Federal Finance Minister Paul Martin's proposed reforms to the Canada and Quebec Pension Plans (CPP/QPP) loom large on this fall's parliamentary agenda. Mr. Martin's package also establishes the new Seniors Benefit to replace the existing Old Age Security/Guaranteed Income Supplement (OAS/GIS) benefits in 2001. This draft legislation fundamentally changes Canada's pension system and will have a dramatic effect on government pension benefits for all retirees.

Under the proposed legislation CPP premiums will rise over the next five years to a maximum of 9.9 per cent of insurable earnings by the year 2003. CPP premiums are now 5.85 per cent (split equally between employer and employee) of insurable earnings to a maximum of $35,800. Both disability and retiree benefits will be cut under the amended program, which is scheduled to become effective January 1, 1998.

The government also intends to establish an investment board to manage CPP funds to be invested in public financial markets. Historically, the government lent CPP monies at attractive rates to the provinces.

Of extreme importance to Canadians is the proposed new Seniors Benefit, which was unveiled in the 1996 budget. Only those who turn 65 after January 1, 2001 will be affected directly by the elimination of the OAS/GIS. Once in the new system, single seniors will no longer receive government assistance when their annual income exceeds roughly $52,000 and senior couples will no longer receive assistance when their annual combined income exceeds $78,000. Under the existing OAS, absolute clawback occurred at $78,000 per senior regardless of family or household income.

The new legislation is being criticized by some as discouraging retirement savings and detrimentally affecting the future of middle-class retirees.

Mr. Martin continues to meet with various lobby groups to discuss this legislation. As a member of the Retirement Income Coalition CAUT has joined influential seniors' and other associations in those discussions. Last spring CAUT participated in the Canada-wide CPP/QPP consultations and presented a number of recommendations to the government and will now examine closely the updated draft legislation on the Canada Pension Plan in light of its input.

At its meeting in late September, the CAUT Executive Committee undertook to include the immediate issue of the new Seniors Benefit in its lobbying efforts. Background: CAUT Bulletin reports March 1997.