Proceedings of the Standing Senate Committee on
National Finance
Issue 26 - Evidence - October 24, 2012
OTTAWA, Wednesday, October 24, 2012
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to continue its study of the expenditures set out in the main estimates for the fiscal year ending March 31, 2013.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, tonight we will continue our study of the 2012-2013 main estimates, which were referred to our committee.
[English]
In this session, we turn our attention to the Public Service Commission for the first hour and then we will move to Bill C-46 for the second hour. We are pleased to welcome Anne-Marie Robinson, President of the Public Service Commission. She is accompanied by Hélène Laurendeau, Senior Vice President, Policy; Denis Bilodeau, Vice President, Investigations — there have been a number of audits in your report that you may be able to help us out with; and Elizabeth Murphy-Walsh, Vice President, Audit and Data Services.
Honourable senators will have recently received two reports, the Public Service Commission Annual Report and the audit report. They are two separate reports that may well be referred to during this session.
I have asked Ms. Robinson to give us some introductory remarks. Is this your first appearance before our committee as President of the Public Service Commission?
Anne-Marie Robinson, President, Public Service Commission of Canada: Thank you, senator. I was here one other time with a colleague from Treasury Board in the spring.
The Chair: Welcome back, then.
Ms. Robinson: Thank you.
The Chair: I know you are fairly new in your position and this will be your first major report. We look forward to hearing from you. I am sorry we cannot give you more than an hour at this particular juncture, but we have another bill that is pressing which we have to get on with as well. For now, you have our undivided attention.
Ms. Robinson: I am pleased to be here today to discuss the Public Service Commission's 2011-2012 audits and annual report, which were tabled in Parliament yesterday. The mandate of the Public Service Commission is to promote and safeguard merit-based appointments and to protect the non-partisan nature of the public service.
We report to Parliament on our mandate, and we welcome the opportunity to discuss our activities and results with your committee.
Under the Main Estimates for 2012-13, the PSC is authorized to spend $92.7 million, and it has an authority to recover up to $14 million of the costs of our counselling and assessment services provided to federal organizations. We have the equivalent of 965 full-time positions.
The Main Estimates, however, do not reflect the contribution that the PSC is making to Budget 2012. As a result, the Public Service Commission's budget will be reduced by $8.9 million. This will be a reduction of 10 per cent of the review base, and it will be implemented over a period of three years. Some 87 positions will be eliminated over the same period.
The PSC is committed to enabling departments and agencies in building a workforce to meet the current and future needs of the public service. The Public Service Employment Act sets out a staffing system based on values where deputy heads have greater responsibilities. The commission fulfills its mandate by delegating staffing to deputy heads, providing policy guidance and expertise to support delegation, conducting effective oversight, and delivering innovative staffing and assessment services.
[Translation]
Mr. Chair, oversight of the staffing system is a priority for the commission. Our monitoring, audits and investigations provide valuable information about the performance of staffing in organizations. This year, we conducted a higher number of investigations, i.e. 184 and 12, respectively.
Our results in 2011-2012 show that the overall integrity of the staffing system is generally sound. Deputy heads and managers are respecting their delegated authorities and meeting their responsibilities; and overall performance has improved.
While overall progress is being made, some areas do require further attention. There were three areas in particular.
First, we found that departments need more consistent monitoring of appointment processes. Effective monitoring of appointment processes allows organizations to determine areas for improvement and to detect and correct errors in a timely manner.
Second, there are still too many cases where organizations do not provide the necessary information to demonstrate that the appointment respects merit. In some instances, inadequate assessment tools were used. In other cases, organizations do not provide the PSC with key pieces of documentation, such as the assessment results for the person appointed. The PSC will draw on audit results from the past several years in order to better communicate to HR advisors and managers on the proper documentation of merit as well as to update its tools and guides.
Third, departments and organizations need to ensure priority persons are considered to fill vacant positions and appointed, if qualified. Our audits have identified some inconsistencies in the application of priority entitlements, for instance, the use of more stringent statement of merit criteria for priority persons, or in other cases, a lack of evidence that priority persons are being considered.
[English]
We will continue to support and work with organizations to identify measures that can be taken to improve staffing performance, with a focus on learning and continuous improvement.
The annual report provided an update on the investigations at the Atlantic Canada Opportunities Agency. We were able to report that the investigations had been concluded. However, at the time of the printing of the annual report, we were not in a position to publish a summary of our investigations as we were still going through our disclosure process. Since then, we have published an online summary of the investigations on our website. One case is subject to judicial review.
Safeguarding the political impartiality of the public service continues to be of critical importance. Our 2011 staffing survey found that employee awareness continued to increase and 69 per cent of respondents were aware of their rights and responsibilities to a moderate or great extent, up from 63 per cent the previous year. We will continue to collaborate with organizations and other stakeholders to find ways of improving the level of awareness among employees.
I would now like to turn to staffing and hiring activities. This was an unusual year as departments and agencies were preparing for the possibility of budget reductions by managing their vacant positions very closely. In 2011-12, overall hiring to the public service declined by 10.3 per cent. This includes indeterminate, specified term and casual hiring, as well as the hiring of students. This was the third consecutive year in which hiring decreased. Indeterminate staffing activities also decreased.
As overall hiring declined and the rate of departures remained stable, the Public Service Employment Act population decreased from 216,709 employees in March 2011 to 211,610 employees in March 2012. This is a decrease of 2.4 per cent. At the end of this fiscal year, almost 90 per cent of the population was indeterminate employees. This is the highest proportion of indeterminate employees in the last 10 years.
The mobility rate, which represents the movement to and within the public service, reached its lowest point since the late 1990s. Promotions dropped the most, with almost a 20 per cent decrease relative to last year, and acting appointments also decreased by 11.9 per cent.
This now brings me to workforce adjustment. When I last appeared before this committee, I spoke about the PSC's two roles in enabling departments and agencies as they implement workforce adjustment. Our first role is to provide policy guidance and support to departments in selecting employees for retention or layoff, and our second role is to support persons who have a priority for appointment in the public service.
We have seen a steady increase in the number of priority persons during 2011-12, rising by 13 per cent from 1,597 to 1,808. However, that number has increased by 52 per cent to 2,744, as of October 18.
[Translation]
Since April 1, 2012, we have also seen a drop in the placement of priority persons. With surplus employees accounting for most of these appointments, the overall drop has been felt more significantly by priority persons with other types of entitlement, including former Canadian Forces members who have been medically released. We continue to monitor this situation closely and are working with our partner, Veterans Affairs, to develop solutions.
We expect the Priority Administration Program will be the main source for staffing vacant positions over the next few years. As such, we continue to enhance its transparency and effectiveness, in collaboration with stakeholders.
This strategy will help us ensure that as many skilled and experienced priority persons as possible can be placed quickly and efficiently.
[English]
I would like now to speak about our modernizing initiatives. In 2011-12, the PSC continued to invest in technology as part of the modernization of our services. We made a number of advances in our online testing for candidates. We have also begun to develop an online open data source that would allow for more timely release of data of staffing performance to organizations. This tool would not change the way in which we report to Parliament, but it would allow organizations to respond to issues in real time.
Looking ahead, we will continue to support organizations as they implement workforce adjustments as a result of Budget 2012.
While the Priority Administration Program will be the main source for staffing positions in the public service over the next few years, it may not be able to meet all of the existing needs for what the Clerk of the Privy Council in his 2012 report refers to as "key skills gaps." The public service will need to continue to conduct targeted recruitment to ensure that the public service of the future constitutes a skilled workforce that can deliver results for Canadians.
We are committed to fostering strong and collaborative relationships with all stakeholders, including parliamentarians, departments and agencies, as well as bargaining agents, so that Canadians can continue to benefit from a professional and non-partisan public service.
Mr. Chair, I would now be very happy to respond to the questions of the committee.
The Chair: Thank you very much for that thorough report. I know from the list I have that you have prompted a number of questions.
Senator Buth: Thank you for your presentation and for being here this evening.
I just want to go to chapter 2 on your report — on hiring and staffing — where you outline that hiring to the public service decreased across all of the categories: Indeterminate is down by 26.3, casual by 9.3, specified term by 7.2 and student hiring is down by 5.3 per cent. On the balance, is the number of individuals who have left the public service in 2011-12 higher than the number of individuals hired?
Ms. Robinson: The departure rate remained more or less stable. We saw a slowing down of hiring last year, which caused the net reduction. I think that was overall what happened.
As I mentioned in my opening remarks, because departments were preparing for anticipated budget reductions but did not know what the decisions would be until the government announced them, a lot of people left positions vacant in anticipation of reductions. That would then allow them flexibility, if they had persons who were declared surplus, to redeploy those persons into those vacant positions.
Senator Buth: In terms of the entire public service, we have seen a decline for the first time since the mid-2000s; it is down 2.4 per cent. Do you have an idea about what will happen next year in terms of Budget 2012 and the reductions?
Ms. Robinson: That would be clear in our report next year. The 2.4 per cent net reduction was as of March 31, 2012, and the budget reductions were announced shortly after that. The number that I have to work with is the 19,200 positions that were announced in the budget, so we will not see the effects of that until next year. Then there be other retirements and things will that will factor into that. I do expect to see a bigger decline as a result of the budget announcement, but we would not have that data until the end of this year.
[Translation]
Senator Hervieux-Payette: Thank you. I have two questions concerning the section that refers to political activities. You say that the processing of candidacies will be simplified. But my experience with certain employees who wanted to stand as candidates was catastrophic. It took an interminable amount of time. There were several stages to go through, and there was always something that went wrong.
