One of our most important priorities as a government is to take care of our seniors.
Canada’s population is getting older. In 1991, a 65-year-old Canadian woman could expect to live another 20 years; four years longer than a 65-year-old Canadian man.
As the population gets older, social programs such as the health care system and the Canada Pension Plan become increasingly important.
The Canada Pension Plan (CPP), which was introduced in 1966, has been a great success in supporting our seniors. In 1998-1999, it provided more than 3.4 million Canadians with $18.2 billion in retirement pensions, disability and survivors benefits, and benefits for dependent children.
The Liberal government is committed to maintaining the CPP so it is sustainable over the long term.
According to Health Canada, 22.6 percent of Canada’s population will be over 65 in 2041 compared to 12.3 percent in 1998. To meet the needs of these growing numbers of retirees as the labour force shrinks, the federal government already has begun to reform Canada’s retirement system.
These reforms were endorsed by all the provinces which, regardless of political stripe, agreed they were important for Canada’s seniors.
Our changing population called for a change in how CPP works. To ensure its survival, we have made major improvements such as putting sustainable financing in place. By increasing contributions now, this will increase the CPP reserve fund from $33 billion to roughly $100 billion.
This will stabilize the contribution rate for future generations at 9.9 percent in 2003.
The federal government will invest the CPP fund in a diversified portfolio of securities to obtain a high yield while protecting the investment of Canadians. An investment board has been assigned the task of making the capital grow.
The board also is accountable for its performance, in the form of quarterly financial statements, an annual report, and public meetings in each of the participating provinces at least every two years.
We also have lowered costs by changing the way certain benefits, including disability and death benefits, are administered and calculated. By 2030, costs will be down by nine percent compared to forecasts.
The cost of administering the CPP is much lower than private pension funds. Administrative expenses represent just 1.67 percent of the benefits paid compared to an average of five percent for other pension plans.
The CPP benefit replaces up to a maximum of 25 percent of average full-time income. For the first quarter of the year 2000, the base pension is $419.92 per month, with a maximum of $762.92 in 1999.
Pensioners will see their pensions increase by 1.6 percent because pensions are indexed to the cost of living, as measured every three months by Statistics Canada.
The Liberal government has taken steps to ensure the Canada Pension Plan is healthy. Its future is now secure, as is our seniors’ quality of life.
We can be sure now that all generations—those of our grandparents, our parents, our children, and our own—can count on the CPP.