Elizabeth May (Saanich—Gulf Islands)
2022-02-28 22:43

Madam Chair, a lot of proposals have been put forward on top of the very good actions the government has already taken. One that I think came up earlier today relates to Canadian pension funds that are invested in Russian operations. We would have to amend the Canada Pension Plan Investment Board Act.

Would the hon. member agree with me that we should do so, and quickly, to divest of Russian investments?

Julie Dzerowicz (Davenport)
2022-02-28 22:44

Madam Chair, I am reluctant to provide advice on our pension fund about what to divest or not divest. However, I will say that I am very proud not only of how the government has taken action, but also of Canadians across this country and businesses, small, medium and large. Everybody has stepped up to ask what they can do, and I would encourage everybody to continue to do so. What more can we do? How can we further support Ukraine and Ukrainians? That is something we all should be doing in the coming days and weeks.

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Mr. Speaker, it is an honour to rise today to speak to Bill C-26, a bill to enhance the Canada pension plan.

I want to start by lamenting, as I did this morning, time allocation, which is bringing this debate to a premature end. I think this is one of those times, particularly with the degree of controversy about the drop-out provisions in the bill and how they will unequally impact women in this country, when we really should have more time for debate and more time to ensure that we have all the facts.

I want to take a moment to say that if there is anything sadder than watching Liberals fall short of their promises, it is the Conservatives jumping on them for doing about one-tenth of what the Conservatives did when they had power. The use of time allocation was constant in the 41st Parliament.

Mr. Speaker, I know that many who are currently heckling me were not here in the 41st Parliament, but I can assure them that we had no time to turn around before there was yet another time allocation motion. The Conservatives broke through all historical records. However, this does not excuse the Liberals for doing the same thing.

I would urge members on both sides of the House to consider what we really want in terms of parliamentary decorum and in terms of being able to address bills and get them through the House in an expeditious way while also ensuring that we do not trample on the rights of each of us here as members of Parliament to do the work we were elected to do, which is to study the legislation, provide suggestions, work together, and produce what the people of Canada want. They want parliamentarians who see the big picture and are prepared to put their heads together to come up with better legislation by taking the time that is needed.

Tme allocation is in no one’s interest here. I very much regret that the current government has brought it in now, for the ninth time. Again, for those who live in glass houses, I will remind them that it was 100 times that time allocation was brought in during the 41st Parliament.

I urge the Liberals in this place to consider what the threshold is against which they strive to achieve their goals. I would urge them not to think that their goal is to be better on any issue—the environment, climate, the treatment of veterans, criminal justice, Bill C-51, parliamentary decorum, the use of time allocation—than what Prime Minister Harper did. I want to set a really ambitious goal for them: Do better than what Prime Minister Mulroney did.

Obviously, I did not agree with everything done by the Progressive Conservative majority back in the 1980s, but I think if members go back and look at the use of time allocation, the number of whipped votes, and the treatment of issues and use that as a benchmark, they will find that they have to set their sights a good deal higher than trying to do better than the prime minister in the 41st Parliament.

Turning to the specifics of Bill C-26, I wish it did include—

I am sorry, Mr. Speaker, but I am having trouble speaking through the noise.

I wish that Bill C-26 dealt with another pension issue. There is an omission, and I hope that the Minister of Finance will get back to it in the spring budget. It is an egregious situation that affects a minority of pensioners for sure, but they are the very people we should do the most to honour. These are people receiving pensions who, through the Superannuation Act, are deprived of spousal benefits if they are veterans, retired service persons, retired RCMP members, and other retired categories of public servants and have remarried over the age of 60. They are deprived of spousal benefits on their death.

This is a terrible injustice to a lot of constituents in my community of Saanich—Gulf Islands. I know that a lot of other members of Parliament are aware of this. It is due to the most anachronistic of all pension rules. It goes back to the Boer War. It was called the “gold-digger” clause.

I do not mind saying that I am 62. I do not feel that I am so far along with one foot in the grave that the gold-digger clause makes sense. The gold-digger clause in the Boer War was that if a soldier came back from the Boer War and remarried over the age of 60, the only possible reason anyone would have married one of these soldiers would have been to get their hands on their benefits when they passed away.

