CPP fix needs to be fixed
November 25th, 2016 - 10:59am
It seems the maxim of one step forward, two steps back is at play with the government’s legislation on enhancements to the CPP (C-26). Instead of accepting the bill in its entirety, New Democrats are pointing out that the time to address emerging problems is while legislation is still before parliament. What needs to be fixed are flaws in the bill that will see people who temporarily leave the CPP program for reasons as simple as staying home to raise children, or prolonged illness punished for these gaps in contribution when they aren’t right now.
Until C-26 becomes law, the solution for people who experience these gaps in employment has been to exclude the time period from pension calculations so that the zero income didn’t drag down the remainder of their contribution. As CPP stands, there are two separate exemptions that allow for people to discount years spent raising children or dealing with health issues that kept them out of the workforce. Under bill C-26, both of those exemptions have been removed.
We already know that poverty is a big problem in Canada where 28 per cent of single women and 24 per cent of single male seniors currently live below the poverty line. While C-26 iwon’t directly address that problem, it is intended to help improve CPP for Canadians down the line. It is a chance to learn from our experience and make the benefit perform better. Those who will come under the scope of this legislation are working now or even just preparing to enter the work force. That’s why in a little more than two years, Canadians will see an increase in their premiums for CPP
This is a much-needed improvement given that so few Canadians are able to save for their retirement. Compounding the problem is the fact that almost half of Canadian families aged 55–64 have no employer pension benefits. These are the same people that have not been able to put aside adequate retirement savings. Consider that the average amount saved by this demographic is just over $3,000 and the need for a CPP that performs becomes stark.
With all the promises made about pensions during the election it was clear that parliament would eventually consider enhancing the CPP. But the government solution has one significant problem that undermines the effectiveness of their attempt. Whether this was intentional or omission is uncertain. What is disheartening is that despite attempts to point the gap out, the Minister refuses to admit the problem even exists.
New Democrats have introduced amendments to fix the provision that penalizes women and people living with disabilities. It is a simple matter of retaining the Child Rearing Drop-out Provision, which already exists in the current CPP so that parents, mostly women, are not penalized for time taken out of the workforce to raise children. The similar existing drop out provision for people that have received CPP disability benefits could also be preserved so that the legislation can improve the benefit for all Canadians who are counting on it, when they need it. It is hoped the government will recognize this was an oversight on their part and will support the corrective measures being put forward by the NDP.