Federal minister Jean-Yves Duclos pointed to firefighters in their early 30s and 40s at the Esquimalt Fire Hall on Friday as a generation benefiting from the government’s bolstering of the Canada Pension Plan.
On the heels of a $30-million funding announcement for Greater Victoria housing on Thursday, Duclos appeared at the fire hall to talk about the government’s roll-out next year of its enhanced Canada Pension Plan for working Canadians.
Duclos, who oversees the country’s social safety net, said the government “is committed to supporting Canadians when it comes to living in dignity in retirement years.”
The CPP enhancement will start to be phased in next year and the Liberal government projects it will reduce the proportion of households at risk of not saving enough for retirement by one quarter.
The CPP website says: “You will get the full increase if you contribute to the enhanced CPP for 40 years.”
Currently, the CPP, financed through employee and employer payroll contributions, replaces 25 per cent of a worker’s average earnings up to a maximum earnings limit each year.
Other sources of income — such as the Old Age Security program, Guaranteed Income Supplement which is a component of OAS, workplace pensions and/or private savings— are supposed to make up the rest of retirement income.
Duclos said starting in 2019, the CPP will slowly grow over time to about 33 per cent from 25 per cent of a person’s average work earnings.
The final pension amount is based on how much and how long a worker contributes to the enhanced CPP.
The expectation is that the enhanced CPP will decrease the average number of “income insecure” retirees to 18 per cent from 24 per cent of the population, said Duclos.
Critics of the deal, however, maintain it is a waste of resources because, while the government says it will improve savings for many people, only a minority need the help, and resources should be more carefully targeted.
In 2017, the government released a report from Canada’s chief actuary Jean-Claude Ménard that showed higher CPP premiums by 2060 will see 6.8 per cent fewer low-income Canadians qualify for the Guaranteed Income Supplement.
On that point, the government said it is taking steps to enhance Old Age Security and the Guaranteed Income Supplement.
As an economist, Duclos said he remembers worrying about vulnerable seniors when the former Conservative government decided to hike Old Age Security benefit eligibility to age 67 from 65 by 2030.
Duclos was director of the department of economics and a tenured professor at Université Laval.
“At that time I thought a number of seniors would be thrown into severe poverty,” said Duclos.
The Liberal government rolled it back to 65, and “that means 100,000 seniors do not need to live in severe poverty and that’s important to state again,” he said, to an audience of police and firefighters and politicians outside the fire hall.
The Liberals also increased the Guaranteed Income Supplement by about $1,000 a year.
“A thousand dollars a year for many Canadians is very little but for many seniors — many of them poor single women — $1,000 a year can mean the difference for paying for medicine and paying for healthy food, being in unaffordable unsafe housing and living decently in his or her community,” said Duclos.