Mr. W. H. McMillan (Welland) moved:
That, in the opinion of this house, the government should consider the advisability of encouraging early vesting of pension rights of employees by disallowing in whole or in part the employer's claims for a reduction of the expenses of pensions for income tax purposes where reasonable vesting provisions are not adopted.
He said: Mr. Speaker, in moving this
motion I wish to say I realize that pensions come under the jurisdiction of the provinces. I also realize that the ideal arrangement would be an agreement with the provinces so that we might have pensions on a national scale and that we might have vesting from the start of employment. This would provide for portability of pensions.
Portability of pensions was mentioned in the speech from the throne this year, and I believe last year also, and some reference was made to calling representatives of the provinces together to deal with the matter. Up until now we have not heard anything further about it, and I do not know whether the government has any disposition to do it; but in the meantime I feel we have to do whatever we can within our jurisdiction to remedy the situation.
I also know that in the speech from the throne at the opening of the Ontario legislature the question of early vesting and portability of pensions was mentioned; but even were this to become law in Ontario it would not help working people in the other provinces. Neither would it help working people moving from one province to another, even those who now live in the province of Ontario.
Industrial pensions come under two groups. First we have the group where the employer and the employee both contribute, and the second group is where the employer contributes the whole amount towards a pension
plan. The matter of contributions and the amount of the contributions generally result from an agreement between management and labour, and form part of a contract. In a sense the employer's contributions are withheld wages, as they form part of the contract. Now, since most large employers are in the 50 per cent income bracket, it follows that the people of Canada have about a 50 per cent stake in these pension funds, and since they have a 50 per cent stake in them it is only right that we should have something to say concerning the administration of these funds.
Not long ago, when the income tax resolutions were before the house and amendments to the income tax bill were discussed, we made it possible for participants in a deferred profit sharing plan and for participants in retirement savings plans to transfer their funds to other similar plans exempt from income tax. The Minister of Finance said this was also possible for participants in industrial pension plans, but unfortunately it cannot take place until the participant in an industrial pension plan has some vesting in his pension plan, this vesting does not take place for a number of years.
At the present time under such plans an employee can usually get a return of his own contributions, but the contributions made to the fund on his behalf by the employer do not accrue to him until he has completed a certain number of years service or until he has reached a certain age, and generally the minimum number of years of service is around 20 years or more.
There are many reasons why an employee may not be able to work for 20 years or for some other number of years up to the time of the maturity of his pension. The employer, for instance, might discontinue operations. A mine might run out of ore or wood operations might discontinue. I have heard of this happening in the north country, and there are other reasons why an employee may have to discontinue his service before he can qualify for a pension.
Quite often there are medical reasons beyond his control. Skin and other allergies can be caused by certain chemicals in the plant where he works and may make life miserable for him. In other cases certain gases and poisons are present which affect him and make him unable to continue work. Such an employee is not sick in the sense that he is confined to bed, but in some plants he cannot qualify for a partial pension like others who are sick suffering from, say, a heart disease or arterial disease.
Further, I believe a workman should be allowed to change his job because of family reasons, and these embrace the education of
Portability of Pensions his family. I do not think he should be wedded to one job in one location all his life unless he wants to be.
In my experience most plants in the Niagara district have been very fair with their workmen and have treated them fairly when, for some reason or other, they have had to discontinue work before the maturity of their pensions. I know of other cases in Canada which I could name, but I do not want to, where employees have not got very good consideration in this respect, and I even know of one or two employees who missed out on their pensions by just two or three months or so. In such a case an employee would stand to lose a lot of money. A man aged 65, with the life expectancy that he has at that age, would lose, on just missing out on a pension of $100 a month, around $11,000 or $12,000, I believe.
The purpose of this motion is not to make our working force a transient population. I think most of our people are satisfied with their work, and this would not make much difference to them. But I am proposing this resolution to help those who must move for one reason or another. I think the whole working force should have some vesting rights in their pension before they have to work for too many years. The earlier vesting would help the older worker. We all know that a man of 45 or over, or even younger, has difficulty getting work at different plants because of their pension plans. I think this would help these people to obtain work at certain plants because they would be bringing certain funds with them which would add to their new pension fund. I know that we have no power in this house to legislate in connection with pensions, but we do have the power to give exemptions in respect of income tax on contributions to pension plans. I think this could easily be worked under the Income Tax Act.
I have not attempted to define the words "reasonably early" because I think other hon. members will have different ideas as to what they mean. As I said earlier, Mr. Speaker, the ideal arrangement would be to have vesting from the first day of work, if it was on a national scale. But I realize that with the plans such as we have in Canada at the present time we must have a definite minimum length of time. I would say that five to ten years would be infinitely better than what we have at the moment because now, as I said before, a man has to serve right up to the date of maturity in most cases. A bill based on this resolution would not allow a workman to get his hands on his pension money early. At the present time he does get his hands on his pension money; that is to say, on his own contributions when he quits work at a plant. A bill based on this resolution
Portability of Pensions would prevent that, and I think it would help all our working people to build up a reserve lor their years of retirement.
Topic: INTERIM SUPPLY