Times have changed. Very healthy, vigorous adults who have a lot of life left get married over the age of 60. I have one such serviceman in my riding who received the highest medals of honour, including the Legion of Honour from the French government, for his service in the Second World War. He is now over 90, and every day I see him, he reminds me to please do something about this terrible injustice. He does not want to leave his wife destitute. Therefore, I flag that again for the Minister of Finance.

Overall, the Green Party supports the bill. We support the fact that it is expanding the most reliable and consistent way in which we can ensure that seniors in Canada have adequate savings for retirement. The Canada pension plan is the most reliable and the most sustainable of what is available.

RRSPs, for example, are a good program. I know many of us will pay into it, but the registered retirement savings plan appeals primarily to those Canadians who already have discretionary income to put into an RRSP. That taxable benefit to higher wage earners costs the tax system quite a lot of money. If we look at it as a public policy question, we see it is not clear that the RRSPs make sense.

The Canada pension plan makes abundant sense, and we know right now that two-thirds of Canadians no longer have any workplace pension. Workplace pensions are disappearing. More and more Canadians have inadequate savings for retirement, so the workplace pension plans are shrinking at the same time as we have what is sometimes called the grey tsunami. We know we have a demographic with many more people about to enter retirement.

By the way, I commend the government for returning the retirement age to 65; that is commendable. However, we do need to enhance CPP benefits. There is no question that overall the bill is going in the right direction. We know that right now the median value of retirement assets for Canadians between age 55 and 64, with no accrued employer pension benefit, is under $4,000. We know we need to augment the CPP. Only one in five Canadians have adequately saved for their retirement.

It is all well and good for some members of this place to say that Canadians should plan ahead and it is their responsibility to figure out how to save for their retirement. This is a very small cost of a public program, with the cost split between the employer and the employee, to make sure that people have adequate savings for retirement. The reason people do not put aside money for retirement is generally that they lack disposable income because the other costs of daily life eclipse their ability to set aside money for retirement.

I urge my friends on the other side of the House to embrace expansion of CPP. I agree with the analysis of the Canadian Association of Retired Persons. It does really good work on public policy and commends the bill as well.

That brings me to the point where I wish we had time in this place and I wish the Minister of Finance and the Minister of Families, Children and Social Development could have provided, at committee, by accepting amendments, a fix to what looked initially like an oversight, and that is the dropout provisions for disability and child rearing to ensure gender parity. Both ministers have said that they can fix this problem by renegotiating terms with the provinces. I wish they had fixed it while they had the chance at committee. They still have the opportunity to fix it, if they are willing to accept amendments when we get through this process. However, at this point there has been no sign of a willingness to accept amendments, and we are left hoping for public pressure to continue what both ministers say they are willing to do by changing the terminology in the negotiated agreements with the provinces.

It is very hard to understand how this oversight has not been fixed already. The conclusion that my friends in the NDP have reached appears an inescapable conclusion. On the evidence we have before us, it appears that the bill will disadvantage women for no apparent reason other than an oversight. I did have a brief moment to discuss this with the Minister of Finance earlier this morning, and his position is that to do what the NDP asks now would result in a transfer of wealth from poorer women to wealthier women because of the way the calculation works. Unfortunately, I do not have the full facts on this. I had a 30-second conversation with the Minister of Finance, which is what happens when there is time allocation and inadequate time for debate.

I am left with the dreadful conclusion that, with the chance to bring in a really strong bill that would have no negatives attached to it, which is what Bill C-26 was when I first read it, it needs to be fixed. The NDP spotted this problem. I commend the NDP for spotting it. With that, I will close.

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Yet, seniors in Canada are more vital and active than at any time in our history.  The most important issue for seniors is independence. This covers a range of policy issues.

On public transit, we know we need to enhance public transportation to meet seniors’ needs. It becomes a key aspect of on-going independence and health to be able to access key services by bus or rail.

We need to look at how most effectively to maintain the ability of seniors to live at home for as long as they choose and to ensure that there are good options available when they choose to move out. Further, we cannot continue to ignore the suffering of well-informed adults who wish to make a choice to die with dignity in their own country. We need an honest, inclusive, national discussion about our aging population. Perhaps most urgent is national pension reform. We cannot afford to keep on stalling.

