Madam Speaker, it is a privilege to rise in the House today in support of Bill C-26. This is a piece of legislation that would bring peace of mind to millions of Canadians, many of them my constituents, who are worried about their retirement.
With Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, our government is fulfilling its campaign commitment to reform and enhance the Canada pension plan and help Canadians who are having trouble saving for their retirement.
The CPP is a Canadian success story and it is the right way to help Canadians save for retirement in a world that is very different from that of our parents and our grandparents.
There was a time when Canadians would work for one company all of their life and then retire comfortably with a gold watch and a defined benefit pension plan. Complemented by the Canada pension plan, they could be assured of a comfortable and dignified retirement but sadly, those days are no more. They are over.
It is very rare today to find a defined benefit pension plan outside of the public service. Today, due to costs and risks, most companies have moved to a defined contribution pension plan, which shifts the investment risk to the employee and that is if one is lucky enough to be working for a company that offers any kind of pension at all. According to Statistics Canada, in 2014 only 37.9% of employees had a pension plan and that number was trending down.
Then there is the changing nature of work today. A 2014 Workopolis study found that if current trends continue, average Canadians can expect to hold roughly 15 jobs in their careers. Indeed, 51% of people now stay in any one role for less than two years. Some of this is by choice, but some is also by necessity. Contract work is increasingly prevalent and employees are often seeking new challenges and new opportunities.
In short, Canadians can no longer rely on the traditional retirement savings methods. The onus has now shifted to employees, but the data makes it clear that Canadians are having difficulty with this new responsibility.
A report earlier this year from the Broadbent Institute found that only 47% of those aged 55 to 64 have no accrued employer pension benefits and the vast majority are retiring with inadequate retirement savings. Just half have savings that represent less than one year's worth of the resources they need to supplement old age security and the Canada pension plan, and fewer than 20% have the resources needed for five years of retirement.
According to the report, just 15% to 20% of middle-income Canadians retiring without an employer pension plan have saved anywhere near enough for their retirement. Without action, this means seniors are forced to continue working whether their health allows it or not, or are living their retirement in poverty. No Canadian seniors who have worked hard all their lives deserve to retire in poverty.
I understand why Canadians are having difficulty saving for retirement because I have been there myself. First, my husband and I saved to purchase a home in Scarborough, in the expensive greater Toronto housing market. At the same time, we set aside what money we could to put into a registered education savings plan for our two boys to save for their educations. Our first son started at Ryerson University this fall and our second son is not far behind. All along, my husband and I changed jobs and employers two times and have not had the benefit of an employer pension or savings plans.
I am privileged now as a member of Parliament to have access to an employer pension plan. While I can now worry less about my retirement, millions of Canadians are not as lucky as we are, and many of my constituents are not as lucky. I regularly knock on doors in my riding of Scarborough Centre to stay connected to the concerns of my constituents, and many of them tell me that they are worried about their retirement. For many Canadians, this is one of the most important things on their mind.
Canadians are justly proud of the Canada pension plan. Like our public health care and the Canada child benefit, it is one of those things that helps to define Canada.
It has been a long time, since 1965, when the Liberal government of Prime Minister Lester B. Pearson first established the Canada pension plan. As I have said, we live in a very different world than we did back in 1965, and Canadians face a very different retirement scenario today.
If we are to help Canadians save for their retirement and ensure that our retiring seniors do not slip into poverty, we need an enhanced Canada pension plan. With its efficient administration and strong performance, the Canada pension plan is the right vehicle to use as we seek to provide enhanced retirement savings for Canadians.
With Bill C-26, we would increase the maximum level of pensionable earnings by 14% by 2025. By increasing the amount of retirement pension, as well as the survivor and disability pensions, and the post-retirement fund, we are keeping our commitment of helping Canadians secure a strong, secure, and stable retirement.
We recognize that there will be an impact on both employees and employers, which is why the changes are being phased in gradually over the next seven years, from 2019 to 2025, for these needed investments. Canadians are investing in themselves and in their future. By investing in their employees, businesses will benefit as well. An employee who does not need to worry about their retirement is an employee who is happier and more productive for their employer.
Canadians deserve to retire with dignity. Today, 1.1 million families nearing retirement are facing a drop in their standard of living, but they will be able to retire with dignity when these reforms are fully in place.
Pension reform is an issue that needs national leadership. For years, as the provinces called out for federal leadership to address this growing problem, the previous government stayed silent, while everyday Canadians retired without enough savings to live comfortably.
I am proud to be part of a government that is prepared to lead and make some difficult choices. This is what leadership is about. The finance minister has worked closely with his provincial counterparts to reach an agreement that critics said was impossible.
We do not need to worry about our retirement in this place, but the millions of Canadians we represent do. This bill is for them, and I am proud to support it.