On November 27, 2006, the Honourable Diane Finley, Minister of Human Resources and Social Development, introduced Bill C-36 “An Act to amend the Canada Pension Plan and the Old Age Security Act”.
Old Age Security (OAS)
The OAS program is the first tier of Canada's retirement income system and is financed from federal tax revenues. OAS and income-tested benefits (Guaranteed Income Supplement (GIS) and the Allowance) are the benefits paid under the OAS Act. In 2005 2006, 4.2 million beneficiaries received $29 billion in benefits.
The OAS pension is paid monthly to persons aged 65 or over who meet the residence requirements specified in the OAS Act. The GIS is a monthly income supplement paid to OAS pension recipients who reside in Canada and have low income as specified under the program. The Allowance is an income supplement for persons aged 60 to 64 paid to spouses and common-law partners of GIS recipients as well as widow(er)s who have low income as set out under the program.
Described below are amendments to the OAS Act, the CPP and some amendments that are common to both.
Proposed Amendments to the OAS Act
OAS: Simplifying Access to and Delivery of Benefits
Ongoing renewal
- It is proposed to waive the requirement for a renewal application for the GIS and Allowance benefits once an initial application has been made.
- Recipients who file tax returns would never have to reapply.
Agreements to co-administer similar provincial benefits
- This amendment would allow the Minister of Human Resources and Social Development to co-administer provincial benefits for seniors, based on federal-provincial agreements.
Simplify the reporting of income for couples and seniors
- For seniors who apply for income-tested benefits and who have suffered a loss of income due to the termination or reduction of employment or pension income - this change would facilitate the application process by requiring that seniors report estimated pension and employment income only.
- Eliminate the requirement for spouses or common-law partners to provide marital and income information already provided by the other spouse/partner.
- Permit OAS application withdrawals where the pension is not yet in pay.
OAS: Consistent Benefit Entitlements
- Discontinue the current ability of estates to apply for income-tested benefits after the death of the low-income senior.
- Consistent entitlement to income-tested benefits for sponsored immigrants
- Extend the restriction on receipt of income-tested benefits for immigrants subject to a sponsorship agreement to those who become citizens before its expiry.
- Income-tested benefits will always be available if the sponsorship agreement breaks down.
- Extend the restriction on receipt of income-tested benefits for immigrants subject to a sponsorship agreement to those who become citizens before its expiry.
OAS: Clarity of Legislation
- Clarify existing provisions to ensure that they are clear, consistent and reflect the true intent of the Act.
Canada Pension Plan (CPP)
The CPP is a joint federal-provincial plan that began in January 1966 and operates throughout Canada except in Quebec, which has a sister plan, the Quebec Pension Plan (QPP). As the second tier of Canada's retirement income system, the CPP provides a retirement pension, disability benefits, benefits for survivors, children's benefits and a death benefit. In 2005-2006, 4 million people received benefits totalling $25 billion.
The CPP is reviewed every three years by federal, provincial, and territorial Finance ministers. The latest review in June 2006 confirmed that the CPP is on sound financial footing and that the current contribution rate of 9.9% will be sufficient to sustain it into the foreseeable future. Changes to benefit levels, contribution rates, CPP financing and investment policy require formal approval by Parliament, and two-thirds of the provinces with two-thirds of the population.
Proposed Amendments to the Canada Pension Plan
CPP Triennial Review
Full Funding
- As recommended by federal-provincial-territorial Finance ministers, this amendment would fully integrate the CPP's full funding provision into actuarial reporting and contribution rate setting. The full funding provision requires that benefit enrichments or new benefits be paid for in full so their costs are not passed on to future generations.
- The amendments set out reporting requirements and clarify rate-setting in the presence of such costs. They also provide for regulations to give specific direction to the Chief Actuary for calculating costs related to new or enhanced benefits.
Long-term Contributors-Canada Pension Plan Disability (CPPD)
- As recommended by federal-provincial-territorial Finance ministers, contributors who made 25 years or more of contributions would meet the eligibility criteria for earnings and contributions with valid contributions in 3 of the last 6 years instead of the current requirement of 4 of the last 6 years. Applicants will also have to meet existing CPPD medical criteria to qualify for the benefits.
- The amendment extends CPPD coverage to thousands of contributors with a long history of labour force attachment. It also represents the first enhancement of CPP benefits since the 1998 changes.
CPP: Business Transformation Amendment
- Statement of Contributions (SOC) online: The legislation currently specifies that a SOC may be requested only once a year. It is proposed to amend the legislation to permit contributors to request a SOC more than once a year.
CPP: Administrative Amendment
- The proposed changes would amend the CPP to allow former common-law partners to apply for a credit split more than four years after the date of separation where both former common-law partners agree in writing.
Proposed Common OAS/CPP Amendments
Provisions for electronic services
- Provisions for full electronic services currently do not exist for the OAS and CPP. It is proposed to amend the CPP and the OAS Act in order to provide the necessary authority for electronic service delivery and transactions.
Charging of interest
- Authority would be provided in the CPP and OAS Act to set the terms and conditions for the charging of interest.
Penalty provisions
- Existing penalty provisions (not in force) of both Acts would be updated and put into force. They could impose financial sanctions in cases of deliberate misrepresentation.
Information sharing
- The proposed changes will expand the group of third parties to whom a contributor's personal information may be provided to.
