I will be supporting this motion. It has been quite interesting over the last few weeks in my riding. I know we all represent different demographics and different people, but so many of the women I've been talking to, when I told them that we were doing this study, were so pleased and felt that it was so relevant.
The pension study is extremely relevant as well. It seems to me that the official said this information would be useful, but he didn't give a certain timeframe on that. So I think there's a timeframe we can work within.
My concern is, again, and I know I've said this several times, that it's so important that we represent all Canadian women. There are a lot of young women right now who might not be thinking about pensions, and maybe they should be, but they are looking at their future. They're looking at the decisions they're making. They're looking at university. Some of them are only in junior high and maybe they're thinking about the typical women's jobs. I think we have such a great opportunity and we need to take it. We don't know what's going to be coming up when we come back in January, what kind of other important issues will be before us. We have a chance to continue talking, even if it's just for a few sessions, on women in non-traditional roles.
I think we can inspire women. It was such a great study, and so far we've heard from very good witnesses. So I would be supporting this. I think our initial decision was a good one and we need to go back to looking at women in non-traditional roles.
:
Madam Chair, the people from the coalition of organizations that are ensuring there will be no sex traffic in Vancouver assured us that everything was going well and that everything would be operational in Vancouver. Now we discover that is not the case. Vancouver police say they do not communicate with that group, with the unit that has been put in place.
The unit put in place is doing nothing at this time. The Vancouver police force is doing nothing either. They don't have the means to do anything. I don't understand how we can stop people at the border between Seattle and Vancouver. However, what is happening for the people who are already in Canada, in Toronto, for example?
Prostitutes took part in a news report and said that their pimps were already getting organized for them to be in Vancouver. They also said that a number of other prostitutes from across Canada, prostitutes who work the streets, were getting organized to go to Vancouver. Those people won't be crossing any borders, and this will nevertheless be human trafficking on a large scale. We'll be dealing with a problem of human trafficking on a large scale. The Salvation Army has already established a place to help persons who will be in dangerous situations.
If the unit set up isn't able to do the job, that must be because there are deficiencies. We have to know what those deficiencies are in order to give it the resources to do its job right.
We're working hard on this matter. Ms. Smith has worked very hard on human trafficking. We shouldn't let that slip through the net. There are only 67 days left before the Olympic Games, which does not leave a lot of time to put an efficient system into place to ensure that there is no human trafficking in Vancouver. We have to be brought up to date.
:
We tabled it in the House, so I think the government has, what, 90 days to respond? How long does it have?
A voice: It's 120 days for a report from the committee.
The Chair: It has 120 days to respond. I think there is time for the government to yet respond.
Now, let us move on. I think we've finished the orders of the day.
Quickly, before you go, I just want to let you know that on Tuesday we're going to be having the last witnesses. There are two of them, from the public service and the Canadian Office and Professional Employees Union.
After that, we could have a short piece of business. I think I would like Julie, the analyst, to tell you that she's going to give you all the information on Wednesday for you to look at so we can start going page by page on Thursday.
Now, having said that, given that we have Thursday, December 3, Tuesday, December 8, and hopefully, Thursday, December 10 to put this whole thing to bed, if the House rises on December 10, we may wish to discuss how we table our report and where. We may also need to bring in these witnesses.
I would ask the advice of this committee on how you see us filling that time and when we should bring in the witnesses. I would like to suggest it should be for no more than an hour, and it may be that we have to ask for some specific, short version of getting everybody to give us an update quickly, and then once they do, we can do a quick one-two on questions so we don't spend a heck of a lot of time and we just get the clarification we sought. I wanted to just remind you of the timelines, that's all.
Yes, Madam Boucher.
:
No. We have three more sitting days: Thursday, December 3, December 8, and December 10.
What I would say is that if you're given your draft report on Wednesday, then on Thursday, December 3, we could start going page by page, paragraph by paragraph, to discuss it.
Sometime on Thursday or on Tuesday, December 8, or on Thursday, December 10, we're going to have to listen to this group of the CBSA, etc. Many of the people we'll be listening to are in Ottawa, but the Vancouver Police Department may have to come from Vancouver, obviously, so we need to give them a week or so's notice.