When an election is called, you have a 30-day period. Eventually we will have fixed-date elections, but in the meantime, the system you have put in place has to allow the person time to prepare. Giving that permission is not a reason to put in place a system that would put that candidate at a disadvantage compared to the others.
I would also like to go back to chapter 4.20. It states that two public servants ceased to be employees as a result of being elected. Almost all private businesses will give employees who want to run leave without pay. Rather than losing their status as employees, would it not have been possible to grant these people leave without pay while they served, so that they could go back to the public service afterwards? Was including this provision your decision? How are those elected representatives treated?
Here is my second question: is there a process? Is there also a time frame given to the potential candidate so that they can seek nomination?
Ms. Robinson: Thank you very much for your questions. Generally speaking, it is a fact that all public servants have to ask for permission before they become candidates or seek nomination in any given federal, provincial or municipal election. The decisions are made on a case-by-case basis.
Ms. Laurendeau will explain the process as well as the time frames involved in further detail.
Hélène Laurendeau, Senior Vice President, Policy, Public Service Commission of Canada: There are two things I would like to say in response to Madam Senator's question. The first concerns the process regarding the permissions granted. This program was put in place in 2005. We have continued to improve it.
Indeed, quite recently, we amended the Political Activities Regulations precisely for the purpose of better defining the time frames involved in the process of asking for permission to seek nomination. We hope that this will facilitate the process, naturally.
One of the things we realized over the years was that people did not quite know when they had to apply and understood the process more or less clearly. We made sure we publicized the process better and did so in several locations throughout the country.
As for the question regarding the loss of employee status, the act provides that in a federal or provincial election when a candidate is elected, he or she loses public servant status. It is different in other provinces, but that is what the law provides specifically. As for seeking nomination, or during elections, normally employees are granted leave without pay, which allows candidates to campaign.
In municipal elections things are a little more balanced because everything depends on the size of the municipality and the level of involvement. But for provincial or federal elections, generally people are granted leave without pay.
Senator Hervieux-Payette: But if members' staff may become public servants, I don't see why you could not make recommendations so that these qualified and competent people who want to serve their country temporarily as elected representatives could return to being good employees at the end of their mandate, either by choice or because they have lost an election.
As far as I am concerned — and I know that we are not talking about large numbers — I think there is a principle in law that means that in the private sector a person could not lose their job because they wanted to go into politics — and this would in fact breach the Charter of Rights. I don't see why this would be the case at the federal level.
Ms. Laurendeau: I understand your position, Madam Senator. On the other hand, our mandate is to apply the law as it exists currently.
Senator Hervieux-Payette: Do you deal with sexual harassment in the public service?
Ms. Robinson: That is the responsibility of Treasury Board. All of the general managers must have a plan in place regarding that policy.
[English]
Senator Nancy Ruth: My questions are about the workforce adjustment section. This is page 4 of your presentation, paragraph 5. You have 2,744 people, and there has been a drop in the placement of priority persons. Then you say that the drop has been felt most significantly by priority persons with other types of entitlement, and you refer particularly to Canadian Forces members who have been medically released. We tried to sort this all out with Veterans Affairs. Can you just tell me which groups and how many of those 2,744 are from various priority groups? Is the huge increase to October from the medically discharged CF people? Who are we talking about?
Ms. Robinson: The largest increase is of persons who have been declared surplus. As the senator has noted, there are two groups of priorities within the priority system. One group is in the statute, which we refer to as statutory priorities, and they have priority over the other group of priorities, which are created by the commission's regulations. Under the law, the commission must appoint the statutory priorities ahead of the regulatory priorities.
Senator Nancy Ruth: Who is in that group?
Ms. Robinson: In statutory priorities, there are three groups. Persons who are surplus, an organization's own surplus employees, have a right to be appointed first within their own organization. Second are employees who are on a leave of absence for more than one year and whose positions were indeterminately staffed during their absence. The last category is persons who have been laid off. The statutory group is largely different, groups with different status related to layoff.
In the second group, the regulatory priorities, are surplus employees from other organizations: medically released or discharged members from the Canadian Forces, indeterminate employees who have been granted leave for the relocation of spouse or common-law partner, and surviving spouses or common-law partners of public service employees or Canadian Forces or RCMP members whose death has been attributable to the performance of their duties.
Mr. Chair, I could send the committee a list of those two different groups of priorities, but I would say the senator's observation is correct. Since the budget reductions, we have seen a significant increase in the number of statutory priorities who are being appointed ahead of the other groups of priorities.
Senator Nancy Ruth: You go on and refer to the Clerk of the Privy Council talking about "key skill gaps" and how you will balance the demand to employ the priority people and fill the skills gaps. Can you tell us what those skill gaps are and how you will do that, if you have any idea?
Ms. Robinson: I will talk about how these things work together. First I can talk about the appointment of students.
While student hiring did decline last year by 5 per cent, there is still a need for students and students are being appointed. In just one of our programs, the FSWEP, we appointed around 8,300 students last year. When a student is appointed, or anyone is appointed to public service, they are required to go through the priority administration to see whether there is someone in that system who could take the position prior to staffing a student or anyone else. However, we normally find, for example, that students are coming in at entry levels and the people in the priority system tend to be more senior people. Therefore, we tend to have a synergy where we can still bring in students to take up those entry level jobs, and then the persons in the priority system would be redeployed into the more senior jobs.
We are still seeing skills gaps in the health sector, in some of the scientific sectors, in some of the financial sectors. Perhaps I will ask Ms. Laurendeau to name a few others. I know she works on this on a regular basis.
Ms. Laurendeau: It is basically an issue of supply of priority people against demand, and we noticed we have very low priority in the group that Ms. Robinson referred to: nurses, psychologists, engineers, scientific researchers. If we have very low priority people, and in some instances, none at all, we can expect that the demand will remain fairly important and therefore will determine our recruitment strategy.
The idea is to ensure that the primary staffing tool is the priority system, provided that we have supply of people that are needed.
Senator Nancy Ruth: What happens to the usual race, gender and disability stuff?
Ms. Robinson: Departments are putting this in their human resource plans. Whether it is implementing workforce adjustment or applying any other measure, those obligations remain. All of the obligations under the Official Languages Act and all the obligations under the Employment Equity Act would remain. Tools are available that departments can put in place, for example, with employment equity to ensure that while they are implementing workforce adjustment they can retain the progress they have made and, indeed, make more progress in terms of representativeness.
The Chair: Senator Nancy Ruth raised one of the points I had marked here and you had highlighted, Ms. Robinson, in relation to the priority employees who have been let go from the Armed Forces because of medical conditions while serving their country. That is a matter of considerable interest and concern to the Senate. You indicate that you are working on this particular matter with Veterans Affairs because there is not as much take-up on this as you would like to see. We would be very interested in hearing about progress from you in that regard.
Ms. Robinson: If you look at last year, which is a year where we actually saw the hiring slow down and we saw fewer appointments, notwithstanding that, we did keep pace up to March 31 last year. The year previous to that we saw 154 appointments of medically released members and last year we saw 158. Notwithstanding the fact that last year was a year where things were already slowing down, we did see a good pace of appointments for medically released veterans. I think this demonstrates in that time period the commitment of departments to place medically released veterans and also the fact that medically released veterans have the skills that the public service needs. Up to that point in time, that group of priority persons had the highest placement rate of any group of persons in the priority system.
Having said all of that, once the budget was announced, we did see a reduction in all types of hiring. Every category of hiring across the public service was reduced, and of course it impacted the members as well. Because of the phenomenon we just spoke about, where employees that are laid off have priority over other priorities in the system, we did see quite a substantial reduction in the placement of medically released veterans.
I brought this to the attention of Veterans Affairs in the summer, and I am pleased to say that a few days ago I received a letter from the deputy head. We have been asked to work with the department to identify policy options to help through this period of transition. It is really going to be in the next couple of years where we will have this phenomenon of an unusual number of surplus persons in the priority system.
There are a number of options the commission would have under its regulatory tool. We need now to go out and consult with people to see which one of those options would make the most sense.
The Chair: Do you do that consulting on behalf of all of the departments, or do they consult with potential employees department by department?
Ms. Robinson: We would consult with departments, with the military and with the Department of Veterans Affairs to understand the needs of veterans themselves as part of that consultation process. We also work with departments who hire veterans in order to understand their hiring needs.
In this case, the policy work could include some regulatory changes to the mechanism. For example, right now, medically released persons have a two-year entitlement in the system, so one of the options might be to grant more time for those persons in the system. Notwithstanding the fact that we are going through a difficult transition over the next few years, if you extended the time, for example, that could give those persons over the life of their entitlement a greater opportunity during that period of time to be appointed to a position.
The Chair: Honourable senators will know that in addition to our mandate with respect to public accounts and estimates, we also have the mandate to follow on behalf of the Senate the machinery of government. As a result, we handled the Public Service Employment Act and significant amendments to it a few years ago, and we have been following the evolution of the Public Service Commission ever since, as you have evolved from employer and hiring agency for the government to an oversight body.
I was glad to see your audit because that is part of your new functions, and you have not mentioned any concerns about cost recovery, which was a concern expressed by your predecessor.
We are familiar with your history, and we are watching as matters evolve to see how the new approach in letting the deputy heads and departments do the hiring is evolving.
Senator Callbeck: Thank you all for coming this evening. The first question I want to ask pertains to my own province of Prince Edward Island. I am not sure what page this is in the report; I just have a copy of the page here.
