Thousands of women who take time off to raise their children and people with disabilities will be “penalized” because of two key provisions missing from the government bill that will expand the Canada Pension Plan, according to the opposition.
“Was this deliberately done or was it an oversight? I’m still having that debate in my head,” said NDP MP Scott Duvall.
The expanded pension plan, under Bill C-26, will sit on top of the existing CPP, boosting retirement benefits over time, but it will be calculated separately, and differently, from the current CPP, which will remain unchanged by the bill.
The controversy comes from the differences in the way the expanded portion of the CPP will be calculated.
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The number of years people contribute to the plan is used to calculate how much they will be entitled to when they reach retirement age. When calculating benefits, the current CPP lets Canadians leave out the years they spent taking care of their young children, so those periods where no, or low, contributions were made, do not drag down the value of a person’s government pension. There is a similar provision in place for Canadians who rely on disability benefits.
The expanded portion of the plan will not allow people to exclude child-rearing years or time spent on disability, which means, for people in those situations, the increased benefits will not be as much of a boost to their retirement incomes as they might have hoped.
At a finance committee meeting Wednesday, Duvall proposed amendments to include the so-called “drop-out” provisions. His amendments were ruled out of order because they could add costs to the federal treasury.
‘How can a feminist government be proud of a bill that penalizes women?’
– NDP MP Sheila Malcolmson
Because more women than men take time out to raise children, the NDP argues the bill penalizes women by counting those zero-contribution years against them.
The government’s website outlining the rules of the basic CPP gives an example of a mother who takes six years off work to care for her daughter. The illustration shows that without the child-rearing drop-out provision, she would receive $85 less per month. But there is no indication of what income this is based on.
Unfair to women, say NDP
The NDP estimates that the absence of a drop-out provision in the expanded plan could mean monthly payments of 18 per cent less for parents who spend a few years raising their children, equalling thousands of dollars over their retirement.
“The Liberals talk about gender equity but it’s only for show,” said Duvall in an interview with CBC News. “With this bill we’re going backwards instead of being progressive.”
Finance Minister Bill Morneau insists the extended CPP will be good for everyone.
“It’s particularly good for women who have less participation in workforce pensions and who live longer. So we are indeed sure that this is a positive thing for women,” Morneau said during question period Wednesday.
The NDP scoffed at that reply in the House.
“Are you kidding me? How can a feminist government be proud of a bill that penalizes women?” asked NDP MP Sheila Malcolmson.
No explanation for missing provisions
The drop-out provisions for child rearing and disability were brought in by Prime Minister Pierre Elliott Trudeau in the late 1970s.
“He saw the importance of that, saw the inequity and made legislation to change it,” said Duvall. “And now his son is taking it away.”
The government has consistently sidestepped questions on why the provisions were not included in the expanded plan and what the cost would be to add them in terms of employee and employer contributions. But changing the legislation now could mean reopening the deal with the provinces, something the government is not keen to do.
Morneau is slated to meet with the provincial finance ministers in late December, but that will likely be after Bill C-26 passes.
“I will … be talking with the provinces what we’ve come to in terms of an agreement and we will always consider ways to improve that. It will have to be done in collaboration with the provinces,” Morneau told reporters Tuesday.
But historically, changes to the CPP are few and far between because they require agreement by the provinces.
“It’s … clear that if the Liberals wanted to fix their bill, they would have done it by now,” said Duvall.
Article source: http://www.cbc.ca/news/politics/cpp-disabled-women-penalize-1.3864498?cmp=rss