Hon. Catherine S. Callbeck:

Honourable senators, it gives me great pleasure to speak to Bill S-223, An Act to amend the Canada Pension Plan. This legislation will extend retroactivity limits for CPP retirement benefits to five years for people over the age of 70 years, as well as the retroactivity limit for survivors' pensions to five years. Currently, both limits are set at 12 months. For retirement benefits, this change would put the CPP in line with the Province of Quebec and its Quebec Pension Plan, which also provides for five years retroactivity.

Presently, Canadians are eligible to apply for Canada Pension Plan retirement benefits beginning at age 60, but depending on age at the time of application, benefit levels are different. Those who apply at age 60 receive a lesser amount — 30 per cent less — than if they had waited until they were 65 years old. For every year a senior does not apply between 60 and 65, his or her retirement benefits increase by 0.5 per cent per month, or 6 per cent per year. For example, if someone's retirement pension begins when they turn 63 years old, they will receive 88 per cent of their full pension. At 65, a senior will receive 100 per cent of his or her pension benefits. For those who continue to wait after 65, their retirement benefits will increase by 0.5 per cent per month, or 6 per cent every year until age 70.

Retirement benefits reach their maximum at age 70. No matter when the senior applies after age 70, their retirement benefit will never get any higher, even though their contributions are still invested and earning interest. No matter when they apply after age 70, under the current rules the retroactivity is a maximum of one year. This legislation will change that to a maximum of five years. That would mean if someone applies at the age of 73, they would receive a full three years of retroactivity rather than just one year. The maximum retroactivity after age 70 would be five years, in line with the Quebec Pension Plan.

The CPP survivors' pension is a monthly pension paid to the surviving spouse or common-law partner of a contributor who has died. If the deceased was already receiving a retirement benefit, the amount of the survivor's pension will be based on it. If the deceased has not yet received CPP retirement benefits, the government calculates how much the deceased's retirement pension would have been if the contributor had been 65 at the time of death. The survivor's pension is then calculated based on the age of the survivor. If the survivor is 65 or older, they will receive 60 per cent of the contributor's pension. For those under the age of 65, there are a number of categories based on age, and a formula is used to make the calculation. Again, the current retroactivity is just one year, and this bill will change it to five years.

This is not a complicated piece of legislation. It brings Canada in line with a number of other countries with contributions-based pension plans. Germany allows four years of retroactivity, Japan allows five years, and Australia and Sweden have no retroactivity limits at all.

From the outset, I would like to say that this is not a money bill. I have consulted outside counsel, the law firm Heenan Blaikie, which provided a legal opinion on the legal issues of this legislation. Heenan Blaikie states:

The funds that are the subject of the proposed amendments are not funds which form part of the Consolidated Revenue Fund and the proposed amendments do not seek, directly or indirectly, to impose taxes or appropriate funds. In our opinion, the draft bill does not require a royal recommendation and sections 53 and 54 of the Constitution Act, 1867 do not impair the power of a Senator to introduce the bill to the Senate or the power of the Senate to deal with it.

The money set aside for the Canada Pension Plan goes into its own fund, which is separate from the Consolidated Revenue Fund. This is not public money — it is destined only to pay for CPP benefits. In addition, no new money is being spent. The benefits are fully funded for those who are eligible, whether they apply or not. As the Chief Actuary stated in his appearance before the Finance Committee, ". . . in the actuarial report, the assumption was made that they would apply, so the cost . . . is already included."

As all honourable senators know, the federal government and the provinces are co-stewards of the CPP fund, and section 114 of the Canada Pension Plan lays out the circumstances under which an amendment to the act can be made with or without the express consent of the provinces. Under section 114, this bill does not require the consent of the provinces.

To be certain, the law firm Heenan Blaikie studied the draft bill and the Canada Pension Plan. With regard to section 114, they stated:

In our view, no provision of the proposed amendments fits within the specified categories. In particular, no amendment alters or has the effect of altering, either directly or indirectly, the general level of benefits provided by the Act, the classes of benefits, the contribution rate for employees, employers or self-employed persons, the formulae for calculating contributions and benefits, the management or operation of the Canada Pension Plan Account, or the Canada Pension Plan Investment Board Act

It follows that, in our opinion, the clause of the bill that provides, for greater certainty, that its provisions are not provisions to which the provisions of section 114 apply is a fair interpretation. The further provision in the draft bill that section 114 of the Act does not apply to it gives legislative effect to this interpretation.

As honourable senators can see, section 114 is not applicable to this bill. The bill will not have any effect on the level or benefits nor the contributions rates, nor any of the other conditions that require provincial consent. It will simply provide regular benefits to those who are entitled to them — money that has already been accounted for in the actuarial reports.

However, because they have such a vested interest in the management of the CPP program, I wrote to all the provincial and territorial premiers to advise them of the bill and to invite their comments. I received replies from Newfoundland and Labrador, Prince Edward Island, New Brunswick, Nova Scotia, Quebec, Manitoba, Saskatchewan, Alberta, Yukon and the Northwest Territories. Many expressed their support for this initiative. In fact, I did not receive any negative feedback.

I would still like to have all provinces and territories officially involved in this process, so, under Appendix I of the Rules of the Senate, I would ask the committee that examines this bill to formally invite all provinces and territories to appear or submit commentary on this bill.

It must always be remembered that the Canada Pension Plan is a contributions-based pension plan. Hard-working Canadians have, over the course of their careers, paid into the plan and they should be getting the pensions and benefits to which they are entitled. This fund is not the government's money; it belongs to those who have paid into it. The federal government is a steward of the funds and must ensure that senior Canadians receive the benefits for which they paid all those years. If a Canadian is late in applying, the government should not be allowed to arbitrarily keep part of someone's pension.

Honourable senators, I encourage you to support this bill so these reforms can be implemented promptly and further improve the lives of Canadian seniors.

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