The hon. member opposite says he could not get a hearing before that committee. When we were in Calgary for two days there was a lot of opportunity for walk-ins. If the hon. member had been there he could have been heard.
Last February a federal-provincial agreement was reached on changes to ensure that the Canada pension plan would be sustainable in the future and would make it more fair and more affordable for all Canadians.
The changes are the result of the latest statutory review of the CPP that the federal and provincial governments, as joint stewards of the plan, began in 1995. They reflect what was said during extensive public consultations that were held across Canada in 1996. The key recurring theme was that Canadians believe in the CPP and they want it preserved.
Most participants believe this can be accomplished by strengthening the plan's financing, improving its investment practices and moderating the growth in costs.
This agreement answers the concerns of the residents of my riding and of most Canadians. This is a very balanced approach.
Federal and provincial ministers agreed on a three part approach to restore the financial sustainability of the CPP and make it fairer and affordable for future generations by moving to fuller funding; by accelerating contribution rate increases now so that it will not have to exceed the 10% for future generations; improving the rate of return on the CPP fund by investing it prudently in a diversified portfolio of securities at arm's length from the government; slowing the growth by tightening the administration of benefits and by changing the way that some are calculated.
The following important features of the Canada pension plan remain unchanged. Anyone currently receiving CPP retirement pensions, disability benefits, survivor benefits or combined benefits will not see these benefits affected. Persons over the age of 65 as of December 31, 1997 who elect to start CPP retirement pensions after that date will also not see these pensions affected.
All benefits under the CPP except the one time death benefit will remain fully indexed to inflation. The age of retirement, early, normal or late, will remain unchanged.
Building up a larger fund, fuller funding and earning a higher rate of return through investment in the market will help pay for the rapidly growing cost that will occur once baby boomers begin to retire. This is what Canadians have asked the government for, to ensure that their Canada pension plan will be there in the future.
Accordingly, the Canada pension plan will move from pay as you go financing to fuller funding to build a substantially larger reserve fund.
Contribution rates will rise over the next six years from the current rate of 5.85% to 9.9% and then remain steady instead of rising to 14.2% in the year 2030 as predicted by the chief actuary. In dollar terms an employee earning $35,800 a year now pays about $945 in contributions. In the year 2003 that employee will contribute about $1,635. Yes, that is $450 more than what is currently legislated for that year. However, by the year 2030 employees will be paying $565 less a year than if we had not acted now. Increasing rates more rapidly now will cover the cost of each contributor's own benefits plus a uniform share of the unfunded burden that has built up. These costs will not be passed on to future generations.
There will be positive changes to the benefits and to the administration of the CPP. Changes proposed are how benefits will be administered and calculated in order to moderate the growth of costs. By the year 2030 costs will be reduced by just over 9% compared to what they otherwise would be by then.
Stewardship and accountability are the most important facets of the CPP. To improve stewardship of the CPP and provide for more accountability so that the sustainability of CPP is not again put at risk, federal-provincial reviews will be required every three years rather than every five. Any future benefits will be fully funded.
In any future statutory review of the plan, new default provisions will identify the steps necessary if the chief actuary calculates the CPP to be no longer sustainable at the steady state rate and ministers cannot reach a consensus on actions to sustain the plan.
Canadians will now receive regular statements about their pensions with the intent to provide annual statements to all contributors as soon as possible. The CPP investment board will provide quarterly financial statements and will report to Canadians on the performance of the fund. It will hold public meetings at least every two years so Canadians can know what is going on in every province. CPP annual reports will provide more complete information and will explain how administrative problems are being addressed. Other issues are up for review. These changes will restore the CPP sustainability and make it more fair and affordable for all future generations.
Partial pensions. Many Canadians want to make a gradual transition to retirement. This opens up the possibility of more jobs for younger Canadians. This will be made possible by providing partial pensions during the transition while Canadians can continue to work and earn further pension credits. We are going to examine this and I hope we can make great progress.
Survivor benefits. Compared with today when 68% of working age women are in the workforce, in the past, when the CPP survivor benefits were designed, most women did not work outside the home. Ways to update survivor benefits to reflect changing realities and the needs of today's families will be examined.
In response to misinformation that is being supplied across Canada by the official opposition I want to repeat that there is no change in the age of retirement. There is no change in the contribution rates past the 9.9% that is being set now. It will be held steady. We will know what the rate will be in the future. The year's basic exemption, which is now $3,500, will be frozen at $3,500. There is no change to the maximum pensionable earnings. All benefits except the death benefit will be fully indexed.
Again I want to say that good government makes a difference. This government has certainly listened to Canadians. We have held hearings in every riding that we represent and we are happy to talk to Canadians.