On the percentage of federal jobs lost in each province, Prince Edward Island is at 6.2 per cent, whereas the total public service is 2.4 per cent, on average. We are taking a tremendous hit here. In fact, the National Capital Commission is 1.6 per cent. P.E.I. is losing roughly four times as many federal jobs at 6.2 per cent.
There was a report put out by McInnes Cooper, which I have here, talking about what they think is coming down the road. They feel P.E.I. will lose 10 to 12 per cent of jobs, which would be roughly 220 to 240 people. Because of that, we will lose another 250 in the private sector. The bottom line is that $50 million will come out of our economy.
Do you have any estimates for what will take place in the various provinces down the road? Can you comment on what I have just said about this study by McInnes Cooper?
Ms. Robinson: he Public Service Commission's mandate is generally to do appointments within and to the public service. With respect to the individual decisions made by the government regarding reductions, the commission is not given that information in a systematic way. Where we come into the picture is when persons who are impacted by any reductions are declared surplus. They come into the priority system, and that is when the commission gets information about the reductions that are going on right now. Of course, we also set some of the policies on how those reductions should be carried out.
Senator Callbeck: You do not have any of those figures for the future?
Ms. Robinson: No, those figures would be in the purview, I believe, of the Treasury Board Secretariat.
Senator Callbeck: Another area I wanted to ask you about is the appointment rates of people with disabilities. In your executive summary, in Chapter 3, the rate has improved but it is still below the workforce availability. What is the rate of appointment of people with disabilities and what is the workforce availability? What is the difference between those rates? Has this changed much in the last five years?
Ms. Robinson: I do not have the data for the last five years, but I would share the concern that you have raised, senator, vis-à-vis the appointment rate, which is the inflow into the public service. The PSC remains concerned about the continued pattern; what we are concerned about is if we do not see the inflow at the right rate, then that bodes for the future in terms of our ability to maintain progress in that area.
Looking at the table with respect to persons with disabilities, the workforce availability — I would point out that we are still using 2006 data. We are all awaiting the new census data, which we hope to have in a year or so.
Persons with disabilities were appointed at a rate of 2.6 per cent. Sorry, the applicants were 2.6 per cent, the workforce availability was 4 per cent, and the appointment rate was 3 per cent. What we did see last year was an improvement in the appointment rate, but it is still not at the level of workforce availability.
In order to address this, the commission is doing a number of things. We are working now to engage departments to actually understand whether there are some barriers in the appointment process, and we are also working with some of the top recruiting departments to understand what they are doing. We do have departments that are very successful in this area, and we need to better understand what those best practices are and spread that information across the public service.
Senator Callbeck: You do not have that information for the last five years. Could you get that information and provide it to the committee?
Ms. Robinson: Yes, I could. I do have the information, senator, for the last three years, but I can also —
Senator Callbeck: Let us have that.
Ms. Robinson: For the last three years, if you look at the appointment rate, in 2009-10 it was 3.1 per cent — this is for persons with disabilities — in 2010-11 it was 2.6 per cent, and in 2011-12 it was 3 per cent. Again, there has been an improvement from the year before, but not at the 4 per cent rate, which is what we would expect vis-à-vis labour market availability.
Senator Callbeck: There is really no progress; you said 3.1 per cent three years ago, so we are going backwards.
The Chair: I wonder if we could have a very quick definition of "workforce availability" so that everyone who is watching this understands what that terms means.
Ms. Robinson: Workforce availability is the proportion of people in the population in the labour market who are within the four designated groups. You look at the portion of the Canadian population that would be eligible or presumed to be eligible to work, and then that would be the proportion you would expect to see appointments within the four employment equity groups in order for the public service to maintain a representative population.
The Chair: Thank you.
[Translation]
Senator Bellemare: My two questions concern staffing and hiring. You said that there are fewer people hired now for indefinite term contracts. Has that changed the structure of contracts in the public service?
In other words, are there fewer full-time jobs and more casual positions? Also, has this changed the demographics in the public service? Are public servants older, or younger?
Ms. Robinson: I am going to begin by answering the question regarding age. We have noted a slight increase in the average age of public servants. I believe it is now 44.1 and last year it was 43.6 or 43.7. So there has been a slight increase in the average age.
Concerning the number of indeterminate positions, as I mentioned in my opening remarks, we saw the highest proportion of indeterminate employees. But I think that last year was not a normal year, as people were preparing for Budget 2012. So it is difficult to say that we are seeing a trend for the future.
Senator Bellemare: Over the next few years, we will be able to see what the effect of the adjustment has been on the type of employment contract. Because eventually, there is going to be an impact on costs.
Ms. Robinson: Absolutely. As for the question regarding casual contracts, we have observed a decline in the number of casual employees who were hired last year.
Senator Chaput: In your annual report, you mentioned the fact that there had been a drop in hiring in the public service and this was the case in all sectors. Are there more people who left the public service in 2011-2012 than were hired?
Ms. Robinson: I am going to ask my colleague Elizabeth to answer that question.
Elizabeth Murphy-Walsh, Vice President, Audit and Data Services, Public Service Commission of Canada: Does your question concern strictly the number of people hired on a casual basis?
Senator Chaput: It could be people hired for an indeterminate term, for a casual contract, for term positions, or students. Overall, did a higher number of people leave the public service than were hired?
Ms. Murphy-Walsh: The annual report states that 9,369 people with indeterminate positions left the public service. As for those who applied for employment in the public service, I know that there were 88,000 applications for 1,900 available positions.
Senator Chaput: Would it be possible to send us that information if you do not have it to hand today?
The Chair: Yes, can you do that?
Ms. Robinson: Yes.
Senator Chaput: Thank you. My other question concerns bilingualism and official languages within the public service. We hear about non-imperative staffing for which bilingualism and official languages are not mandatory. If I understand correctly, when we talk about non-imperative staffing, the person may speak one or the other of our official languages, but not necessarily both. Is that correct?
Ms. Robinson: Regarding non-imperative staffing, the positions are bilingual, but the incumbent is given a certain amount of time to learn the second language.
Senator Chaput: So it is a designated bilingual position?
Ms. Robinson: It is a designated bilingual position, yes.
Senator Chaput: What percentage of positions are occupied by someone who has to take second-language training?
Ms. Robinson: In 2011-2012, among the 686 non-imperative bilingual staffings, 71 per cent of the people appointed were already bilingual, and 29 of the appointed employees were no longer in the category of those who had to take two years' training to become bilingual.
Senator Chaput: And according to you, how is it that there has been an increase in the percentage of people who are having trouble passing the exam successfully? Have the tests been changed? Are they subjected to new criteria?
Ms. Robinson: In 2011-2012 we noticed a decrease in the success levels, in particular for the oral competency test. For the French tests, there has been a decrease of 4.8 per cent and a 3 per cent decrease for the English tests. When I noticed that tendency, I asked my team to carry out a small study to determine the reason for this drop in the success rate.
With the information we have, we believe that this decline can be explained in part by the increase in the proportion of people who in 2011-2012 did the test for training rather than to obtain a bilingual position.
Last year, fewer people applied for imperative staffing positions, and generally speaking, that portion of the population is very bilingual. However, there were more students in training who took the test and those students were in the process of learning the second language, and that is why their success rate was lower.
Senator Chaput: In such a situation, it costs you more for training?
Ms. Robinson: Not necessarily. That is probably due to a general decrease in staffing levels last year.
Senator Chaput: On page 117 of the report, there is a table illustrating the number of second language evaluation tests. My question will be very brief.
How is it that in 2011-2012 you administered fewer evaluation tests than the previous year, that there was a decline of approximately 14,000 tests? How is it that fewer tests were given if the need is there?
Ms. Robinson: I think this is linked to the number of staffing actions. If the staffing rate was lower, then there would have been fewer requests for second language tests because a certain number of tests are specifically associated with the appointment process.
Senator Chaput: Thank you.
[English]
Senator Runciman: You stole much of my thunder, chair.
The Chair: Sorry. I was not looking at your notes.
Senator Runciman: You raised the issue of veterans. There are just a couple of other matters related to that. In some of the statistics I saw that part of the problem with respect to this issue is that the priority system does not appear to be working because the vast majority are hired by only two departments, National Defence and Veterans Affairs; DND hires about 70 per cent.
There was a comment made by the Auditor General with respect to injured veterans integrating back into civilian society. He said that bureaucratic hurdles are hurting that reintegration. Is that the sort of thing that your office looks at as well? Do you know what kind of bureaucratic hurdles the Auditor General is talking about?
Ms. Robinson: I have not had the opportunity yet to look at the Auditor General's report, but I will certainly read it with interest, because this is an area that is of great interest to the commission.
For the commission's part, the medically released members would enter into our priority system after they have been declared fit to work. Having said that, we did an evaluation of our own program for placing medically released members. We found that we had administrative problems. We are taking steps, and took steps last year, to address those. We have put in place — I cannot remember the exact date, but it was some six to nine months ago — a case management program to offer the former members more assistance when looking for and applying for jobs within the federal public service.
One thing we found in our evaluation is that these former members, unlike many other people in the public service party system, have not necessarily applied for jobs before under the Public Service Employment Act. Given some of those complexities, we felt a need to put in place some of those extra supports.
I do not believe this part is mentioned in the Auditor General's report, but in the spirit of improving and simplifying the system and providing more support, we have put those measures in place.
Senator Runciman: Do you have any concerns that the vast majority of hiring that has occurred is concentrated in these two departments?
