(From Ted Menzies, MP)

Thank you for taking the time to write in regards to retirement, pensions and the federal bankruptcy and insolvency Act .  The Conservative Government has been engaged in a very serious discussion with Canadians on pensions and pension security throughout the year.  Moreover, we have also taken concrete action to strengthen Canada’s retirement income system and reduce the tax burden on seniors since forming Government in 2006.

First, we have been reviewing issues related to pensions under federal jurisdiction.  In January 2009, we released for public comment a major research paper on the legislative & regulatory regime for federally regulated private pension plans (http://www.fin.gc.ca/activty/consult/pensions-eng.asp).

Additionally last spring, at the request of our Finance Minister, I conducted an extensive cross-country and online public consultation which was open to all Canadians on the legislative and regulatory framework for federally regulated private pension plans (http://www.fin.gc.ca/n08/09-018-eng.asp).  In October 2009, based on the tremendous feedback received, comprehensive regulatory changes to improve the federal pension framework were released (for more information, please visit: http://www.fin.gc.ca/n08/09-103-eng.asp).

Second, along with provincial and territorial governments, last May we conducted and completed the mandated triennial review of the Canada Pension Plan (CPP).  Reforms to CPP to allow greater flexibility in how Canadians retire were unanimously agreed to by all governments as part of that review.  These reforms include the removal of the requirement for individuals to stop working or reduce earnings for two months in order to take up CPP and permitting more low-earnings years to be excluded from the pension calculation (http://www.fin.gc.ca/n08/09-051-eng.asp).

Third, we have long recognized the need to work with our provincial partners to examine the larger pension concerns facing Canadians.  Indeed, under 10% of pension plans are federally regulated, with the majority provincially regulated (for instance, the Nortel pension plan is regulated under the Ontario Pension Benefits Standards Act).  That’s why we raised the issue at the annual meeting of federal, provincial and territorial finance ministers in late 2008 and, early in 2009, set up a joint federal-provincial research working group - with respected academic Dr. Jack Mintz as director of research, and myself as chair of the working group - to conduct an in-depth examination of retirement income adequacy.  Several provinces also commissioned parallel studies to complement the working group.  To review the research working group’s summary report, please visit http://www.fin.gc.ca/activty/pubs/pension/riar-narr-eng.asp.

We convened a national summit of our provincial and territorial counterparts in December 2009 to discuss the findings of this important group (http://www.fin.gc.ca/n08/09-072-eng.asp).  Working together, governments agreed to move forward and study policy options to address issues identified in that in-depth research. All potential pension reform options are on the table and all will be studied in good faith, but we must also make sure we safeguard the strengths of the current system.

This joint study will include my travelling the country again for cross country public consultations, as we strive to hear the opinions of Canadians on available options.   That work will lead up to the next meeting of federal, provincial & territorial governments in May 2010, where governments will consider how best to put into action specific pan-Canadian solutions that benefit all current and future retirees.

Fourth, this past June, to help protect pension benefits while allowing companies more flexibility in meeting their pension obligations, we brought into force new regulations to provide temporary solvency funding relief for federally regulated defined benefit pension plans.  The measures cover plans established for employees working in areas that fall under federal jurisdiction (http://www.fin.gc.ca/n08/09-059-eng.asp).

Fifth, your Conservative Government has introduced landmark changes to ease the tax burden on Canadian seniors since 2006.  These measures will provide nearly $2 billion annually in tax relief to seniors and pensioners, including:

• Budget 2009 increased the Age Credit amount by $1,000 for 2009 and subsequent taxation years;
• The 2008 Economic and Fiscal Statement reduced the required minimum Registered Retirement Income Fund (RRIF) withdrawal for 2008 by 25 per cent, providing $200 million in tax assistance to RRIF holders and allowing retirees to keep more of their savings in RRIFs;
• Budget 2007 increased the age limit for maturing pensions and RRSPs from 69 to 71 as of 2007;
• The Tax Fairness Plan introduced pension income splitting for the 2007 and subsequent tax years, and increased the Age Credit amount by $1,000 for 2006 and subsequent taxation years;
• Budget 2006 doubled the amount of income eligible for the Pension Income Credit (from $1,000 to $2,000) as of 2006;
• Budget 2008 introduced the Tax-Free Savings Account (TFSA). The TFSA is particularly beneficial to seniors as it helps them to meet their ongoing savings needs on a tax-preferred basis after they are no longer able to contribute to an RRSP.   In addition, income earned within a TFSA and withdrawals do not affect eligibility for federal income-tested benefits or credits, such as old age security, the guaranteed income supplement and GST credit;
• Seniors have also benefited from general tax relief measures such as the two-point reduction in the GST, the reduction in the lowest personal income tax rate to 15%, the increase to the basic personal amount and other amounts, and the increase to the two lowest tax bracket thresholds;
• Budget 2008 increased the amounts that can be earned to $3,500 before the GIS is reduced, so that GIS recipients will be able to keep more of their hard-earned money without any reduction in GIS benefits, providing additional financial support to low income seniors still in the workforce; and
• Budget 2008 announced significantly more flexibility for seniors and older workers with federally regulated pension assets that are held in Life Income Funds to use their retirement savings when and how they require.  

Clearly, the Conservative Government is working to protect seniors and pensioners.  While others play catch-up, we’re delivering results.

If you would like to provide further comments or suggestions during the preparation of Budget 2010, the Minister has provided an on-line consultation process for Canadians to provide their thoughts and suggestions.  Please be sure to visit the following to provide your comments and suggestions: http://www.fin.gc.ca/n08/09-114-eng.asp

Sincerely,
Ted Menzies, MP
Macleod