finance minister Dwight Duncan, “Our preference is a pan-Canadian solution as opposed to each province on its own”. We have demonstrated this recently by establishing a joint research working group on retirement income adequacy, and by holding numerous federal-provincial-territorial summits on this issue.
We also believe that the Canadian public has a fundamental right to be involved in and at the centre of this debate. That is why we have ensured that Canadians from coast to coast to coast have had the opportunity to have their voices heard in person and online. From March to May 2010, we invited public input through round table discussions, expert conferences, online consultations and public town hall meetings to gather feedback directly from Canadians.
Even labour organizations, such as CUPE, typically not supporters of our government, have been forced to begrudgingly admit that we have conducted “a serious public policy discussion”.
Following these extensive and necessary consultations, the findings strongly suggested that we explore opportunities to build further on the strengths of Canada's retirement income system. As a result, we agreed, along with the provincial and territorial governments, to explore a set of innovative improvements. While no final decisions have been made at this point, options are under study and development for further review when federal, provincial and territorial finance ministers meet again at the end of 2010.
Clearly, our Conservative government is taking a leadership role in addressing the concerns surrounding retirement income adequacy. However, as with many issues, there is always more that could be done.
As a member of the Commons finance committee, I have had the opportunity to hear a great deal from experts on the issue of retirement savings in recent months. We have been given countless suggestions, but I would like to focus on a few that will not cost our government much, if anything, but may improve the long-term prospects for many future retirees.
First, we can work toward making RRSP contribution limits fairer for Canadians without pension plans. The incomes of non-salaried Canadians vary widely from year to year, and the self-employed and small business employees are often challenged to achieve the same savings as those with employer-contributed pension plans.
One solution may be to base RRSP contribution limits on an average income, allowing the carry forward or back of earned income above the annual limit to maximize RRSP contributions.
Another solution may be to adopt a lifetime savings limit, so that workers can obtain the necessary retirement savings at any point in their lifetime.
Another approach to helping those without an employer-provided pension could be to allow for the creation of pooled pension plans. Delinking employment from pension plans and allowing workers to participate in pooled pension arrangements would allow many Canadians to access greater retirement security at no cost to taxpayers.
We had a couple of suggestions regarding lost RRSP contribution room, which impacts the ability of Canadians to maximize the full benefit of RRSPs. RRSP contribution room is lost when workers make withdrawals due to financial hardship, a lost job or other circumstances during their working lives. Restoring that RRSP contribution room when withdrawals are made would allow workers to replace their retirement savings once their personal crisis was past, and ensure that the funds would be there for their golden years.
RRSP contribution room is also lost when those who do not contribute to RRSPs early in life lose the value of their contribution room through inflation. This probably applies to most Canadians, as mortgages and children tend to be major expenses earlier in their earning years as workers, and their RRSP contributions are often delayed.
By indexing their unused RRSP contribution room to inflation, we could introduce additional fairness for these Canadians.
Another suggestion we heard concerned allowing Canadians greater diversity in the choice of their registered foreign investments. More diverse investment opportunities spread and reduce investment risk and could lead to greater returns for investors.
However, the number of stock exchanges where Canadians can invest retirement savings is currently limited. Currently, foreign stock exchanges must apply to be listed to sell securities to Canadians. Expanding the list of stock exchanges worldwide would increase the diversity of Canadians' investment portfolios.