When should we do that, and should we set a timeline for doing it so that we don't cut too much into dealing with our report?
Could it be an hour, and could we ask everyone to do a three-minute presentation on an update, because we had a full presentation on June 11? Perhaps we could ask the Vancouver Police to take five minutes to present to us, and then we could ask one round of questions and do it in an hour.
Is it possible?
When would you like to see that hour occur: on December 3 or December 8?
Some hon. members: Agreed.
The Chair: Okay, it will be Tuesday, December 8.
Do you think we can do this in one hour?
Mrs. Sylvie Boucher: Ça prendrait une heure, ou peut-être une heure et demi.
An hon. members: I wonder whether the minister is able to come.
The Chair: We have to finish our draft report, because we would want to table it. We may want to discuss then whether we want a press conference, after tabling our report, because I think this is a very important and salient issue, or whether other reports are going to be tabled as well as committee reports, etc.
We have three days to do this in. I just want to be sure.
Yes, Nicole?
:
We should go and do it in Vancouver? Okay, on Friday, December 11, we will all go to Vancouver. The committee will travel.
In fact, if it may be too late for the Vancouver Police to come, we could video conference them in.
Now that we've finished that, I will suspend while we await our witnesses.
The Chair: The committee is now in session.
I want to thank Mr. Baldwin and Dr. McDonald for coming here today. As you know, the committee is discussing the issue of pensions. Actually, we're discussing pensions from the point of view of private, public, and unpaid work, people who have done unpaid work and what happens to them in their pensionable years.
We'll ask you each to present for 10 minutes. Feel free to present for under 10 minutes, if you wish. After that we will have a round of questioning from the members of the committee.
Given the order in which I have your names, Mr. Baldwin, will you begin, please?
Thank you very much. It's an honour to be here.
Having spoken with both the clerk and the analyst who is supporting your efforts, I thought it would be appropriate for me to address three questions today.
First, will the increased labour force participation of women affect their retirement income security?
I'm going to give short answers and then explain them.
The short answer to that question is yes, the change is already evident in data on incomes of older women, and there's much more to come. However, I will also forewarn you that it doesn't appear that there's any immediate prospect of establishing equality between the incomes of older men and older women.
The second question I'll speak to is whether there are gender-specific retirement income issues that the committee might note. My answer is yes, there are a number of issues to be addressed in all pillars of Canada's retirement income system.
Finally, are there important pension issues that are not gender-specific, but which will be very important to women? The answer is yes, there are some very serious problems facing the third pillar of Canada's retirement income system, and these are not gender-specific problems, but they will have an important impact on women.
I should say that I will use this term “gender-specific” to refer to both workplace pensions as well as registered retirement savings plans and the income that each of those institutions generates. I should warn you too that my presentation is oriented more towards identifying problems than it is to telling you what the right answer is to solve the problem.
First of all, let's talk about the increased labour force participation of women and current retirement income prospects of older women.
I have, by way of background to what I'm going to say now, prepared some tables, which the clerk has indicated she will have translated and circulated to you. If you don't catch all the numbers as I'm speaking, don't worry, they will catch up with you at some point.
I want to note that over the period between the early 1980s, which is the earliest period for which I was looking at income data, through to 1996, there was a stubborn stability in the ratio of women's income to men's among people over 65. The women's income seemed to be stuck at about 62% of men's income. Happily, between 1996 and 2006 that gap has closed slightly, but only slightly, so that by 2006 the average income of individual women over 65 was 68% of that of older men.
The second thing I'd note about incomes of older women compared with those of older men is that over that period from 1981 to 2006, the sources of women's income in old age changed. They changed in ways that made the sources look more like men's income, in the sense that income from the Canada and Quebec pension plans and third-pillar income grew faster than other sources of income.
At the beginning of the period, women were getting about 7% or 8% of their income from each of the Canada and Quebec pension plans and the third pillar. By the end of this period of observation, which is 2006, women were getting about 20% of their income from the Canada and Quebec pension plans and about 30% from workplace pensions. You can see that these two sources of income, which in effect reflect your working career, became more important over this period of time.