Ms. Robinson: I will ask Ms. Laurendeau to speak more about some of the other departments, but certainly the commission works actively with all departments to ensure they understand the priority system and the entitlements of the veterans. We will work actively with departments to ensure they understand the skills that the veterans have to offer, which are a wide range of skills in a wide range of occupations. Therefore, we are confident that in working closely with departments we can continue to improve the program as we go forward.
Senator Mitchell: One of the features or elements of your report is that three of the four employment equity designated groups continue to be appointed at rates above their workforce availability. Given the next sentence, it implies that one of those three is women, which is a good thing, probably. Do you have information or data that would reflect how well women are being reflected in higher echelon appointments of the public service? You are doing really well here. You have three of four. That is excellent. However, how are we doing overall?
Ms. Robinson: That question, in terms of the representation of the overall population, is under the purview of the Treasury Board Secretariat. The commission looks at the actual appointments. We look at the movement and, in particular, we like to measure the flow into the public service.
Having said that, I believe there is still a challenge at the senior levels of the public service. I still think it is important that all agencies in the public service work together to address where we have gaps. Much of the research that the Public Service Commission does is very specific and targeted to identify, in all four of the employment equity groups, where there are gaps under the Employment Equity Act. That is where, from time to time, the employment mechanisms can be used to address those gaps.
Senator Mitchell. On page 114 of your annual report, you indicate that there has been a change to regulations affecting the appointment of women in the Department of Indian Affairs and Northern Development and that these regulations facilitated the implementation of an employment equity program to encourage the advancement of women from administrative support to entry-level office positions. That is to be applauded. However, they have been discontinued. The reason given was that the public service regulations apparently provide — I am saying apparently — a means to achieve these objectives. Could you explain how well these new regulations operate compared to the ones they replaced?
Ms. Robinson: I will ask Ms. Laurendeau to answer the question since she worked specifically on that regulation.
Ms. Laurendeau: The regulation that was specifically for Indian Affairs and Northern Development was one of the precursor programs we had put in place many years ago. When the legislation was changed in 2005, a more encompassing regulation was put in and embedded for every department that was cloning a similar program, but made it accessible for all departments. That regulation, per se, was superseded by the one that was more general in nature, but was duplicating the same program. Therefore, it became obsolete and needed to be repealed. That is why that specific regulation was repealed, but the level of programs currently available to facilitate the hiring of women remains the same because it was included in the broader regulation.
Senator Mitchell: In your summary you say results show that the overall integrity of the staffing system is generally sound. One of the elements of that assessment would be that there are still too many cases where organizations were unable to provide the necessary information to demonstrate that an appointment respects merit.
I am not saying this is entirely and always the case in the RCMP, but we are hearing a great deal of complaints within the RCMP ranks of promotions that are made not necessarily on merit, but in fact may well be made on this old boys' club network kind of phenomenon. I am wondering whether you have the authority to investigate circumstances in the RCMP. Have you done so? If not, and if they asked you, could you?
Ms. Robinson: Again, I am going to ask Ms. Laurendeau for assistance on this, but I do not believe the RCMP is under the Public Service Employment Act. Our authority would only extend to the Public Service Employment Act.
Senator Mitchell: There are civilians in that department.
Ms. Laurendeau: Those are under the purview of the Public Service Employment Act. The public servants covered by the Public Service Employment Act are under our purview. If the member was referring to civilian members or members of the RCMP, those are governed by the RCMP Act and are outside of our purview. The only portion of the population within the RCMP that the Public Service Employment Act governs is the minority of people who are public servants supporting the RCMP operations.
Senator Mitchell: You would have some application in that regard.
Ms. Laurendeau: For that population, we would.
Senator Mitchell: Have you investigated that at all, or can you say?
Ms. Robinson: In terms of our investigation function, which is managed by Mr. Bilodeau, we get information from a number of sources. It is done through our audits, a systematic monitoring program and, from time to time, individuals will bring complaints to the commission. We look at all of this information. We look at whether we have either jurisdiction or grounds, and then we can launch an investigation for any appointment that is within our jurisdiction and under the act.
Senator Callbeck: I just have one question, and it is a section of the audits. There were three areas. You said there are still too many cases where organizations were unable to provide necessary information to demonstrate that the appointment respects merit. You gave some examples, one being that organizations were unable to provide you with the key pieces of documentation, such as the assessment results of the person appointed. When you run into situations like that, what happens? I assume the person is in the position, so they stay there, but what actions do you take?
Ms. Robinson: We have to look at each of those following an audit, on a case-by-case basis. The auditor would look at the entire file. When we are finished an audit, we now have a process in place where we will refer some of those cases to our own investigations unit, if the facts merit that, and/or to the department for further follow-up. It really depends on the facts of the case in question.
I want to thank the senator for raising this issue of "merit not demonstrated." I would say this is one area that I, as a new president, am determined to tackle. It is frustrating when you see the audits and you see some of these systemic issues year over year. I have asked the team to do a breakdown of what these issues are, because some are common across all departments. Some relate to a need for us to give better examples of how to document files and roll our sleeves up and work closely with departments.
If you look at the nature of some of these problems, some of them are administrative and some of them are quite fixable. I am very committed to tackling this issue and hope to see real progress in this area over the next couple of years.
Senator Callbeck: As I say, in all those situations where this has been detected, the person still stays in the position, do they?
Ms. Robinson: Yes. In most of the cases, there is not necessarily a reason to think the appointment is not valid. You have to look at the circumstances of each case. Where we are concerned about the appointment itself, after each audit cycle, we do refer a number of cases to investigations. In some cases, if the facts warrant it in a specific file, investigations are conducted. Then sometimes those investigations can result in the revocation of an appointment or, if there is documentation missing, it is more likely that the person needs to be re-evaluated or the documentation needs to be found.
A systemic follow-up is done after each of these audits. My goal would be to not find this stuff in the first place, to get at the problem in a preventative way and help the departments improve how their files are documented so that we do not see these errors in the first place.
Senator Callbeck: It is great that you will make it one of your priorities.
The Chair: Ms. Robinson, in your presentation to us earlier, you mentioned the investigations with the Atlantic Canada Opportunities Agency. You indicated that you did not have an opportunity in your report to talk about those, but they are on your website. We did not have access to your website and that has not been circulated. Is there anything that you wish to tell us in terms of lessons learned, actions taken or that kind of thing?
Ms. Robinson: Yes. Thank you very much for the opportunity to speak about that. Maybe I could talk first about the findings overall.
Ms. Robinson: The evidence gathered during the course of the six investigations that examined the issues of political influence revealed that, in all six investigations, none of the appointments examined showed that actions by the minister of ACOA or the political staff influenced decisions made in relation to the appointments.
Of the five appointments that were investigated under section 66, one of those is currently under judicial review. I cannot comment on a case that is under judicial review. However, with respect to the other four appointments that were investigated under section 66, the evidence during the investigation showed that in two investigations, no errors, omissions or improper conduct took place. In one investigation, there were errors that affected the selection of the persons appointed, and in one investigation, improper conduct affected the selection of the persons appointed.
The commission has written a summary of these investigations, and the purpose of our doing a summary of an investigation is as a teaching tool. When we do investigations and we find things that are problematic, from time to time we can put an anonymous summary of those investigations on the website, which is our normal practice.
The purpose for the commission is really to maintain confidence in key public institutions and their staffing systems and to inform and educate the human resources community, managers and deputy heads about the importance of upholding the letter and the spirit of the Public Service Employment Act. Then, when we describe these cases — and in this case, we described two transactions that we found were problematic — they are there to serve as a reminder to public servants, with the objective of avoiding reoccurrence. That is really at the heart of our reasons for putting out an anonymous summary.
As I said, we did put it on the website because that is normally how we would disclose information about investigations.
[Translation]
Senator De Bané: Ms. Robinson, when you advertise a position that is open to the general population, can people apply, no matter where they come from in Canada, or is your search limited to certain geographical areas?
Ms. Robinson: Thank you very much for that question. A number of years ago, the Public Service Commission made a policy change that means that for most competitions the selection zone is all of Canada. Perhaps Ms. Laurendeau could explain this in greater detail. That project has been a success in that when that policy was fully implemented, we observed much more mobility among Canadians throughout the country, and there was also an increase in the number of placements. For instance, people who work in a western province, or in eastern Canada, can apply for a position in Ottawa.
Ms. Laurendeau: The national selection zone was introduced approximately five years ago and since that time, we have seen a constant improvement in accessibility from coast to coast to new positions in the public service; this has given people in various regions access to positions wherever they are open.
What helped us a lot obviously was the introduction of technology that allows us to manage this type of competition from coast to coast, at different times. We again this year saw an increase in internal mobility, in recruitment into positions in the public service.
So that is a success we are maintaining. We have the obligation of opening up positions on a national scale.
[English]
Senator De Bané: In the next five years, how many of your experienced senior civil servants will retire? When thousands of very experienced people suddenly leave or retire, do you think that you will have in place a system to maintain a top-notch civil service?
Ms. Robinson: I am more and more confident about that. I say that because one thing I have seen over my career, and certainly in the last few years, is a very significant increase in the capacity of federal departments to plan and to integrate their human resource planning with their business planning.
We see people thinking further and further ahead, and we also saw that planning being applied during the recent budget reduction exercise. The tools that are in place and the regulation that is in place which allows departments to determine which employees will be retained and which employees will be laid off allow the departments to look to their future needs and select employees for retention based on that planning. What I saw through the process was that those planning systems are in place.
