Madam Chair, it is great to be focused on pensions tonight. It helps to show Canadians that we are very serious about these issues and that we care.
In a country like Canada, it is unacceptable that senior citizens would be subjected to poverty and squalor during their retirement years. If Canadians are to take a more active role in retirement planning, then governments must also be prepared to step up and do their share.
That is a quote. On October 13, 2010, I presented a white paper to the leader of the Liberal Party. That paper took more than a year to write and it contained 28 recommendations for substantive changes to the various pension systems in Canada. That paper contained the words that I have just said. They represent the guiding philosophy that was used during the drafting of that paper. They are the basis for my actions and beliefs as they relate to pensions and pension reform in this country.
Canada is a nation rich with resources and potential and our citizens should be able to enjoy a measure of dignity during retirement. Contrarily, more than 200,000 Canadians over the age of 65 currently live well below the low income poverty line.
What that means is that after a lifetime of working to raise their families and pay their taxes, 200,000 Canadians are being forced to choose between buying groceries and paying the rent because their retirement income is simply too low to allow them to do both. While almost unbelievable in Canada, this is a daily reality for far too many. In response, the daily goal set by this or any government of Canada should be to immediately correct this wrong.
I would suggest it is shameful that the government seems ambivalent to the issues of inadequate pension security. We need to get serious about pension security, coverage and adequacy before we see more situations such as the one which is currently threatening 17,000 former employees of Nortel. That is 17,000 people who worked for a lifetime, paid their taxes and put money away for a rainy day, but despite their efforts saw their savings wash away because of inadequate legal protections. Shame on all of us.
I am not here to poke holes without offering my thoughts and ideas. That is what my white paper is all about. Historically speaking, prior to the Great Depression, most Canadian social services were delivered by a patchwork of religious, volunteer and charitable organizations. However, the reality is that today, in addition to being essential for basic living, many Canadians view pensions as defining elements of our national identity.
Where are we today? Most Canadian seniors are eligible for old age security and most former workers can receive Canada pension plan or Quebec pension plan benefits based on their contributions during the course of their careers. Those at the lowest end of the income scale are also eligible for the guaranteed income supplement. Alone, these mechanisms provide somewhere in the neighbourhood of 30% of one's replacement income in retirement.
In dollars, these plans pay a maximum of about $20,000 annually, but the average payout continues to be significantly less. Current economics suggest that this will not be enough for most Canadians who will need private retirement savings to survive. All of us know that is not sufficient today, never mind 20 years from now.
A number of Canadians do have a private pension through their employers and/or take advantage of government tax shelters, such as RRSPs or the tax free savings account, but recent events have called the security of these private investments into question. With this, it is this last option that in many respects needs some of the most dramatic attention from government today.
In the past few years alone, we have seen a number of private companies become insolvent. Once that occurs, it would seem that employee pension plans are inadequately protected under Canadian law. The real life result is that thousands of hard-working Canadians, like the 17,000 former employees of Nortel, are being cast to the wolves and the government seems content to watch the carnage.
In fact, last week one witness at the industry committee suggested that Nortel employees can expect to take a “haircut at the neck” when it comes to their pensions. How is this acceptable?
Despite repeated calls for action, the government seems willing to sit back and allow the markets to do as they will to many of these people. I will not support this approach and I am proud to say that my party is not prepared to sit back either.
On paper, it may seem as though Canada has already addressed the challenges presented by an aging population through the utilization of a range of public and private mechanisms. But, despite this apparent resolution, retirement income security, adequacy and coverage continue to be looming problems that require the immediate attention of business, labour, individual citizens, and governments at all levels. I very much hope all of us can work together to come up with some solutions as we move forward on this important issue.
The undeniable fact is that over the next 20 to 30 years, Canadian pension regimes will face a perfect storm of an aging population with longer lifespans and dramatically higher levels of personal debt, coupled with lower disposable incomes and global economic and market instability. Immediate steps must be taken in the short term if pension security, adequacy and coverage are to be attainable for the long term.
In an effort to ensure that Canada's retirement income system is prepared for these challenges, I have suggested adopting a multi-pronged, internally coherent strategy that will shore up our system while being mindful of several key principles.
First, we need to underscore the value of a functioning pension system. I strongly believe that a reliable retirement income regime is in everyone's best interests, as indicated by the parliamentary secretary.
Second, we should be rethinking the three pillars of the existing pension system. Canada has long prided itself on the success of its current retirement income system. The three primary mechanisms associated with that system are: old age security and the guaranteed income supplement; the Canada pension plan; and the various private plans in privately administered options. A fourth pillar includes private savings outside of tax-sheltered plans. These structures have provided a strong base. However, they will face new pressures as the national population continues to age over the next 20 years. Weaknesses must be purged and strengths should be expanded upon.
Third is the integration of existing systems. It is essential that the existing structure be examined holistically and with a multi-generational focus. Public and private structures should be integrated with the stated goal of providing more seamless coverage to the population.
Consideration must also be given to those who have traditionally fallen through the cracks. In particular, women, who statistically endure a greater rate of poverty due largely to factors involving longevity, employment type and tenure, must receive the attention needed to ensure retirement income security, adequacy and coverage on par with all Canadians.
With these principles in mind, and understanding the need to respect any relevant jurisdictional and partnership issues, my white paper is proposing several specific recommendations to help ensure Canada's pension and retirement savings structures are fortified in a way so as to ensure they are prepared for the anticipated storm. Those reform proposals include measures such as: the establishment of a supplemental Canada pension plan; launching financial literacy measures; a review of the cost of living calculation; and the creation of a stranded pension agency.
All of the items in the white paper have been shared with the government. I am very hopeful that it will review those recommendations. Clearly, I would not be offended if it adopted several of them.
Many of these measures are also encapsulated in Bill C-574, the pensioners' bill of rights that I presented earlier and on which we had the first hour of debate.
While I am pleased to hear that the parliamentary secretary is going to support sending my bill of rights to committee, I look forward to working with all of the parties in the House to improve the pension system.