I would point out, though, that there's a bit of a difference in the period when these incomes grew. That is, most of the increase in income from the Canada and Quebec pension plans took place between 1981 and 1996. After that, it was a fairly stable portion of older women's income that came from the Canada and Quebec pension plans. In the case of third-pillar income, which as I said includes workplace pensions and RRSPs, the income from that source was growing right through to the end of the period of observation, which is 2006.
The last thing I want to say is that if you look at income coming from the Canada Pension Plan, you notice that the number of female contributors compared to the number of male contributors grew over the whole period from 1966, when the plan was created, until 2006. Back in 1966, there was only one woman contributor for every two men. By 2006, there were 90% as many women contributors as there were men contributors. There was also a tendency towards equalization in retirement benefit payments to women versus men over that 40-year period. So at the start of the period, retirement benefits paid to women were only 64% of the benefits paid to men, and by the end of the period, it was up to 82%. The chief actuary, in his latest regular actuarial report on the Canada Pension Plan, predicts that those gaps will keep getting narrower, but you never reach equality, at least by 2050, which is the end of the timeframe assessed by the chief actuary.
Moving on to some gender-specific issues, I'm going to limit myself to some comments on old age security and the guaranteed income supplement. I'm going to talk about it in relation to the objective of eliminating poverty in old age.
There have been some quite comprehensive studies done of poverty among the elderly in Canada in the recent past. I'm thinking of two articles in particular in a recent edition of Canadian Public Policy: one prepared by Kevin Milligan and another prepared by Mike Veal. They both paint a picture of substantial decline in poverty rates among the elderly in Canada over the period from the late 1970s to the early 2000s.
In fact, Canada now has one of the lowest rates of elderly poverty in the high-income part of the world. But there are two things. One is that there are some subsets of the elderly population with noticeably higher rates of poverty than the elderly population as a whole. One of those population subsets is single elderly women, especially people who are widowed or divorced. Further research on the widowed part of that story has also been done in a Statistics Canada study by Bernard and Li, which you may want your staff to have a look at.
I'll add with regard to the low rates of poverty that there are some real debates about how to define and how to measure poverty. These debates are actually quite important in looking at the situation of the elderly poor, because the incomes of the elderly poor are much more strongly concentrated near the low-income lines than is true of the non-elderly population. So if you move those lines even a small amount, you start moving significant numbers of the elderly from one side of the line to the other. You may want to be sensitive to that, because you may get conflicting testimony on what portion of the elderly population has an income below the poverty line.
Looking ahead, there are a couple of policy issues you may want to think about. One is that through old age security and the guaranteed income supplement, we offer minimum income guarantees to elderly couples and elderly singles. It is striking that the guarantee to elderly couples is 1.6 times the guarantee made to elderly singles. Usually when people are trying to equilibrate incomes between couples and singles, the factor that is used to equilibrate them is 1.4, not 1.6, which is to say we're making a somewhat stronger commitment to elderly couples, it would seem, than to the single elderly. So you may want to think about that especially in relation to the problem of single elderly poverty rates.
The other thing that is very important going forward is what kinds of adjustments will be made to old age security and GIS in the future. I say this because those programs are price indexed. Generally speaking, price indexing is a good thing. Over the last 25 years or more, average wages have not grown in relation to prices, so old age security and GIS have also maintained not only their purchasing power but also their value compared to average wages and salaries. The chief actuary is expecting that labour markets will tighten up under the demographic circumstances we're facing in the future, and I think he's right. Real wage growth is likely to begin. If that's true, then OAS and GIS will start falling compared to average wages, and they will likely fall in relation to poverty rates.
:
Thank you for inviting me. I'm just going to make four points, and my colleague has already made at least two of them.
The first point I want to make is that the inequality in the labour force is totally reflected in CPP/QPP, in RPPs, and RRSPs, and in savings, and until such time as that issue is addressed, probably in labour market policy, there will continue to be a gap between men's and women's pensions.
I would also add that one of the factors we have to keep thinking about is that women still have babies. Yes, women have the child dropout clause, but what the most recent research is showing is that when women come back into the labour force, they do not get back into the same job they had. They are further down on the ladder when they come back. Oftentimes, they may come back just part time because that's the only kind of work they can get. It's not always guaranteed.
