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Ottawa, July 4, 1997
1997-054

Updated Draft Canada Pension Plan Legislation Released

Related document:

• Canada Pension Plan Investment Board Act: updated draft legislation available on the Canada Pension Plan Web site (Adobe Acrobat format - 674,083 bytes).

Finance Minister Paul Martin today released updated draft legislation to amend the Canada Pension Plan and to establish the Canada Pension Plan Investment Board. A first draft of the legislation was released on February 14, 1997 following the agreement reached with provinces, as joint stewards of the plan, to amend the Canada Pension Plan. The updated draft incorporates comments from the provinces and the public on the first draft.

The changes to the CPP are the result of the latest statutory review of the CPP which the federal and provincial governments undertook over the past year and a half. They reflect what Canadians asked their governments to do during last year's joint federal and provincial CPP consultations: to preserve the plan, strengthen its financing, improve its investment practices, and reduce costs.

The draft released today fully reflects all the terms and conditions agreed to with the provinces in February, including fuller funding, a new investment policy, changes to the way some benefits are calculated and tighter administration. This legislation amplifies a number of points which will govern the new investment policy for the Canada Pension Plan Fund. These strengthen the fiduciary obligations of the Board and conflict of interest provisions, and clarify the process for appointing directors to the board.

"Releasing the draft now provides time for interested parties to review the technical aspects of the legislation before the bill is introduced to the House of Commons in the fall," Minister Martin said. The new measures will become law once the legislation is passed by Parliament, and supporting orders-in-council are approved by two-thirds of the provinces representing at least two-thirds of the population of Canada.

The intention is to have the new regime in place by the end of 1997. This will allow all the provisions to come into effect as planned -- January 1, 1998 for the benefit and investment measures, and January 1, 1997 for the contribution rate increase. As previously announced, the additional .15 percentage point increase in the contribution rate for 1997 -- a maximum of $24 for employees and employers -- will be collected when employees file their tax returns and when employers file their T-4 reconciliation forms for the year.

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