Mr. Speaker, I will be sharing my time with the Minister of Veterans Affairs.
I am pleased to join in the debate on old age security and Canadian seniors.
Our government is committed to ensuring retirement security for all Canadians. Canada does not live in a glass house. Canada's demographic state is part of a worldwide phenomenon in the developed world where families are having fewer babies. We cannot afford to put our heads in the sand and hope the challenge of financial sustainability will go away. As a Globe and Mail editorialist said yesterday, “The challenge of ensuring that the retirement income system and other supports are on a secure footing for the next generation is one that no government can avoid.”
There is no doubt that Canadians are living longer, healthier lives than in past generations. The average Canadian can now expect to live to age 81. By 2025 our life expectancy will probably increase by another two years. The bottom line is this: Canadians will be relying on retirement income for longer periods of time. Therefore, helping Canadians prepare for and achieve financial security in their later years is an absolute priority for our government.
Let me outline to members of the House the basic three pillar structure of Canada's retirement income system. The first two pillars are the old age security program and the Canada pension plan. These public pension plans provide a modest base with which Canadians can build additional income for retirement. The third pillar consists of personal savings and RRSPs, as well as employer pension plans. Ideally the combination helps provide a standard of living similar to pre-retirement levels.
Canadians will receive close to $72 billion from Canada's public pension system this year.
The first pillar, the old age security program, OAS, provides a basic level of income to seniors. It recognizes the contributions they have made to Canadian society and the economy. It is also intended to alleviate poverty. The old age security program is funded from general tax revenues on a pay-as-you-go basis. There is no reserve fund. By 2030 the number of OAS beneficiaries will nearly double from 4.7 million in 2010 to 9.3 million in 2030. Program costs could rise from $36.5 billion in 2010 to $108 billion in 2030.
Right now there are four working age Canadians for every senior. By 2030 this will shrink to two. Can two working age Canadians support the pension requirements of one senior? This is the issue. Let us be serious. Can we expect to saddle future generations with that burden? Should we not build an adjustment period so people can benefit from their retirement benefits later in life?
To be eligible for the basic OAS pension, a senior must have lived in Canada for at least 10 years after the age of 18. A person who has lived 40 years in Canada since the age of 18 is eligible for a full pension.
Finally, the guaranteed income supplement, GIS, is an income-tested monthly benefit paid to OAS pensioners with little or no income. Along with the OAS pension benefit, the guaranteed income supplement ensures that seniors' overall income does not fall below a specified threshold.
Under budget 2011 our government introduced a new GIS top-up of up to $600 for single seniors and $840 for couples. This measure is improving the financial security of more than 680,000 seniors across Canada. The GIS top-up, like other OAS benefits, is indexed quarterly to reflect increases in the consumer price index. We have also enabled GIS recipients to earn up to $3,500 without it affecting their benefit amount. This allows seniors to work a bit if they wish to supplement their pension benefit.
The numbers speak for themselves. The rate of poverty among seniors has decreased from 21.4% in 1980 to a rate of 5.2% in 2009. Canada has one of the lowest rates of senior poverty among the countries in the Organisation for Economic Co-operation and Development. It is lower than that of Denmark, France, Germany, the United Kingdom and the United States. Poverty among seniors in Canada is lower than poverty among the general population.
The second pillar of the Canadian retirement income system is the Canada pension plan, which is a contribution-based earning-related social insurance program. It ensures a measure of protection to a contributor and his or her family against the loss of income due to retirement, disability or death.
There are three kinds of Canada pension benefits: first, retirement benefits, which include the retirement pension and the post-retirement benefit; second, disability benefits, which include benefits for contributors with disabilities and for their dependent children; and third, survivor benefits, which include the death benefit, the survivor pension and the children's benefit. The death benefit is a lump sum payment to the person's estate that may help with the cost of a funeral.
The Canada pension plan operates throughout Canada, although Quebec has its own similar program called the Quebec pension plan. The administrators of both plans work closely together to ensure all contributors are protected. Outside of Quebec, the majority of working people in Canada over the age of 18 pay into the Canada pension plan. The employee pays half the required contribution and the employer pays the other half. People who are self-employed pay both portions. No tax dollars are involved and the amount paid is based on a person's salary. In the case of the self-employed, it is based on net income. Contributions are important because they determine if workers and their families are eligible for benefits and in calculating the amount of that benefit.
Canada also has reciprocal pension agreements with certain other countries, so if a Canadian has worked in another country, they may receive pension or benefits from either country and Canadians who live outside of Canada can receive their CPP benefits while outside of Canada. All CPP benefits, except for the death benefit, are adjusted in January of each year and there is an increase in the cost of living as measured by the consumer price index.
The CPP is a secure plan. It is internationally regarded as a model for its sound structure, governance and long-term stability.
The 2009 report of the chief actuary projected that the CPP will be sustainable for the next 75 years. This calculation factors in the demographic changes that we are likely to experience in the foreseeable future such as an increase in life expectancy, the retirement of the baby boomers and so on.
We can be proud of what we are doing to ensure financial security for our senior citizens. However, what is necessary at this point is also to reinforce the sustainability of the first pillar of our pension retirement system, namely the old age security program. We owe future Canadians this element of security. That is why I call on all Canadians and all members of the House to support measures that would reinforce the financial sustainability of the old age security program.
Let us not leave the burden of financing to future generations of Canadians. Let us ensure that any changes are done with substantial notice and adjustment so current retirees or those close to retirement are not affected. Let us give Canadians time to adjust and plan for their retirement. More important, let us not bury our heads in the sand by supporting the motion today.
Finally, let us help shore up the first pillar of Canada's retirement system, the old age security system, so Canadians can build toward a secure future. This is why I cannot support the opposition's motion.