The second point I want to make is a rather important point, and that is on the decline in the prevalence and stability of marriage, and that is to say that marriage rates are down and divorce rates are up. Single, female-led families are on the rise. There is a huge increase in cohabitation and common-law relationships. All of this translates into women not having the legal and fiscal protection of marriage, which they have had for some time.
There is a very large change, and this is being reflected even in the first wave of baby boom women. The problem with this is, as they say in academia, that women are always one man away from poverty. This is quite true, when I go to my third point, which is.... We've talked about unattached women. I would like to say that unattached women--you refer to them as single women--make up 38% of the older population over age 65. It's 38%, and 14% of them live in poverty.
Who is carrying the burden of this poverty is an interesting question. When we break down the categories, there are single women, there are widowed women, there are divorced women, and there are separated women. The women who are carrying the burden of poverty in this country are the divorced and separated women.
If I just give you one quick example, if you take divorced women and put them in the male bottom quintile, which would be 20% for men, 43% of divorced women have the same salary, so it gives you some idea.
I want to also add to that women from visible minorities and aboriginal women. Aboriginal women are the most dependent on our public pension system in this country and they are the poorest of the poor of the poor. The visible minority women are the second poorest of the poor, with a rate of about 25% who live below LICO.
The fourth point I want to make is about caregiving. Women are double caregivers, and they are serial caregivers. In other words, one in five baby boom women are caregiving, just for starters--five million people. The problem is that 17% of them are what we call the famous “sandwich generation”. When that's over, then they serially go on to look after their husband's parents, their husband, and so on and so forth. The caregiving issue never ends. It's not quite as short and small as we think it is.
There's a huge issue attached to this that nobody has even thought about, and that point is, what happens when the caregiving is over? What the latest research is showing, in the U.S., in Canada, in OECD countries, is that through the caregiving process, women are forced into early retirement, and it's retirement by stealth because they don't think they're going to retire. So what happens is when the caregiving is over, which could be up to 10 years, they then try to go back into the labour force. Their human capital has deteriorated, they have wasted or used all their savings to live, and they can barely afford to even go out to look for a job. Then they face age discrimination because they're an older worker, and who wants an older worker?
I would say we need to look at pensions to cover, maybe not the first point, because I think it's a labour market issue, but the other points. I think we need to look at doing something about the allowance for women who are divorced and separated. I think we need to look at the sponsorship agreement and make some changes for older women there. I'm thinking of expanding GIS, but I won't say any more.
Is that it?
:
Thank you, Madam Chair.
Welcome, Mr. Baldwin and Ms. McDonald.
Mr. Baldwin, you said you weren't offering any solutions but rather pointing out problems. I hope you nevertheless have your ideas on the subject—you've studied such a long time—because we're looking for solutions.
You mentioned the upcoming situation. You also said that, from 1980 to 1996, the incomes of women 65 and over represented 62% of those of men and, from 1996 to 2006, only 68% of men's incomes. The difference isn't great.
And yet, based on my personal experience, the years from 1980 to 1996 were years in which women stopped working in order to take care of their children, whereas, from 1996 to 2006, we more commonly saw women stopping for a period of time, taking parental leave and then going back to the labour market.
However, incomes didn't increase much all the same. How do you explain that?
:
Thank you, Madam Chair.
Ms. McDonald, Mr. Baldwin, thank you for being with us this afternoon.
Mr. Baldwin, you said something that somewhat surprised me, that we won't have achieved pension income equality between men and women by 2050. That's quite a serious manner. We know that more women currently belong to a public sector pension plan. I was wondering where the deficiencies are.
Last week we also learned that all money had to be withdrawn from an RRIF by the age of 90. Every week, I go and celebrate birthdays of 100 years or more with women who have achieved that venerable age. However, very few men reach that advanced age. If you withdraw all your money at 90, what do you live on between 90 and 105, or even 108? How can you offset that shortfall?
As regards natural caregivers, someone suggested applying the same equation solely for women who take care of children until the age of seven. They can receive a credit for pension plan contributions. Could women who take care of an aging parent, a sick spouse or a sick child enjoy the same conditions, and for seven years as well? Would that be beneficial, in your opinion? I think these measures would be readily applicable because the process for that is already established.