Canada’s 14^th place ranking in the 2014 Global Retirement Index is certainly a good sign. Even better, Canada’s ranks 8^th in the Finances in Retirement sub-index. However, these impressive numbers belie the precariousness of the situation. What our high standing does not reflect is that the safety net that has allowed this current generation of retirees to live out the rest of their lives with dignity and security is being quietly undermined. If we do not reform the system, this could be the last generation of retirees with stable pensions.

It used to be that retirees could depend upon a three legged stool: the Canada Pension Plan (CPP), the Old Age Security Pension (OAS), and workplace pension. Workplace pensions were the first to go. Only 24% of the current private sector labour force contributes to employer based pension plans. The younger generation simply does not have the option. Thankfully, the public sector still has solid pensions. To solve this inequity, the Harper strategy has been to claw back public sector benefits until equality is reached  — that is, equality at the bottom..

Though we are certainly experiencing a demographic shift in Canada as boomers age, there is no basis for the cries of the doomsayers who would have the Canadian workforce moving from the labour market to hospital beds in one fell swoop. The story that Canada will experience catastrophic labour shortages and have no one left to support public pension plans is not supported by evidence. (At the same time, we are somehow experiencing an epidemic of youth unemployment.) The evidence suggests that our economy need not collapse in one arthritic gasp. In fact, we can assume that the GDP will continue to grow, buoyed by immigration (not temporary workers) and by less labour intensive economic activity. For a Prime Minister who has suggested that his legacy could be “re-orienting economic immigration,” we would expect these solutions to be obvious. In this possibility for a newly invigorated economy, retirees need not be seen simply as an economic drain.

The best bet for ensuring that retirees continue to live in security and dignity is an enhanced CPP. If our three legged stool is missing a leg, we need to bolster the strongest leg. A robust CPP is the most sustainable and reliable option to keep seniors out of poverty and to allow them to retain their purchasing power as they age. In a nation with a savings problem, the enhancement of the CPP which is essentially a required savings plan, only makes sense.

At Davos 2012, the Prime Minister surprised the country (and his caucus) with the announcement of changes to access to old age security.  Without consultation or a word in the 2011 election, the 2012 budget raised the age at which Canadians qualify for OAS to 67. This was not the reform that Canada needed.  Experience shows that a good percentage of people over 65 are not able to keep working due to health issues.

At the annual December 2013 meeting of Federal, Provincial and Territorial Ministers of Finance, most provinces, led by PEI, were preparing to move ahead with assessing a series of phased in proposals to enhance the CPP, which over some 40 years, would increase the maximum CPP payable beyond the current 25% of the national industrial wage.  Under consideration was an increase in the Years Maximum Pensionable Earnings (YMPE, which is equivalent to the average industrial wage) subject to CPP contributions from $52,500 in 2014 to something closer to international standards, which would be close to $110,000.  (For comparison, the USA’s Social Security System assesses premiums of 12.4% on incomes up to $117,000.)  In addition to increasing the YMPE, the co-operating provinces were considering an increase in the income replacement ratio of 25% of the YMPE to something more reasonable like 35% or 40%.

This newfound cooperation among the provinces was met with a blunt rejection by the federal government. Provinces are now looking at ways to fill the void that the federal Conservatives have opened. The Ontario government, for example, has seen the necessity to go it alone with plans to develop an Ontario Retirement Security Plan. Inconceivably, Harper has been trying to stand in the way of this, too.  The best option for seniors and for the Canadian economy is a national, public, shared program with defined benefits without restrictions on labour mobility. That said, if the Harper Conservatives will not help seniors maintain independence, the least they can do is not interfere.

Originally printed in the Hill Times.

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I stand with the members of the opposition parties in general in believing that the CPP is our best and most reliable pension system and that it must be expanded. I am concerned about this new approach, because it is discretionary. It appears to create the greatest benefit for those people who buy and sell investment services.

I would like to ask my hon. friend what can be done and whether we can put forward perhaps a private member’s bill from this side of the House to ensure that we protect the pensions that are held in firms that go into bankruptcy. For such plans as that of Nortel or Catalyst Paper and others, can we make those secured creditors in bankruptcy?

