OTTAWA, ONTARIO, May 3, 2007 — Bill C-36, which makes amendments to the Canada Pension Plan (CPP) and the Old Age Security Act is now law. Once in force, the changes will make it easier for people to apply for benefits and will make it easier for more Canadians with disabilities to receive benefits.
"We have listened to Canadian seniors and taken action to make sure that the Canada Pension Plan and the Old Age Security (OAS) program meet their needs today and in the future," said the Honourable Monte Solberg, Minister of Human Resources and Social Development. "These changes demonstrate the commitment of Canada's New Government to Canada's seniors and to persons with disabilities, reinforcing Canada's public pensions as cornerstones for retirement and income security."
Thanks to the amendments, applications for OAS benefits can be modernized and streamlined, leading to easier access for eligible seniors. For example, when seniors apply for their OAS benefit, they will be able to make a one-time application for the Guaranteed Income Supplement. As a result, virtually all eligible seniors will receive GIS if their income drops below a certain threshold, as long as they file their annual income tax returns.
"Canada's public pensions are a source of pride for all Canadians," said the Honourable Marjory LeBreton, Leader of the Government in the Senate and Secretary of State (Seniors). "Seniors built the CPP from the ground up and worked hard to make our public pension system a world leader. They deserve fair and easy access to every penny of their retirement benefits."
Two key amendments to the CPP are based on recommendations made by federal, provincial and territorial ministers of finance at the conclusion of the triennial review of the CPP last June. These two amendments to the CPP, which are expected to come into effect later this year after formal provincial consent, will mean that:
More individuals will qualify for CPP disability benefits; specifically, applicants with 25 years or more of CPP contributions will require valid contributions in three of the last six years, instead of the current requirement of four of the last six years. Medical eligibility requirements for CPP disability benefits will remain the same.
The CPP's full funding provision will be integrated into actuarial reporting and contribution rate-setting. The full funding provision requires that benefit increases or new benefits be paid for in full so that their costs are not passed on to future generations.
Some amendments will apply to both the Canada Pension Plan and the Old Age Security Act. For example, Bill C-36 provides for the creation of electronic services such as online applications. This will mean that people will have more flexibility when they apply for their pensions.
For more information, please refer to the backgrounder on Bill C-36.
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Backgrounder
Bill C-36: An Act to Amend the Canada Pension Plan and the Old Age Security Act
Old Age Security
The Old Age Security (OAS) program is the first tier of Canada's retirement income system and is financed from federal tax revenues. The benefits paid under the OAS Act are the OAS pension and income-tested benefits (the Guaranteed Income Supplement [GIS] and the Allowance). 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 widows or widowers who have low income as set out under the program.
Amendments specific to the OAS Act
Ongoing renewal of the GIS and the Allowance
This amendment will waive the requirement to reapply for the GIS or the Allowance benefit once an initial application has been made.
Recipients who file income tax returns would never have to reapply.
Agreements to co-administer similar provincial benefits
This amendment will allow the Minister of Human Resources and Social Development to co-administer provincial benefits for seniors, based on federal-provincial agreements.
Simplification of the administration of the OAS Program
This amendment is 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. It will facilitate the application process for the "options" provision under the GIS and the Allowance by requiring that seniors report estimated pension and employment income only. This will assist seniors who have suffered a loss of income due to the termination or reduction of employment income, or an increase in pension income by greatly simplifying the eligibility requirements under the program. This amendment will come into effect in 2008.
The requirement for spouses or common-law partners to provide marital and income information already provided by the other spouse/partner will be eliminated.
OAS application withdrawals where the pension is not yet in pay will be allowed.
Consistent Benefit Entitlements
The ability of estates to apply for income-tested benefits after the death of a low-income senior will be discontinued.
All sponsored immigrants will be treated equally when accessing income-tested benefits.
- The restriction on receipt of income-tested benefits for sponsored immigrants subject to a sponsorship agreement will be extended to those who become citizens during their sponsorship.
- Income-tested benefits will continue to be available if the sponsorship agreement breaks down.
Clarity of Legislation
This amendment clarifies existing provisions to ensure that they are clear, consistent and reflect the true intent of the Act.
Canada Pension Plan
The Canada Pension Plan (CPP) is a joint federal-provincial social insurance plan funded by the contributions of Canadian employees, employers and the self-employed. Created in January 1966, it operates throughout Canada except in Quebec, which has a similar plan, the Quebec Pension Plan. As the second tier of Canada's retirement income system, the CPP provides contributors with retirement pensions, disability benefits, benefits for survivors, children's benefits and a death benefit. In 2005-2006, 4 million people received benefits totalling $25 billion.
The federal government and the provinces and territories are all joint stewards of the CPP. Every three years federal, provincial and territorial ministers of finance review the CPP. The latest review in June 2006 confirmed that the CPP is on sound financial footing and that the current contribution rate of 9.9 per cent will be sufficient to sustain it into the foreseeable future. Changes to benefit levels, contribution rates, CPP financing and investment policy requires formal approval by Parliament and two-thirds of the provinces with two-thirds of the population.
Amendments to the Canada Pension Plan
Full Funding
As recommended by federal-provincial-territorial finance ministers, this amendment will fully integrate the CPP's full-funding provision into actuarial reporting and contribution rate-setting. The full-funding provision requires that benefit increases 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 costs related to new or enhanced benefits. They also provide for regulations to give specific direction to the Chief Actuary for calculating such costs.
Long-term Contributors—Canada Pension Plan disability benefits
As recommended by federal-provincial-territorial finance ministers, individuals who contributed to the CPP for 25 years or more will meet contributory eligibility requirements for disability benefits 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 current CPP disability medical criteria to qualify for the benefits.
The amendment extends CPP disability coverage to thousands of contributors with a long history of labour force attachment.
Accessing Statements of Contributions
Statements of Contributions (SOC) provides contributors with a detailed summary of their contributions made to the CPP to date and an estimate of how much they can expect to receive in CPP benefits when they retire. The CPP currently specifies that a SOC may be requested only once a year. Contributors to the CPP will now be able to request their SOCs more than once a year.
Credit Splitting
Former common-law partners will now be able to apply for a division of pension credits more than four years after the date of separation when both former common-law partners agree in writing.
Common Old Age Security Act/Canada Pension Plan Amendments
Provisions for electronic services and transactions
Provisions for full electronic services have not previously existed under the OAS program and the CPP. The changes in Bill C-36 will now provide the necessary authority for electronic service delivery and transactions.
Charging of interest
The Bill provides authority to exempt the CPP and the OAS Act from the Financial Administration Act, which dictates the charging of interest on benefit overpayments. It also provides regulation-making authority to determine whether specific circumstances may warrant the charging of interest.
Penalty provisions
The existing penalty provisions (not in force) of both the CPP and OAS Act will be updated and put into force. These provisions will impose financial sanctions in cases of deliberate misrepresentation.
Information sharing
The changes will expand the group of persons to whom a beneficiary's information may be provided, in order to assist seniors when they apply for benefits or have questions about their benefits.
