Thank you, Madam Speaker, for the opportunity to speak to today's motion. I would like to thank the member for Lévis—Bellechasse as well.
As members know, Canada has a three-pillar retirement income system based on a balanced mix of public-private responsibility and voluntary, compulsory programs.
The first pillar, the old age security and guaranteed income supplement programs, provides a basic minimum income, guaranteed for seniors who meet residence requirements.
The second pillar, the Canada and Quebec pension plans, ensures a basic level of earnings replacement in retirement for all workers in Canada.
The third pillar, the system of voluntary tax-deferred savings in RPPs and registered retirement savings plans, encourages and assists Canadians to save for retirement, to help bridge the gap between public pension benefits and the retirement income goals.
Issues surrounding pensions have grown in increasing importance recently, as this is an issue that impacts all Canadians in one way or another. Our Conservative government has recognized that reality.
I would like to highlight key initiatives that we have recently unveiled to support pensions and help protect the retirement of Canadians across this country.
Let me begin by pointing out to the House that our government started this process by actually consulting with Canadians, releasing a comprehensive discussion paper on improving the framework for federally regulated private pension plans. This important discussion paper, available online for all to read, was part of our effort to reach out to Canadians for their views and input on issues related to federally regulated pension plans.
Indeed, the public was invited to make submissions directly to the government in response to this paper, and in fact, our government has already posted responses we have received to this initiative online. This input, open for all to see, will help inform permanent changes our government intends to make later this year to federally regulated pension.
Before continuing, let me remind all members that the federal government only directly regulates private pension plans subject to federal legislation, that is, areas of employment under federal jurisdiction, including banking, telecommunications and interprovincial transportation. These plans currently only represent 7% of all private pension plans in Canada, with the balance regulated provincially.
In addition to the release of that discussion paper, we went further in talking and listening directly to the concerns of Canadians, as our government held a series of national consultations earlier this year. The Parliamentary Secretary to the Minister of Finance, the member of Parliament for Macleod, went right across Canada to meet face to face with people from Halifax, Montreal, Toronto, Winnipeg, Edmonton, Vancouver and Whitehorse. Those who could not attend these meetings were invited to send in written submissions on the discussion paper.
There is no denying that we are in the midst of one of the most challenging economic periods in recent memory and that has caused a sharp decline in global markets, which has led to losses in many pension plans. Our government has recognized that challenge and taken specific concrete measures to provide temporary solvency funding relief for federally regulated, defined benefit pension plans, as originally outlined in our 2008 economic and fiscal statement.
The Federal Superannuates National Association, in reaction to these changes, publicly congratulated our government “for recognizing the need and placing priority on creating an equitable and fair pension system for Canadians--”.
Again, these measures covered plans established for employees working in areas that fall under federal jurisdiction only and offered temporary relief to sponsors while also protecting pension benefits.
The proposed regulations set out a series of measures to: first, extend the solvency funding period by one year for deficiencies reported as of year-end between November 1, 2008 and October 31, 2009; second, extend the solvency funding payment to 10 years from 5 with the agreement of members and retirees; third, extend the solvency funding payment to 10 years from 5 when the difference is secured with a letter of credit; fourth, extend the solvency funding payment period to 10 years from 5 for agent crown corporations with terms and conditions to ensure a level playing field; and fifth, allow asset smoothing above 110% with the difference in payments subject to a deemed trust.
We have recently also taken other important steps to help protect the retirement savings of individual Canadians. For instance, in recognition of the exceptional deterioration of market conditions and its effect on retirees' savings, in the 2008 economic and fiscal statement we announced a 25% reduction in the required minimum withdrawal amount for registered retirement income funds for 2008. This one-time measure has provided an estimated $200 million in tax assistance to retirees by allowing them to keep more of their savings in their RRIFs.
A respected Financial Post columnist, Jonathan Chevreau, declared that this measure gave “pensioners and pension-plan administrators more flexibility to deal with the market malaise that has triggered a plunge in asset values recent months”.
Our government has also increased the age at which RRSPs must be matured from 69 to 71. With this change, RRIF minimum withdrawals are not required to begin until the year an individual turns 72 years of age, which is well above the medium retirement age in Canada. I hear my colleague from Newfoundland adding some comments across the way, and I would encourage him to participate when his turn comes.
Another important development in supporting retirees and their savings was reached this past May when the finance minister met with his provincial and territorial counterparts at their annual spring meeting. At that meeting, the results of the tri-annual review of the Canada pension plan were announced. The federal, provincial and territorial ministers all agreed that Canada's retirement income system was healthy and compared well internationally in terms of adequacy and affordability, confirming that the CPP remained on sound financial footing despite the market downturn.
The minister also unanimously recommended numerous key changes to the CPP to increase flexibility for older workers, expand CPP coverage and improve fairness in the plan's flexibility retirement provisions. Key among the changes: providing greater flexibility to those taking up the retirement benefit before the age of 65 to enable them to combine pension and work, and an enhancement in the pension formula to exclude up to an additional year of low earnings.
Jack Mintz, public policy professor at the University of Calgary, heralded these changes, remarking, “The more flexibility you build into pension arrangements, the better”.
Finn Poschmann of the C.D. Howe Institute said:
This is an important shift in public pension policy. The proposed adjustments mark an important sea-change in government pension policy’s approach to dealing with population ageing and, in particular, making it easier for those people who want to work later in life to do so.
The Edmonton Journal cheered them as “an overdue update of the CPP which reflects contemporary realities”.
Those are not my words, these are the words of eminent public policy persons. What is more, ministers also agreed to the extraordinary step of creating a research working group, something suggested by today's motion, on retirement savings adequacy. This group was tasked to quickly undertake that study and report back to the ministers of finance and ministers responsible for pensions by the end of the year.
Clearly, promoting the retirement income security of Canadians has been and will continue to be an important goal of the Government of Canada. To conclude, let me say our Conservative government is working hard in consultations with the provinces, territories and, most importantly, Canadians across this country.