Hon. Judy Sgro: Mr. Speaker, we had many discussions and actually asked many questions of the government on this side of the House in that whole debacle with Nortel, calling on the government to make the kind of changes to the Bankruptcy Act that would eliminate the contribution holiday. The government did take some action on that part of the file, requiring a larger amount of surplus before they could take a contribution holiday, but there is much more to be done when we come to this whole issue of protecting individuals’ pensions.

We all believe that, when we put money into a pension fund, it is sacrosanct. Certainly, we Liberals believe it has to be protected 100%. We have to realize people are counting on that money to be there, and if a company goes bankrupt and leaves them as Nortel did, many have nowhere to go.

We have examined many different options. The Province of Ontario has a fund, as does the U.S., which backs up to $1,000 per month some of the pensions of companies that go bankrupt, but that is under huge pressure and it is not necessarily the best answer either.

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The general narrative put forth now sounds plausible. The demographic shape of Canadian society is changing. More of us will be older as those born in the post war baby boom, roughly from 1947-1957, enter our senior years. (I can say “our” as a 1954 vintage boomer myself). The story is that all of us will be old and far too few young people will be around to work to generate the wealth to cover our pensions. It sounds plausible until examined. No one is anticipating that the GDP will collapse with fewer workers. We assume the GDP grows because we anticipate the economy will be buoyed by immigration and by less labour intensive economic activity.

Moreover, the Parliamentary Budget Office report (issued Feb. 8) states that, having off-loaded two per cent of health-care costs on the provinces, Ottawa has room to absorb the bump created by retiring baby boomers. In fact, the PBO report says we can increase Old Age Security. Debates about pension reform have pitted the Harper Conservatives who refuse to enhance CPP, against many premiers and opposition parties. Pension reforms must be built upon the system that will best create decent pensions that will keep the elderly out of poverty, require minimum additional contributions and have low administrative and investment costs.

The only system that is capable of meeting these goals is the CPP, a proven system that is the envy of many countries. Its systems can be modified to offer enhanced benefits. Everyone is familiar with the CPP, which is in sound financial health with the latest actuarial report noting that it is sound for at least the next 70 years.

Approximately 35 per cent of older citizens 1.6 million seniors are still dependent upon Guaranteed Income Supplement (GIS) to keep them out of poverty. This is partly because current the CPP objective of just replacing 25 per cent of the average industrial wage is too low. A 50 per cent income replacement ratio would dramatically reduce the reliance on GIS to keep the elderly out of poverty and reduce the cost of GIS to the federal government by billions annually.

The Year’s Maximum Pensionable Earnings (YMPE) should be raised to at least $90,000 and consideration given to raising it to the full Income Tax Act (ITA) limit for Registered Pension Plans (RPP) of ($122,222 in 2009) pending an evaluation/review in a decade.

Subject to an actuarial evaluation, it is expected that these benefits could be achieved with a phased-in increase of CPP contribution rates from the current 9.9 per cent to approximately 14.5 per cent, most, if not all, of which would be offset by reductions in workplace pensions for those with workplace pensions. Redirected GIS savings could be used to offset some of the required contribution increase.

An honest evaluation of the effectiveness of current tax policy will illustrate how inefficient it is for most retirement savings. Net federal RPPs tax expenditures (concessions) were worth $17.6-billion and $11.3-billion in 2007 and 2009. RRSPs cost $12.1-billion and $8.5-billion in the same years. The loss of provincial revenues adds another 35 per cent to 40 per cent.

Defined benefit (DB) plans are much more efficient than defined contribution (DC) plans in that they produce significantly higher pensions for the same contributions, yet DC plans get the same tax support.

RRSPs are terribly tax inefficient in that for the $8.5-billion to $12.1-billion in annual net tax expenditures (around 30 per cent of total contributions), the median value of RRSP assets by Canadians under age 65 is a woeful $40,000 and those over 65 have less than $55,000insufficient to supplement one’s pension, especially at today’s annuity rates. Only 25 per cent of working Canadians contribute to RRSPs, only six per cent with incomes under $20,000. Pro-rating tax expenditures to the value of projected pension would bring fairness and equity back into the system.

Phasing-in the doubling the target income replacement rate to 50 per cent and the doubling the YMPE over the next 47 years is the most efficient way to ensure that future retirees will be able to retire with dignity without inter-generational subsidies.