However, I would also note that it will be a challenge for the public service in the future, notwithstanding the readjustment we are going through right now. All of the economists are predicting labour shortages in the future, so we are ensuring that we continue to recruit students, although right now we are going through a downsizing period. We need to continue to have a presence on university campuses because we need to continue as an employer to compete for the services of Canadians going forward. I really believe that planning is the key to that, and I am seeing important improvements in that area.
The Chair: Senator Mitchell, I am afraid we have run out of time, but if you would like to put your question on the record, we could ask the Public Service Commission to provide us with a written answer.
Senator Mitchell: This week we saw reports of the hiring of the Deputy Minister of Environment Canada who was unable to answer a question about what caused climate change — a startling thing. It made me wonder who did the hiring. Would you be involved in that? It would not necessarily have to be internal, but would the Public Service Commission be involved in that hiring or would you?
The Chair: Are you able to answer that quickly?
Ms. Robinson: The Public Service Commission hires up to the assistant deputy minister level. Deputy ministers are appointed by the Governor-in-Council.
Senator Mitchell: That would be the Prime Minister.
Ms. Robinson: Correct, which is the Prime Minister, and a secretariat in the Privy Council Office would support that hiring.
Senator Mitchell: They would have done the interviewing and so on.
The Chair: On behalf of the Standing Senate Committee on National Finance, Ms. Robinson and your team from the Public Service Commission, thank you very much for being here. Good luck in doing a very important job and maintaining integrity within our public service.
Colleagues, from the Pensions and Benefits Sector of the Treasury Board of Canada Secretariat, we now welcome Joan Arnold, Senior Director in that particular sector; and Kim Gowing, Director. From the Tax Policy Branch of the Department of Finance, we welcome Sean Keenan, Director of the Personal Income Tax Division, who has helped us before on different matters, and Alexandra MacLean, Senior Chief.
I understand that Ms. Gowing has the introductory remarks, and then if Finance Canada wishes to have some remarks, that would be fine too.
We are interested in learning about the impact of the legislation and the impact of the various clauses in this legislation, Bill C-46, so we can understand it. It is not easy at a first reading, which is why we need some experts to help us.
Kim Gowing, Director, Pensions and Benefits Sector, Treasury Board of Canada Secretariat: Thank you for the invitation to come to your committee. We are here to provide an overview of Bill C-46, An Act to amend the Members of Parliament Retiring Allowances Act. Specifically, Bill C-46 proposes to increase plan member contribution rates to bring an MP's share of the current pension cost from 14 per cent to 50 per cent.
Today, parliamentarians contribute 7 per cent of their salaries to the pension plan. When they move to a 50/50 cost- sharing ratio, plan members will contribute just over 20 per cent.
For a member of the House of Commons, this change would mean an increase of $11,060 in 2012 to $38,769 by 2017. In after-tax dollars, this would mean an increase of $5,930 to $20,794. For a member of the Senate, this change would mean an increase from $9,261 in 2012 to $32,298 by 2017. In after-tax dollars, this would mean an increase from $4,964 to $17,312 for a member of the Senate.
Additionally, the bill would raise from age 55 to age 65 the age at which plan members can retire with an unreduced pension. This would come into effect on January 1, 2016. This means that starting in 2016, early retirement can be as early as age 55, with a reduction of 1 per cent for each year less than the normal retirement age of 65.
With these changes, the government is expected to save approximately $29 million by 2017-18.
Bill C-46 would also reduce the rate of interest from 10 per cent annually to 4.7, which is the same interest rate used as the funding valuation interest rate. This would allow accounts to more closely track the actuarial value of the obligation as reported in the actuarial valuation for funding purposes. This is consistent with the intent of the members of Parliament retiring allowances bill.
Finally, the bill would not impact the accrual rate of the pension plan, which will remain the same, at 3 per cent. Additionally, the maximum pension will remain at 75 per cent of a member's total average salary.
We would be pleased to take the committee's questions.
The Chair: Thank you.
I have a number of senators who would be interested in talking to you, but before I go to my list, can you explain the $29 million by 2017-18? This is the savings the government is expecting. Would that be a cumulative amount for the years between now and then, or is that the baseline savings for every year thereafter?
Ms. Gowing: It is cumulative savings by 2017.
The Chair: What would happen after 2017-18? Is there any savings at all?
Ms. Gowing: No, because at that point you will be at the 50/50 cost-sharing ratio, where the government will pay half and members will pay the other half. To reach the savings of $29 million, the government's share is going down and the member's share is going up.
The Chair: The government's savings is the difference between what it is paying now and where we want to get to at 50 per cent?
Ms. Gowing: Yes.
The Chair: That clarifies that point.
Senator Buth: Chair, you took my question, but I do have another one. Can you tell me where I would find in the bill the clause that deals with the reduction of the rate of interest from 10 per cent to 4.7 per cent? For the life of me, I can not find that.
Joan Arnold, Senior Director, Pensions and Benefits Sector, Treasury Board of Canada Secretariat: It is on page 6, subclause 5(2). It refers to the interest rate there in proposed subsection (3). The rate for the purposes of proposed subsection (2) is the effective quarterly rate derived from the valuation interest rate for the fiscal year.
Senator Buth: Thank you very much. That is the only question I had.
The Chair: It is derived from the valuation interest rate. You must wonder what that is, do you not? I have absolutely no idea what the valuation interest rate is as appearing in the third line. What is that?
Ms. Arnold: That is the valuation interest rate used by the Office of the Chief Actuary when they are preparing the actuarial valuation every three years. They assume a rate of interest for valuation purposes to properly value the liabilities.
[Translation]
Senator Bellemare: We do not see the 10 per cent and 4.7 per cent figures that you mentioned. In the section, does this mean that the annual interest rate of 4.7 per cent is fixed for the duration of the act, or can it change according to decisions made by the Chief Actuary? If that is the case, how will the Chief Actuary make a decision regarding that rate?
[English]
Ms. Gowing: The rate now is the rate used by the Chief Actuary to value the long-term liabilities. That rate is the government's long-term borrowing rate, and you can find that in the actuarial valuation.
The rate of 4.7 per cent, I believe right now for the year 2017, is the rate that will be used to credit the account going forward for the year 2013. The rate changes each year based on the assumptions done by the Chief Actuary. By 2017, that long-term rate is expected to be 5.2 per cent.
[Translation]
Senator Bellemare: Am I right to think that a rate that goes from 10 to 4.7 per cent has a very real and considerable impact on contribution rates, and thus that retirement contributions vary according to that rate?
[English]
Ms. Gowing: It has no effect on members' contribution rates. That rate determines the liabilities of the plan and what the government's obligations are for the future benefit of the plan.
The Chief Actuary determines what the cost of the plan is and what the government's future liabilities are. The rate that is accredited to that amount of money creates the —
[Translation]
Senator Bellemare: Because normally, when the contribution rate is determined in defined benefit plans, they use a series of hypotheses: demographic, salary and economic performance hypotheses, and the bank rate. I would like to know how you determine the contributions if that rate is not used? If it is not used to determine contributions, what do you use?
[English]
Ms. Gowing: For determination of the contribution rate, you are right; they do use part of the actuarial valuation. They figure out what the demographics are — the salaries, the economy, things like that — and they come up with what they call the current service cost. It is the cost of buying one year of future benefits. That amount is what is used to determine what the members' and the government's contribution rates are.
The Chair: Following through, if there is less put into this fictitious interest rate, then it is possible that the overall amount will be less than it would be if it was at 10 per cent. If it is less, then it is possible that the member will be required to pay more to bring this up to the amount that you need to meet the obligation. Is that correct?
Ms. Gowing: No, it is not correct.
The Chair: Explain it to me.
Ms. Gowing: First, it is a pay-as-you-go plan. Also, based on the Chief Actuary's most recent valuation, he is already using the long-term bond rate of 5.2 per cent in his actuarial valuation. I believe it is on page 36 of the actuarial valuation that was tabled March 31, 2011. He has noted that the interest rate of 10.4 per cent was always a higher rate than was required, and he has already started using more realistic rates to reflect the liabilities of the plan.
The Chair: Other senators may wish to ask other questions, and I will not take up their time. I do not understand why we would be having this legislative change if it was meaningless. If the actuary is already ignoring the 10 per cent, it is either there for a reason or is not there. However, let us move on to something else, and then you can help me with that offline later if everybody else understands it.
[Translation]
Senator Hervieux-Payette: I have a brief anecdote for you. I sat for five years and seven months in the House of Commons. There were two election years and so I did not have the necessary six years to qualify. We hear certain things being said publicly. No one said that we were talking only about the 50 per cent. When does a senator or a member of Parliament become eligible for a pension? Because that is not automatic.
People are not in a minority government, nor here for a year and a half or two years only, and qualify for pensions. If we contribute, we go back home with the amount of money we contributed. We are given a cheque, we can deposit it in an RRSP, but that is all we get. Is it still six years for the minimum pension, and 15 years to obtain the maximum pension, whether we are talking about a member of Parliament or a senator? Are the criteria the same?
[English]
Ms. Arnold: Yes, six years of service as a member is still required, whether it be in the Senate or in the House of Commons in order to qualify for a pension. It is not 15 years anymore because the accrual rate, of course, is 3 per cent and not 5 per cent, and so one would need 25 years of service in order to have the maximum accrual at 3 per cent.
