Wednesday, December 16, 2009

Minister Finley

I asked the following of Minister Finley on March 28, 2009:

Madam Minister, I understand that changes to CPP benefit levels, contribution rates, CPP financing and investment policy require formal approval by Parliament. Why do these changes also require the support of two-thirds of the provinces with two-thirds of the population? Further, what other Acts of Parliament require these same conditions?

I respectfully submit these questions without prejudice.

Answer dated May 22, 2009:

Dear Mr. Birkbeck:
On behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development, I am pleased to respond to your letter dated March 28, 2009, regarding the Canada Pension Plan (CPP).

Unlike other social programs in Canada, the CPP falls under the joint stewardship of the federal and provincial governments. Given the constitutional rights of provinces to oversee social programs, benefits for seniors and retirement pensions in Canada, when the CPP was proposed as a national social insurance plan in the early 1960s, provincial governments agreed that there were merits to having a federally-administered, national retirement plan that included supplementary benefits for persons with disabilities and survivors. However, they did not give up their right to oversee such a plan and the program was designed to be one of joint federal-provincial responsibility. This is a feature unique to the CPP.

Joint stewardship of the CPP has led to a great deal of stability and the ability to engage in long-term planning. While the Plan has evolved to meet the changing needs of Canadians, such changes have been implemented on the basis of broad consensus. To this day, the federal government continues to work cooperatively with the provinces to ensure that the CPP is sustainable and reflects modern social trends of the Canadian society. Federal and provincial Ministers of Finance review the Plan's financial state every three years and make recommendations as to whether benefits and/or contribution rates should be changed. They base their recommendations on a number of factors, including the results of an examination of the Plan by the Chief Actuary. This process ensures that the long-term financial implications of proposed Plan changes are given timely consideration.

The federal government is firmly committed to maintaining a strong and stable public pension system for the financial security of Canadians. Not only must the Plan be equitable and sustainable for today's retirees, it must also meet the needs of future generations. The rules governing the Canada Pension Plan strive to strike a balance between the long-term sustainability of the Plan and fairness and flexibility to individuals in planning their retirement. Canadians may be justifiably proud that the CPP is financially viable well into the future.

I hope that my comments are helpful in explaining the legislation governing the CPP. Thank you for your interest and for taking the time to write.
Dominique La Salle
Director General
Seniors and Pensions Policy Secretariat
Income Security and Social Development Branch