The first federal budget under Justin Trudeau’s Liberals gives no sign of what might be in store for the Canada Pension Plan or civil servant pensions.
The budget tabled this afternoon in Ottawa reiterates the federal Liberals’ commitment to enhancing the CPP, but refers only to a plan to launch consultations on how to improve the program — offering no signal as to how much it could be expanded or what it could cost.
Finance Minister Bill Morneau met with his provincial and territorial counterparts last December, when the ministers punted any announcement on CPP until the end of 2016 and agreed to meet again to discuss it further.
CPP currently pays out a maximum of about $13,000 a year, but the average pay out is a little over half that. The government needs the agreement of seven provinces representing two-thirds of Canadians in order to make any changes.
The budget, which posts a $29.4 billion deficit, also details the Liberals’ plan to roll back changes to Old Age Security, increase the Guaranteed Income Supplement top-up for single seniors, and study a Seniors Price Index, which would be used to measure the cost of living for those over age 65 and adjust payouts.
Trudeau recommitted last week to undoing the previous Conservative government’s OAS plan, which eventually would have lifted the eligibility age from 65 to 67. The Liberals committed during the election to maintaining the eligibility at age 65.
Single seniors will see a more immediate change, starting in July, with an increase to the GIS top-up. The increase will more than double the current maximum for the lowest-income single seniors. Those who live on about $4,600 a year or less, before OAS and GIS, will get $947 a year. The increase gradually reduces as annual income increases, with a complete phase-out for seniors earning $8,400 a year, before OAS and GIS. The government says that increase will cost more than $670 million a year and improve the financial security of about 900,000 single seniors.
Senior couples forced to live apart also will get assistance — higher benefits, based on their individual incomes. That plan will cost $2.6 million a year, according to the budget.
The government also is pledging to help low-income seniors through an additional $200.7 million over two years for affordable housing — something it says will help 5,000 low-income senior households. It also will help the provinces and territories, which will not be required to match the federal investment in the program.
The budget also floats the possibility of changes to federally regulated pensions, promising to consult on whether to change a rule restricting pension plans from holding more than 30 per cent of the voting shares of a company, referring to the need for efficient but flexible regulations.
There’s no mention, however, of possible changes to public sector pensions. Stakeholder groups have raised concerns Morneau will want to move away from defined benefit plans and into shared-risk or target benefit plans. The finance minister used to run Morneau Shepell, the largest administrator of defined benefit plans in Canada. Speaking at a Public Policy Forum conference in 2013, Morneau argued pensions like those provided to retired civil servants were on a path to extinction, citing a “modest” CPP increase as a possible solution.
Public sector pensions are likely to be one of the items that come up as civil service unions continue negotiations with the federal government. The budget renews the Liberals’ pledge to bargain “in good faith” with the unions.
Those looking for specifics on health funding may also be disappointed. The budget lists funding for a number of foundations — but the government is still in talks with the provinces and territories regarding increased health transfers.
The Liberals are pledging $47.5 million a year for the Canadian Partnership Against Cancer, $5 million over five years for the Heart and Stroke Foundation’s research on women’s heart health, and $4 million over four years for the Canadian Men’s Health Foundation to provide information about lifestyle and behavioural changes that improve men’s health.