It’s time to have an open discussion about the fiscal, health, and social implications of the aging population. Let’s start by looking at the evidence before jumping to conclusions.

Green Party Leader Elizabeth May also represents Saanich-Gulf Islands, B.C.

Originally printed in The Hill Times March 12, 2012

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Bill C-25, “An Act relating to Pooled Registered Pension Plans and making related amendments to other Acts” would enact legislation enabling the creation of PRPP’s, a new retirement savings vehicle being proposed by the government.  Business organizations, such as the Canadian Federation of Independent Business and the Canadian Bankers Association, were generally very supportive of PRPP’s, citing their low cost and administrative burdens to business.  Furthermore, these witnesses said the plan appropriately targets modest income workers in the private sector who may not have access to a workplace pension. However, many labour organizations and civil society groups expressed reservations about the plan, saying that the government should explore other options, such as enhancements to the Canadian Pension Plan. According to these witnesses, PRPP’s offer very few new features than group Registered Retirement Savings Plans and worry that the voluntary enrollment by businesses and employees means PRPP’s will not address the lack of retirement savings amongst certain demographics of the population. In their opinion, a version of the Canadian Labour Congress’s proposal of a phased-in doubling of CPP contributions would do more to help Canadians save for retirement.

However, the government has responded that it does not have the necessary provincial support for CPP enhancements and business organizations have expressed concerns that their members are still recovering from the financial collapse and that raising their contributions rates will drive down wages and limit hiring.

The committee also heard from the Canadian Association of Retired Persons and the Canadian Bar Association, who raised the concern that the proposed PRPP further normalizes Defined Contribution plans over Defined Benefit Plans.  Defined Contribution plans are considered lesser plans by these witnesses, as employees contribute a defined amount, but do not receive a guaranteed benefit when they retire. The committee also heard testimony from the Canadian Medical Association, who testified that Canadians also need to be saving for potential long term care they may require later on in their life.

Pooled Registered Pension Plans

http://www.fin.gc.ca/n11/11-119-eng.asp

Canadian Labour Congress Proposal

http://www.canadianlabour.ca/action-center/retirement-security-everyone/retirement-security-reform-1-double-cpp-benefits

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Ms. May has agreed to have all of her expenses open for public scrutiny and has also suggested capping or cutting MPs’ current base salary of $157,731.

“Canada should pay its MPs well but reviewing their pensions in the context of today’s circumstances would be prudent,” said Green Finance Critic Ard Van Leeuwen. “The divide between pensions haves and pension have-nots is growing in Canada and it`s not appropriate to have MP`s at the very high end of the spectrum.”

“We should be examining options for MP pension reform.  We would be willing to look at any proposals brought forward,” said Green National Revenue and Ecological Fiscal Reform Critic Erich Jacoby Hawkins.  “Originally, there was a need to balance the economic uncertainty of being an MP and to ensure good candidates.  However, with the salary plus benefits, and since an MP is in a position to make maximum RRSP contributions, there is no longer any justification for an MP to have a special pension plan that is richer than one any other employee with similar income would have.  We should also examine pushing back the eligibility for receiving benefits to age 65, thus reducing the potential for double-dipping.”  Once they sit in Parliament for six years, MPs are eligible to collect full pension benefits at age 55.

The recent focus on MP pensions comes from a report by the C.D. Howe Institute revealing that MP pension funds, rather than being invested, are guaranteed by law to grow 10.4% per year.  This is in contrast to other pension funds that are vulnerable to market downturns.  The end result is that taxpayers end up paying $23.30 to the MP pension plan for every $1 paid in by the MP.  The report also says that the pension plan is underfunded by up to $1 billion. The Canadian Taxpayers Federation has been leading the charge to have these inequities addressed, calling the situation “a national disgrace.”

“The bottom line is that we need to ensure that all Canadians have adequate incomes in retirement.  A pension system must keep the elderly out of poverty, require minimum additional contributions and have low administrative and investment costs.   An MP’s pension should be in line with what someone with a similar salary in the public service receives,” said May.

The Greens have also been calling for enhancement of the Canada Pension Plan (CPP) by phasing in the doubling of the target income replacement rate from 25% to 50% of income received during working years.

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Seconded by Elizabeth May on May 31, 2012

Click here for the complete document.

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