Mr. Speaker, the government has been working with provinces and territories to enhance the Canada pension plan, or CPP, to ensure that future generations of Canadians can count on a strong public pension system in their retirement years. Canada’s finance ministers came together in Ottawa on December 21, 2015, and agreed to begin discussions on a modest, fully funded and phased-in enhancement of the CPP. These discussions included issues such as the impact on contribution rates. After months of co-operative work with provinces and territories, finance ministers met in Vancouver on June 20, 2016, and agreed in principle to an expansion of the CPP starting January 1, 2019, that would increase the income replacement from one-quarter to one-third of pensionable earnings and increase the maximum amount of income subject to CPP by 14%.
To ensure that these changes are affordable for businesses and Canadians, the agreement included three measures: introducing a long and gradual seven-year phase-in starting on January 1, 2019, that would allow more time for businesses to adjust; enhancing the Canada workers benefit to offset the impact of increased contributions on low-income workers; and providing a tax deduction, instead of a tax credit, for employee contributions associated with the CPP enhancement in order to avoid increasing the after-tax cost of savings for Canadians.
A news release provided the signed agreement by federal and provincial ministers and background on the agreement in principle to enhance the CPP.
In advance of the tabling of federal legislation implementing the agreement in principle, Bill C-26, the government released a comprehensive technical paper summarizing the economic and policy analysis and providing more details on the design of the CPP enhancement. In addition, and as required by legislation, the chief actuary of Canada prepared a report assessing the financial sustainability and other financing implications of the legislative changes in Bill C-26. The report from the chief actuary confirmed that the CPP enhancement is sustainable at the legislative contribution rates set out in Bill C-26.
For more information, members should consult the following documents: the news release from the December 2015 finance ministers’ meeting, found at https://www.fin.gc.ca/n15/15-089-eng.asp; the news release from the June 2016 finance ministers’ meeting, found at https://www.fin.gc.ca/n16/16-081-eng.asp; the backgrounder on the Canada pension plan enhancement, found at https://www.fin.gc.ca/n16/data/16-113_3-eng.asp; the 28th Actuarial Report on the Canada pension plan, found at http://www.osfi-bsif.gc.ca/Eng/Docs/CPP28.pdf; the news release on the Canada pension plan enhancement legislation, Bill C-26, found at https://www.fin.gc.ca/n17/17-010-eng.asp; the news release announcing that Manitoba agrees to the Canada pension plan enhancement, found at https://www.fin.gc.ca/n16/16-088-eng.asp; and Bill No. 149, An Act to Enhance the Quebec Pension Plan, found at http://www.assnat.qc.ca/en/travaux-parlementaires/projets-loi/projet-loi-149-41-1.html?appelant=MC.