Senator Hervieux-Payette: You probably have some communication people in your department and your group. This should be known by the public because, in general, people resent it, as if everyone here was leaving Ottawa with a full pension very early. I do not think there are even 5 per cent of the members of Parliament who would qualify for the 25 years. Maybe some people were elected in two minority governments plus a full term, and they will start qualifying after the next election. It is not known, and I am saying that because it is important that people know that it is not a bonanza and it is not Loto-Québec that we have, that people are earning the amount of money. The contribution certainly increases — it is gigantic — but I would like to know why there are three steps, 2013, 2014, 2015, or something like that. What is the purpose of having changes over three years? For someone 71 years old, of course, it is more on our side than on the side of the house.
Ms. Arnold: I am assuming you are referring to the increase in contributions of 1 per cent in the next three years, like 2013, 2014, 2015. I think that decision was taken by the government in order to minimize the contribution rate increases in this Parliament. However, I have to tell you I am not exactly certain. It was a decision that was made by ministers.
Senator Hervieux-Payette: One per cent would be $9,261 in 2017. One per cent cannot be $9,000. It does not match. I am trying to figure out the percentage that is mentioned there and the figure that is in the speech.
Ms. Arnold: I think the $9,000 refers to what one would be paying in contributions now in 2012 if one were a member of the Senate, because the number is 7 per cent of $132,500, I think; and then in 2013, the amount would be 8 per cent of the sessional indemnity, and then 9 per cent in 2014 and 10 per cent in 2015. That is how it is set out.
Senator Hervieux-Payette: Is what is proposed in that bill comparable to the civil servant pension portion? Is it going in the same direction, or is there a very special status for parliamentarians?
Ms. Arnold: No, I would not say there is a very special status with respect to 50/50 cost-sharing because the public service in Bill C-45 will also be in a situation of 50/50 cost-sharing of the current service cost by 2017.
Senator Hervieux-Payette: Will they have the same thing, contribution, 25 years and eligibility?
Ms. Arnold: No, the accrual rate for public service pensions is 2 per cent per year, up to a maximum of 70 per cent with 35 years of service. That is how it works.
Senator Hervieux-Payette: It is 35 years?
Ms. Arnold: That is correct; it is 35 years in the public service.
Senator Marshall: Could you talk about the integration of the plan now with the Canada Pension Plan? In terms of integration, right now we are effectively buying 3 per cent of our pension every year, so at the time of integration, we are going to lose so much off the parliamentary pension, which means that we will not be picking up the 3 per cent; we will be picking up less than the 3 per cent. How much of an impact will integration be? Have you worked out any scenarios? Do you have any models as to what the dollar value will be?
Ms. Gowing: I will give a brief overview of how this coordination will work.
Currently, you pay into the 7 per cent under your senator's salary, and then you also contribute under the Canada Pension Plan. When you cease to be a member of the Senate, you will receive a pension as a senator and you will also receive a benefit from the Canada Pension Plan. These are what we referred to as a "stacked plan," so you have the base of your Senate pension, and, on top of that, you will receive your Canada Pension Plan.
Starting in 2016 for all service going forward from that point, your plan will be integrated or coordinated with the Canada Pension Plan. That means when you turn 60, if you are in receipt of your senator's pension, your senator's pension will be reduced by a certain amount to take into account your eligibility to receive Canada Pension Plan. It is not a one-for-one dollar switch; that should be also understood. Also starting in 2016 is a recognition that you will be coordinated with the plan; your contributions will be split so that you will pay on contributions up to the Canada Pension Plan year's maximum pensionable earnings, which is currently $50,000. You will pay a lower contribution rate on that first $50,000, and you will pay the higher rate on any earnings in excess of that. We are only coordinating the piece for the years that are applicable to the year's maximum pensionable earnings and only for that service that you have spent as a senator.
Senator Marshall: You said it is not dollar for dollar.
Ms. Gowing: No, it is not.
Senator Marshall: What is it? Is it one cent for every dollar? What is the ratio? How close to dollar for dollar is it?
Ms. Gowing: For the sake of an example, let us say that you are receiving $50,000 a year from your member's pension. What it is trying to do is maintain you at that $50,000 level while recognizing that you have an alternate source of income through the Canada Pension Plan. It is keeping you at that level of $50,000, but it is the two sources of income.
We have worked the numbers to be that, on average, right now, based on our calculations, the reduction would be approximately $189 for every year of service. If you had 10 years of service, as a senator at age 60, your pension would right now be reduced by approximately $1,900.
Ms. Arnold: That is 10 years of service after 2016, where the coordinated contributions are being paid.
The Chair: I will not take any more supplementaries. I will put your name on the list. Otherwise, it is unfair to those who are on the list now for you to jump the queue and say you have a supplementary and take up all the time. You have the floor.
Senator Marshall: I do have another question.
The Chair: Go ahead.
Senator Marshall: I am looking at the legislation and the interest rates. Look at page 4. The rates are going to go to 8 per cent in 2013, 9 per cent in 2014 and 10 per cent in 2015. Can you talk about the rates of 4, 5 and 6 per cent? I think it has something to do with the two components of the plan. Could you explain how that interest rate is split between the two plans?
Ms. Arnold: That is the contribution rate, Senator Marshall?
Senator Marshall: Yes.
Ms. Arnold: This plan is essentially in two major parts. The first is a registered pension plan, which means that it follows the rules of the Income Tax Act for registered pension plans. Then it has another part, Part II of the act, which is a retirement compensation arrangement that allows one to pay benefits that exceed the limits for registered pension plans. It is set up in a somewhat complicated way.
The Chair: You agree with us.
Ms. Arnold: I sort of did it, so yes, I do. I do not know that I would do it this way again, but we are stuck with it now.
Under the first part of the plan, the registered plan, you pay 4 percent as a contribution rate on the salary or the amount of remuneration you are earning, actually your sessional indemnity, up to what we call in this act the earnings limit. That means that is the highest amount of money you can contribute on under a registered plan. You pay 4 per cent in Part I. In order to make up for the whole 7 per cent that you are supposed to pay in total on your whole sessional indemnity, you pay the rest of that contribution in Part II of the act, which is the retirement compensation arrangement. This is all totally clear, right?
It is set out that way because you always have a solid 4 per cent that you are paying up until 2016 under the registered plan, and all the rest of the contributions that have to be made for your pension at the present time — 7 per cent this year, 8 per cent next, 9 the year after, 10 the year after — are paid under Part II. It is set out here by reference to the sections in Part II of the act that require that contributions be made.
Some changes were a little bit late in the drafting process, which is why you will see it set out this way. If we made those changes or if those changes had been decided upon at an earlier stage, we would not have done it quite like this.
In any case, in total, you end up paying 8 per cent on all of your sessional indemnity next year, 9 per cent in 2014 and 10 per cent in 2015. After 2015, as per proposed subsection 2.7(3) on page 4, the Chief Actuary is to fix the rates starting in 2016. At this point, we are not certain what those rates will be. It will depend on the next actuarial valuation.
Senator Marshall: I have seen a report — and I cannot remember where I saw it, but it might have been on the Treasury Board website — where the plan is broken down into the two components, which I think of as the basic plan plus the enriched portion of the plan.
Ms. Arnold: Correct.
Senator Marshall: Once we start making these increases in what I call premiums, we will see that in the enriched part.
Ms. Arnold: It will be taken up in the enriched part, as you call it, yes.
The Chair: Is the 7 per cent going to 8, going to 9, et cetera, an average of the Part I and the Part II?
Ms. Arnold: No, it is not an average. It is an overall amount in total.
The Chair: Four per cent is for the first part, and if 7 per cent, as you explained it, is for Part II, how do you get overall 7 per cent?
Ms. Arnold: I will give you the complicated answer for that.
The Chair: I do not ask any direct questions.
Ms. Arnold: You pay 4 per cent on Part I on the salary up to that limit. That limit is around $132,000 at the moment for a plan like this that is not integrated with the CPP. That maximum salary amount for a registered plan is lower if the plan is not integrated with CPP. Then you pay 4 per cent on the salary that one might have over that earnings limit amount. Then you will pay 3 per cent on all of the sessional indemnity, the whole works, not just one part or another but the whole works, and that is paid in Part II. That all comes out to 7 per cent. I have calculated it carefully many times. That is the way the act is set out right now, and then we had to do the increases for the next three years. That is why you see it the way it is in proposed section 2.7.
Senator Callbeck: There is nothing in this legislation that affects people who are already on the pension; is that right?
Ms. Arnold: Oh, no.
Senator Callbeck: Does the 4.7 change every three years or every year?
Ms. Arnold: That is the interest rate credited to the account, Senator Callbeck?
Senator Callbeck: Right.
Ms. Arnold: No, it changes. After each actuarial valuation, it would change slightly.
Senator Callbeck: Is that every year or every three years?
Ms. Arnold: It is every three years. That is under the Public Pensions Reporting Act. It is required to be at least every three years.
Senator Callbeck: The maximum pension will remain 75 per cent of members' total average salary. I thought it was 75 per cent of the best five years?
Ms. Arnold: Yes, that is correct.
Senator Callbeck: This says the total average salary.
Ms. Arnold: I think that must be either a typo or an oversight. It is a five-year average, the best five consecutive years. It is the same approach in the public service.
Senator Nancy Ruth: Back to the CPP, I took my CPP some years ago, and it is always taxed back. I do not get it. It seems like I do not keep any of it. When you integrate it, will it be much different from what happens now in terms of the tax structure?
Ms. Arnold: I do not think so. The tax people are here.
Sean Keenan, Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance Canada: CPP benefits are taxable, included in your income, and your pension benefits are taxable, so to the extent that the plan is currently stacked, you receive a pension benefit and then an additional CPP benefit on top of that. Both those amounts are included in your income for tax purposes. To the extent that the plan is integrated such that you receive a lower pension benefit to reflect the fact that you are receiving the CPP, then you will have a lower amount of income included.
