JD Candidate, 2017
Bill C-26, introduced at the beginning of October, seeks to gradually expand benefits under the Canada Pension Plan over the next decades. However, the child rearing and disability drop outs, which were available under the regular CPP benefits, will not be applied to the expanded benefits. This will disadvantage future generations of retiring women and persons with disabilities, who will be penalized for time they spent out of the workforce caring for children or due to a disability.
On November 15th, 2016, I had the pleasure of attending the Parliamentary Finance Committee’s study of Bill C-26, An Act to Amend the Canada Pension Plan (CPP). The Committee heard from labour union representatives, who were pleased with the current government’s initiative to improve the universal pension plan. For many retired Canadians, the CPP is their only source of income.
The expanded pension benefits proposed by Bill C-26 will take about 40 years to come into full effect. This means that the changes will not affect current seniors, many of whom are also living in poverty. Instead, the changes will affect millennials – Bill C-26 is about our pensions.
We live in a time when fewer employers are willing to provide their workers with a workplace pension. Add that to the current depleted job market that forces millennials into underemployment and precarious work, and our future retirement conditions appear rather bleak. There is no doubt that the expanded pension benefit proposed by this Bill is a historic advancement that helps secure the livelihood of future Canadian retirees. Right now, the CPP pays a benefit of only 25% of pensionable earnings. With the proposed changes, the expanded benefits will increase the revenue replacement to 35%.
Yet despite this improvement, Bill C-26 overlooks women and persons with disabilities by not applying the child rearing and the disability drop out to the extended benefits. The CPP provides the child rearing drop out to ensure that parents are not penalized for time they spent out of the workforce raising children. The disability drop out ensures that persons unable to work due to a disability and who received a pension are not penalized for time they spent out of the workforce.
The expanded benefits under the Bill C-26 do not take into account the child rearing and the disability drop outs. And since women predominantly take time off work to care for children, they will be disproportionately disadvantaged by this proposed change.
This feature of Bill C-26 came as a surprise to the labour movement representatives, who had not bargained for any changes to the protections provided to women and persons with disabilities in the CPP. It’s also possible that this change came as a big surprise to provinces, who had to be consulted by the federal government before an agreement for expanded benefits was concluded.
During the Committee, labour movement representatives suggested that provinces were not informed that the expanded benefits would not apply the drop out provisions. Members of the Committee and the labour movement alike wondered whether this oversight would require the federal government to return to the negotiation table with the provinces.
Our generation’s retirement security depends on the government undertaking a review of the changes proposed by Bill C-26 to ensure that the critical drop out provisions for child rearing and disability are included in the expanded benefits. Such a revision would ensure that women and persons with disabilities are not overlooked.
For more information on Bill C-26, check out the status of the Bill on the House of Commons webpage.