Money from RRSPs is also a subject of concern for me. Currently, seniors can accumulate maximum employment income of $3,500 a year without being penalized with respect to the Guaranteed Income Supplement or pension income. Those people therefore have $3,500 more in their pockets and do not pay any more tax. However, those who withdraw $3,500 from their RRSPs must pay tax on that amount, which is normal, but that $3,500 is added to their income, which has the effect of moving them to another tax bracket. Those people then lose all their programs, the Guaranteed Income Supplement and the other programs to which they are entitled. And yet, a simple amendment to section 13 of the Old Age Security Act would make it possible to make a change of the same order of magnitude—$3,500:$3,500, that doesn't change—and to grant an exemption as in the case of working people. For a person who works very hard to set money aside but who is penalized relative to another person who has not saved, what is the point of investing money in an RRSP?
With respect to the Guaranteed Income Supplement, a couple receives more money than a single person, as you've already said, Mr. Baldwin. However, if the husband dies, the survivor benefit is immediately reduced to the amount granted to single persons, without the slightest transition. No consideration is given to the fact that that person had a higher income when she was living as a couple. The change after the husband's death is very quick. She then receives only part of the previous amount and winds up in a state of considerable poverty.
Do you have any idea of what we could do about that? Are the options I've proposed desirable, or do we need something more?
:
First of all on the question of why equality and amounts of retirement income will not be achieved through CPP, it all relates to Dr. McDonald's point about earnings differences prior to retirement. The chief actuary projects women's CPP benefits getting up to 84% of the men's level by 2050, but that's the end of that story.
Concerning the caregiver, you're right that it would be possible to exempt periods of caregiving. I presume that one needs a non-obtrusive administrative routine to figure out when people are caregiving and when they're not, but if you can overcome that problem, you could probably do it.
Having to draw down your RRSP accumulations by age 90 is a case of just not having caught up with the evolution of changing mortality. Indeed, I was going to mention, in the unedited version of my comments, that there are a number of things we don't know about RRSPs and defined contribution plans. One of them is that we don't know what actual experience people have drawing them down on their own. We don't know whether people run out of money before they reach the end of their lives or whether they're actually being too cautious. It's one of those important things that we should know more about and don't, especially since there are more of these arrangements in place.
Finally, I think your comments on the tax-back rate under GIS are very important, not only in terms of the incentives people have to save before retirement, but incentives people have to work after they're retired, if they're on low income. It's also an area wherein you have a real tension between what you might want to do for fiscal reasons and what you might want to do to have a good benefit design. You relieve those problems, of course, if you boost OAS and scale back GIS, but then you have a lot more money flowing through your public accounts, and that creates problems of it own. So you have a real dilemma here.
:
One might not be in poverty and one might be. I think we all know right now that there are a lot of senior women who've stayed home and raised their children. They were thinking there would be enough in their husband's pension and somehow it would just be taken care of. I think the fact is that women are a lot more educated now.
We had a professor testify that things have changed quite drastically in the last 10 years, so we have a problem right now with senior women—many of whom are widows—who need help. I don't think the pension program necessarily today can help them unless we create one that is more like a social program, where we could increase benefits and it would become more of a social program. But I think we also want to look forward and consider how we make sure women in the future have an adequate pension.
Some of the things you refer to... Here's what I can't get my head around. Many of those things are life choices. Sometimes, for example, staying home with the child definitely is a choice for a woman. She decides she wants to do it. When they make that decision, maybe she and her husband say, because they're not having her income, what they will do is reduce his income by contributing to a spousal RRSP, or they might put money away. They make a conscious decision to stay home. How do we then recognize the value they are placing and the value they are giving to our society by staying home, but at the same time not take away from people who say they won't stay home and will put their children in child care? Now we're taking their tax money, their tax dollars, and giving it to the woman who stays home.
Do you follow what I'm saying? I'm going to change it now. Another life choice is divorce. There are so many different examples of why people would get a divorce, but many times it is a choice, and it really does cost a lot of money. There's the financial implication. Again, we have individuals who are paying their taxes and working hard and all those things, and maybe they don't get a divorce, but now we're using their income to help supplement people who have gotten a divorce.