Senator Nancy Ruth: That is to my benefit.
Mr. Keenan: You will pay less tax, but you have less income.
Senator Nancy Ruth: It is half a dozen of one or six of the other. I do not know whether they even out in terms of less income and less tax, but it does not seem like a big deal to me. I guess that is what I am saying. Is it a big deal? No, I do not think so.
The government is expected to save approximately $29 million by 2017-18. Madam, you said it was cumulative. In the minister's statement, he says that over the next five years these measures will save $2.6 billion. Is that the civil service component? What is the difference? You have had this question before, have you? It looks like it.
Ms. Gowing: The $2.6 billion is the cumulative savings for the three major public sector plans, which is the RCMP, the Canadian Forces and the public service, and the members of Parliament plan as well.
Senator Nancy Ruth: It actually is a reality that the intention of Treasury Board is to save $2.6 billion over the five years from these four plans.
The Chair: We are only dealing with one of them.
Senator Nancy Ruth: I understand. That is right. That is pretty good.
The Chair: Thank you for clarifying that, Senator Nancy Ruth.
Senator De Bané: First, I am not affected myself because I am older than 74 years of age and have reached the maximum number of years. That being said, over my years in Parliament, I have seen both extremes. When I was elected the first time, members could serve six years, get elected to the House of Commons at 18 years of age, be defeated at 24 years of age and then collect a pension over 50 years. Now we are saying that we have corrected that over the years. We said that you have to be a minimum of 55 years of age. Now we are going to 65, and I think that we are going to the other extreme.
Let us assume that a member of either house — let us talk about the House of Commons — is here five days a week for a minimum of 10 to 12 hours a day. Then, during the weekend, he has to be in his riding. He does between 80 and 100 hours per week. We tell him, "Well, if ever you are defeated, we consider that you are like anyone else." This is not true because someone who joins the public service does not have an absolute guarantee that his job is secure for 35 years. However, if I use what you call among economists the law of large numbers, most of them will stay for 35 years without difficulty, and not more than half a dozen will be fired for incompetence. If there are 700,000 people on the public purse, not more than half a dozen, statistically, will be fired for incompetence.
Here, the turnover is 35, 40 per cent of the members. We will say, "No, no. We have to treat them like other jobs."
I remember talking to one of the most prominent lawyers in Quebec who was a member here. When he left, I said, "You are going to go back to your profession. You are one of the most prominent lawyers." He said, "Unfortunately, not. I have been away from it for about 12 or 13 years. The law has changed tremendously. No, I cannot. I will have to do something else."
I think that we have gone from one extreme to the other. Now you say, "You take a risk, and if you are defeated you will have to wait until the age of 65." We are really going from one extreme to the other. That does not affect me, so I am at liberty to say that for all those who are here. There are other aspects that are totally irrational. The guy who is elected and is 18 years of age has the same salary as a former prime minister who sits in opposition and has 30 years of experience. Because their votes are equal, we give them the same salary. That is stupid, but it is our system.
Now we have a pension that does not take into account that that position, that load of responsibility, has no resemblance to other positions. No other position is as aléatoire as this one. I heard a senator telling us this afternoon how his seven year-old son sees him so little that he did not even recognize that it was his father who was there on weekends. We are going from one extreme, being overgenerous, to saying that this is the system. The other thing that bothers me is the danger that it would incite people to try to find other income to supplement this.
The Chair: Would you like to comment on that? It is not necessary, but if you wish to.
Ms. Arnold: I have no comment.
Senator Stratton: There are two components to this plan: the registered plan and then the retirement compensation arrangement.
Ms. Arnold: Yes.
Senator Stratton: With most pensions, you can split the income with your spouse. You cannot entirely do that with the plan that exists today. Is that correct? You can do it in part.
Ms. Arnold: I will let my tax colleagues answer that.
Alexandra MacLean, Senior Chief, Tax Policy Branch, Department of Finance Canada: This bill does not have any measures in it related to the ability to split retirement income with one's spouse. However, Bill C-45 does have a measure regarding pension income splitting. It will allow pension income splitting with respect to retirement compensation arrangement income under certain conditions.
Senator Stratton: You always have a qualifier. What is "under certain conditions"?
Ms. MacLean: The important conditions are that you have to be 65 years of age and that there is basically a dollar cap. The total amount you can split under the sort of existing pension income splitting, plus the retirement compensation arrangement income that you are splitting, cannot exceed a dollar amount that is equal to about $93,000 for 2013.
Senator Stratton: Okay. That is better than I thought.
Ms. MacLean: That is not in this bill but in Bill C-45.
Senator Stratton: No, I appreciate that. That is good news. The senators who will have to pay this penalty — I will not have to as I am leaving shortly — will be able to split their pension with their spouse.
Ms. MacLean: That is correct.
Senator Stratton: Is that retroactive?
Ms. MacLean: It is for 2013 and subsequent years.
Senator Stratton: Before?
Ms. MacLean: No, 2013 and subsequent years.
Senator Stratton: If I retire in 2013, I would be able to split it if I were married?
Ms. MacLean: That is correct.
The Chair: He is not saying that he does not care about what happens afterwards.
What impact will the splitting of our Canada pension that some of us have been involved in as a tax measure have on the clawback of the Canada pension under this legislation?
Ms. MacLean: That is all a bit different and happens outside of the tax system, which is sort of my part of the world.
CPP benefits can be split directly through the CPP. That is to say, you can apply to them to divide your CPP benefits with your spouse. It is a different mechanism from the pension income splitting in the Income Tax Act.
I have to turn it back over to my colleagues, but I would think that there is —
The Chair: Perhaps Ms. Arnold can help us.
Ms. MacLean: I imagine that there is really no link between the ability to split the CPP benefits and the CPP integration measures. Is that correct?
The Chair: That is really the question in a much more succinct manner than I could put it.
Ms. Arnold: As Ms. MacLean was saying, there is no link between the splitting of your CPP, which is a CPP legislation measure, and the integration issue here in the plan for members of Parliament.
The Chair: Is your entire CPP taken into consideration? If you have split it, you are not getting your entire CPP because you have already set up another scheme under the CPP.
Ms. Arnold: The part we would be reducing here, once the integration issue is there — and coordination starts for service for 2016 and later — is a small reduction in your member of Parliament pension. We are not touching the CPP entitlement.
The Chair: However, the small reduction that you are making is dependent on the CPP amount that I am entitled to?
Ms. Arnold: No it is not, really. The fact that there is available another source of income is there, but whatever that CPP amount is does not affect how much we reduce your member of Parliament pension. It is a factor in the MPs' plan that is related to the number of years that you contributed to both the CPP and to the MPRAA. There is a small percentage that is applied for each one of those years of service. It would not be affected by the fact that one chose to split one's CPP benefit with one's spouse.
Senator Mitchell: There is quite a bit of confusion about this, and it is complicated. Of course, you are doing a great job of explaining it to people who find it complicated. I know in the briefing that the government received in its caucus, and we received a copy as well, it was said that members and senators would be paying 20 per cent of their gross income come 2016, but in fact $32,298 over a senator's income and $38,796 over an MP's income is not 20 per cent at all; it is 25 per cent. Just for the record, that should be clarified in your briefing. Is that not the case? It is 20 per cent in the briefing, but it is not in fact. It is in fact 25 per cent.
Ms. Gowing: We will go back and verify the numbers.
Senator Mitchell: Thank you very much.
The government is making the point that for an MP — and I am a senator, so I am talking about MPs; I am defending their interests — the cost of their pension right now is $78,000 and they are paying only 11 of it. It will go up to $39,000, so they will be paying 50. The $78,000 cost has not changed at all. The cost attributed to them in total to their pension has not changed. It is $78,000 a year, just as it was. However, two fundamental things have changed that would reduce the cost of the pension.
I am not arguing about the 39 or the 78, but there are two fundamental things that have reduced the cost of the pension. One is this CPP inclusion. If I am in for 25 years and I get $1,900 every 10 years from CPP, the total reduction would be $5,000 over 25 years. My pension would actually go down. The pension I am buying would go down from $100,000, my max at 75 per cent of what senators are earning, to $95,000. It would go down 5 per cent. However, the cost of their pension is not going down from $78,000, 5 per cent down; it is staying the same. Why is that cost saving not being attributed to the MP?
The second cost-saving is the cost-saving that is intrinsic to the fact that you are going from 55 years of age when you can start to 65 years of age when you can start. That is probably a considerable cost-saving because that will take out 10 years of payment or penalties.
I have 5 per cent — at least — savings due to the one factor, the CPP; and I have got whatever per cent savings due to the 55, 65 factor. However, the cost that is being attributed to each of those MPs is staying at $78,000. Why has it not come down $74,500 or maybe to $72,000, and why are they not paying 36 instead of 39? How does that work? They are being misled. That cost-saving has not been given back to them. You are an accountant; you know that. You should say that to the Prime Minister.
Ms. Gowing: When the Chief Actuary did the costing for the plan, one of the assumptions was that those who were age 55 would more than likely take an early pension because the penalty is not a great penalty. It is 10 per cent versus, for example, the public service is a 5 per cent annual reduction. In his calculations, the assumption was that a majority of senators and members of the House of Commons would take their pension at age 55 with the 10 per cent penalty, therefore leading to a longer payout period. Subsequently it is a cost to the plan.
