Mr. Speaker, I am honoured to add my voice in support of today's debate on retirement income security.
Before I commence my remarks, I will correct something that I believe the member opposite just said, which is that old age security is only available to the poorest seniors. OAS is universally accessible to our seniors. If he is getting mixed up between OAS and GIS, the guaranteed income supplement, it is true that our poorest seniors can apply for that supplemental income through GIS. However, OAS is universally acceptable.
As all members are well aware, seniors have led the way in making Canada the dynamic and successful nation that it is today. Through their sacrifices, succeeding generations have had the opportunity to prosper. There is at times the perception that our senior population may be forgotten in the rush of modern life but the reality is that when it comes to our government, nothing could be further from the truth.
Since 2006, we have taken important steps to improve government support for seniors. I know I have participated in round tables on seniors issues in my riding and met with numerous seniors groups to hear their concerns first-hand, as I am sure so many of my colleagues have as well.
We believe today's legislation would build on our success by improving the range of retirement savings options available to Canadians. The pooled registered pension plan, or PRPP, would make well-regulated, low cost, private sector pension plans accessible to millions of Canadians who have, up until now, not had access to such plans. In fact, many employees of small and medium-sized businesses and self-employed workers would now have access to a private pension plan for the very first time. This would be a key improvement to Canada's retirement income system.
PRPPs would also complement and support the Government of Canada's overarching objective of creating and sustaining jobs, leveraging business investments, securing our economy recovery and encouraging sustainable, private sector driven growth.
Some of the retirement income system proposals we heard in our consultations would have significantly raised costs for employers and employees. They would have been unacceptable in the midst of a very tentative economic recovery.
Promoting the retirement income security of Canadians is an important goal of the Government of Canada. We will continue to ensure that our policies, programs and services meet the evolving needs of Canada's senior population.
I am the fifth of six children in my family. Quite typically for modern Canadians, my father lived to the age of 89 and my mother to the age of 93. My father was a self-employed electrician and electrical contractor. Except for four years in her later life, my mother stayed at home to raise six children.
At the beginning of my father's working life, Canada did not even have a Canada pension plan. Our country has come a long way in the intervening decades. However, innovation is required and should be welcome.
The Canadian Chamber of Commerce commented in November 2011 that this legislation had the potential to benefit the estimated 60% of Canadians who have either no or insufficient retirement savings. This legislation ushers in excellent opportunities for employers and employees to work together and the self-employed to benefit in a way that can create a more secure future in one's senior years. This would have helped lifelong contributors to the Canadian economy, like my father and his family.
Through these legislative and policy efforts, we recognize the contributions seniors have made and continue to make to our nation. They deserve pension security and we are ensuring that the retirement income system and the tax system support those goals.
We are doing so in a number of ways. For example, the CPP provides a secure indexed lifelong retirement benefit. To ensure that the CPP remains on solid footing, it is regularly reviewed by federal, provincial and territorial governments that have successfully acted as joint stewards of the plan since its inception.
As a result, the chief actuary indicated in his most recent report on the CPP that the plan was sustainable, at least for the next 75 years, at current contribution rates and benefits.
Canada's retirement system includes tax assisted private savings opportunities to help and encourage Canadians to accumulate additional savings for retirement. This includes registered pension plans, RPPs, and registered retirement savings plans, RRSPs.
RPPs are sponsored by employers on a voluntary basis and can be either defined contribution or defined benefit with employers and often employees responsible for making contributions.
RRSPs are voluntary individual defined contribution savings plans. Employers may provide a group RRSP for employees and may remit a share of contributions on behalf of their employees.
Contributions to RPPs and RRSPs are deductible from income for tax purposes and investment income earned in these plans is not subject to income tax. Pension payments and withdrawals are included in income and taxed at regular rates.
In all, the cost of tax assistance provided on retirement savings is currently estimated at approximately $25 billion per year in forgone revenue for the federal government and about one-half that amount in forgone provincial revenue.
However, that is not the only way the government helps Canadians ensure that they have more money available when they retire. I will quickly elaborate on some other measures our government has introduced to assist seniors and pensioners which, together, are providing roughly $2.5 billion in additional annual targeted tax relief to seniors and pensioners.
Since 2006, our government has increased the age credit amount by $1,000 on two occasions, doubled the maximum amount of income eligible for the pension income credit to $2,000, introduced pension income splitting, and increased the age limit for maturing pensions and RRSPs to 71 from 69 years of age.
In 2012, a single senior can earn $19,542 and a senior couple $39,084 before paying federal income tax. Due to measures taken since 2006, about 380,000 seniors will be removed from the tax rolls in 2012.
In addition, in budget 2008, our government introduced the tax free savings account, TFSAs. The TFSA is a general purpose savings vehicle that helps all adult Canadians, including seniors, to meet their ongoing savings needs on a tax preferred basis, including those who are over age 71 and are required to begin drawing down their registered retirement savings.
Of note, the income earned within a TFSA and withdrawals from the account are not subject to income tax and do not affect eligibility for federal income tested benefits or credits, such as old age security, the guaranteed income supplement or the goods and services tax credit. This feature improves savings incentives for low and modest income Canadians who would expect to receive GIS benefits in retirement. In its first five years, it is estimated that over three-quarters of the benefits of saving in a TFSA will go to individuals in the two lowest tax brackets.
Last year, we introduced measures strengthening the GIS, which is a benefit for low income seniors. Budget 2011 included a new GIS top-up benefit targeted to the most vulnerable seniors.
On top of all these efforts, our government provided an additional $10 million over two years to enhance the new horizons for seniors program, funding that will enable more seniors to participate in social activities, pursue an active life and contribute to their community. The program provided funding for projects that will increase awareness of elder abuse and promote volunteering, mentoring and improved social participation of seniors. We are continuing to help seniors.
I have been approached by constituents on this legislation who had two primary concerns: whether the PRPP was portable and whether a worker who does not opt into such a plan initially can opt in later. The answer to the first concern is, yes, the plan is portable. We urge all provincial governments to move quickly with their mirroring legislation. The answer to the second concern is yes. A worker who does not opt in initially can opt in later.
In fact, Dan Kelly, vice-president of the Canadian Federation of Independent Business, said, in November 2011 in media interviews, that the pooled plans are desperately needed because presently only about 15% of small and medium-sized businesses his company represents offer some form of retirement savings plan for their employees. He further stated, “This can't come soon enough from our perspective”.
In conclusion, I will reassure seniors that in carrying out our plan to restore budget balance, this government will not raise taxes. There are employers and employees across the country in all sectors who are anxiously looking forward to seeing this fundamental change in Canada's pension landscape becoming available. I would, therefore, encourage all members of this House to support this very important legislation.