I'm wondering how we look at women right now who are under the poverty line, who are widows. They need our help, so that's one part of it. Maybe that's the OAS, which you referred to, Mr. Baldwin. But looking forward, how do we not punish and make people pay for other people's decisions, whether it's staying home to raise their children or getting a divorce?
:
Thank you, Madam Chair.
Ms. McDonald, I think a bit the way you do. We have come to a turning point where a major societal choice is necessary. In our lives as parliamentarians, we have often made important societal choices. I'm thinking of Quebec, among others, when the decision was made to put child care centres and parental leave in place. There were indeed costs associated with that, but those issues were important for society. Steps had to be taken in that direction.
Today, a number of stakeholders have come to tell us a lot of things that you've said about women. It's not necessarily what we wanted to hear, but that's part of our reality. That's what life is today. It's much more individual than collective. My grandmother had 21 children. The house was always full. One brought a ham, another a roast. That's no longer the case today. When you have a family of two and both die, the mother often winds up with major financial problems. She is ultimately alone in society. That's also a fact.
The committee is looking for a way to solve the problems women are currently facing. This is not a new issue; these problems have accumulated over the years. However, the situation has changed. Women now occupy a significant place in society. But we must nevertheless attack all existing inequalities.
Women definitely depend on public pension plans. That's obvious. A number of stakeholders have told us that we must make substantial amendments to existing plans. In Quebec, talks have been started with the QPP. In Canada, it's the CPP. A number of people are even suggesting doubling the replacement rate. It's currently 25%. They're proposing to double it to 50%. Many are even suggesting putting a public fixed-benefit plan in place.
I would like to hear what you have to say on the subject, on the idea that the government should take a significant position on this point.
:
I can't answer that. I'm not a pension expert; I'm a retirement expert.
The defined pension plans are far better than defined contribution plans, so that may be one way to go. I have read all the transcripts and all the suggestions that have been made, and I realize that was one of them. I don't think companies will entertain the CPP/QPP doubling of what you call the payroll tax. You might be able to raise it a little bit.
I'm all for the OAS and the GIS being greatly expanded, especially the GIS, because that still helps target more to the really poor people. I keep going on about the allowance. The allowance could be used in a number of different ways, if you had the will, I think.
That's the best I can say. As I said, I'm not a detailed pension expert. It's probably good that I'm almost the last person here, because this is about the moral economy for women. I think you have all the facts; it is a question of the moral issue and the political will. There's a great book called Counting for Nothing: What Men Value and What Women are Worth. What are women worth to our Canadian society? The argument is that we are contributing to the economy in a big way and that it will get bigger.
You people are the experts on that issue.
:
I want to ask a quick question.
You came up with an interesting statistic: that women who do caregiving, or what I like to call unpaid work, are worth $25 billion to Canadian GDP. I have a real concern for those women. I saw them when I was a physician. These are the women who, if they and their husbands divorce... Let's imagine they were married, because we know that a lot of these women tend to be much older now. If their husbands divorced them, if they got some CPP at that time, they no longer have it, because it was only a small amount, and especially if that person remarried, then they don't get any more survivor benefits.
And yet, if they have done... This is something that Canada brought to the United Nations way back in 1998, when I was the minister for women's equality. The United Nations have now picked up Canada's idea and are working on it in many countries. They've estimated trillions of dollars worth of unpaid work. These are the poorest women at the end of the day. How do we...?
You said an important thing about value. I would have liked us to talk about that; we haven't talked a lot about it. These women have fallen smack between the cracks. What is it we do to value the work? We value that unpaid work when we pay an early learning child care worker, when we pay a home care worker, when we pay a geriatric nurse. We do all of those things, and yet these women have nothing for that work. There is no value for that work, because the woman did it at home because she had to, because nobody else was there to do it. She's left poor at the end of her days, and is the sickest—because poverty is the greatest determinant of health—and costs the system a lot of money in health care and all of those other things.
How does society help her to be a lot more independent by valuing that work? I would love to have heard somebody come up with something on that, because that's a big issue that I feel we don't consider.
Do you have anything to say on that?