The other major cost driver in the plan is the 3 per cent accrual rate. I understand that has not changed, but it is also a key cost to the plan.
Senator Mitchell: It is still a reduced cost because they can take it all at 55 now. It is still a reduced cost. That just does not wash, with all due respect.
Ms. Arnold: It is all based on assumptions. Whenever you are calculating certain current service costs, you have to make certain assumptions. That was one of the assumptions made by the Chief Actuary.
Senator Mitchell: The fact is that it will be at least 10 per cent less because they are being penalized in the new system, which they were not before. That is the least, that are they are not now. There has to be a cost-saving, and it is not being passed along. Certainly the cost-saving, given the CPP, is not being passed along either.
My next question is the following: Let us take a senator — I will use a senator as an example because I have done those figures — who at 50 starts paying $32,298 a year for 25 years to 75 so that they can max. That comes to $807,000 that they put in. If you apply the 5.2 per cent that that is being used as a valuation of the long term by the Chief Actuary, the interest earnings will be about $1.5 million over that period of time. That senator will have paid in in excess of $2.3 million and they can start drawing $100,000, but not even $100,000. They can start drawing $95,000, but I will say 100 for round figures. They can draw $95,000, $100,000, for the rest of their life, without even attributing any earnings on that $2.3 million during the time that that is being paid out — no earnings at all, just the 2.4 straight up. They have to live to be 99 years old just to recover their own money. If that is the case, I do not see the government putting up very much money at all. I do not think this idea that the government is paying 50 per cent is true.
Second, I cannot even opt out. This senator cannot even opt out. They have almost zero chance — in fact, they have zero chance of actually getting back all of their value, all the money they have put in and earned, because they will not live to 99 and even if they did, there is still interest of those earnings, on that $2.4 million, over that period of time. They get nothing out of it.
How is it actuarially possible to think that that senator has to pay — and the same will be true of an MP — that kind of money, $33,000 a year, $32,000 a year, for all that period of time, and that that is a reasonable assessment of the costs when they can never get it back? What is that? Who did this? Who is the actuary?
The Chair: We are hoping to have the actuary in tomorrow or Monday. We have asked many times.
Senator Mitchell: Do you have an opinion of that? Have you thought of that?
Ms. Gowing: I think this is a question best left to the Chief Actuary.
Senator Mitchell: The government makes the case that private sector pensions, remuneration, and package and benefits are such that this is unreasonable. I am not saying there should not be some changes to the pension; it is a relatively valuable pension. Are you aware of any studies they did to make a comparison? If so, are you aware of what level of echelon in the business sector they compared it to? I would think that our MPs should be considered to be very high executives. They are running a big corporation. They are on the ultimate board of directors. They are running a $300-billion corporation. They are not just another employee. I am not putting down any employee. I am saying these are pretty significant jobs, pretty significant people.
Let us take a senior VP in a senior corporation in Canada. Let us consider, one, their pay, and, two, their compensation. Many of them will have very lucrative pension packages that are defined contribution; maybe not this lucrative, but probably. You go into a senior VP of the CIBC; they will be very good. They will also get shares. They will probably get stock options. They will get bonuses. They will get certain kinds of retirement bonuses if they last, and so on.
It is not a straight comparison at all. If it is, could you tell me, are there any studies that you did, who did them, and could we see them, that compare the private sector to these pensions that are supposed to be so unreasonable?
Ms. Arnold: The short answer is, not recently.
Senator Mitchell: Great. Thank you.
Ms. Arnold: The government does not necessarily compare itself to private sector pension plans because a large number of them are not defined benefit plans, with guaranteed payouts and guaranteed indexing —
Senator Mitchell: Very senior ones are.
Ms. Arnold: — and so on and so forth. I guess it is the difference between who is paying for these pensions. In the case of elected officials and officials of the government, the taxpayers are paying. In the case of CIBC, I guess it is the people who use the bank.
Senator Mitchell: The people who provide the services.
My next question is the question of the pool. There is no pool. Just to make a debating point, when the government says it is saving money, it is not, because they have not been putting money in.
I have a couple of questions. First, knowing what the return rate is would be very relevant. It would not be some nominal, notational thing. It would be very relevant to the ultimate value and the ability of a plan to pay out and how much it could pay out and how much we have to pay in, the cost to buy it, if we had a real rate of return. There has to be some relationship between the 5.2 that they are talking about and the valuing of this fund. It is interesting to note that 5.2 does not seem to be particularly reasonable.
The CPP last year did 6.6; the year before it did 11.1; the year before that it did 14.9 per cent return, in three not particularly good years in the market. In the last ten years it has averaged 5.9 per cent.
Three questions: How prudent is it not to have a pool of funds that are actually put aside and managed? A subset or corollary of that is this is a Treasury Board issue. That is unfunded liability. That is really debt that the government is hiding from the public of Canada. They should be putting money into that and it should be apparent.
Second, why is it that the rate is fixed at 5.2 and not at least at 5.9 and not perhaps even higher? The government is telling us the economy will do really well. CPP did 14.6, 11.6, and now all of a sudden we will be doing 4 and maybe 5.2. I am just saying.
The return issue is really relevant to me and I would just like to get your impression of that.
Ms. Gowing: The rates you are quoting from the CPP are annual rates of return. The 5.2 is a long-term borrowing rate, the 20-year bond rate. That is the big difference there.
With respect to what rate is chosen to value the liabilities, that is a question that the Chief Actuary would have to address.
Senator Mitchell: I will ask him.
The interesting thing also is that there will be a take-home pay cut for MPs of $1,400 a month, which is 20 per cent. It is a take-home pay cut of 20 per cent. Okay. Just so people know, it will be about $5,800 a month that they will have to pay their mortgages and feed their family, et cetera.
Have you calculated what the actual take-home pay cut will be to various levels of the military? They will be paying more. What are they paying now? They are not actually going to 50 per cent. Great. What percentage are they paying now? What percentage are they going to and how much will that mean to a corporal earning — I do not know, if they earn $60,000 a year, $5,000 a month, $4,000 a month after taxes and benefits, perhaps? How much will they be cut?
The Chair: Senator Mitchell, we are not dealing with that particular issue at this time. I allowed that question thinking there may be some comparative value.
Senator Mitchell: How does it compare to the 20 per cent cut?
The Chair: If you can give a quick answer, that is fine. Otherwise, I am sure you will be back.
[Translation]
Senator Bellemare: I have a question concerning the group used to formulate the hypotheses. Do the senators and MPs together determine the contributions, or are they considered separately?
In other words, is the fact that senators work till they are 75 taken into account in determining contributions, or is that determined according to the average age of retirement for all parliamentarians?
[English]
Ms. Arnold: All of the members are together. I think the average age of people leaving Parliament is not separated out. Poor Jean-Claude Ménard, the Chief Actuary, will probably have a lot of questions, because he can probably shed more light on that for you, Senator Bellemare.
Senator De Bané: Am I correct to say that for deputy ministers appointed by order-in-council, part of their remuneration is a special provision related to their number of years as deputy, which are counted for their pension?
Ms. Arnold: Yes.
Senator De Bané: Would you please explain the difference in that special benefit given to deputy ministers?
Ms. Arnold: Deputy ministers are covered by the public service superannuation plan. They have the same pension provisions apply to them as apply to my colleagues and my other colleagues in the public service.
However, if one is a deputy minister in a quite tightly controlled group of deputies of the departments, essentially — Privy Council Office controls this — a deputy would earn an additional 2 per cent accrual for each year as a deputy, with a maximum of 10 years. There is an additional 20 per cent that is possibly payable to a deputy if they have spent 10 years as a deputy. That is not in the statute. That is a Treasury Board decision that was made in 1988.
Senator De Bané: This is a very special, exceptional benefit to the pension of deputy ministers. Do you not think that members of Parliament, in view of the very unique position they have, particularly members of the House of Commons, is most uncertain? There is a turnover of over 30 per cent every four years? Should they be considered as having that privilege? This is one point. Do you have anything to say?
Ms. Arnold: No, I am sorry. I do not have anything to say about that.
Senator De Bané: I will be retiring this year. Because I have contributed to the CPP since its inception, I have been receiving, every month, the maximum allowed under CPP.
In a few months I will retire. I will receive whatever pension I am allowed to receive and I will continue receiving the CPP. Why, for my colleagues who will be serving in 2018, 2020, will we reduce an amount because one will impact on their pension? It has never impacted my salary. It will not impact when I receive a pension in a few months. What is the rationale for impacting those who will retire after 2016-17? Is there a rationale?
Ms. Gowing: It was not our decision to put that into the legislation. It was a decision of the government.
The Chair: It was a policy decision.
Ms. Gowing: Yes, a policy decision.
Senator De Bané: Perhaps someone can explain why it may be. I receive my salary today and on another day I receive a cheque for CPP. In a few months I will retire. I will receive whatever pension I am entitled to and I will receive the other cheque. CPP is directly related to contributions made irrespective of position or occupation. It is related to amount of contribution and years of contribution.
Now it will impact on the pensions of members of Parliament. One is related to contribution and the other is something else.
Senator Mitchell: The fact is that senators earn about 25 per cent less than MPs. We pay the same proportion of our pay into our pension as they pay into theirs. They contribute a higher amount, but they will get a higher pension. It is all proportional, so everything is equal to that extent. However, the demands of senators' pension payouts will be far less than the demands of MPs' pension payouts. MPs tend to retire sooner. They can take their pensions at age 55 or 65. Most of us will not take ours until age 75. As Senator Marshall pointed out, on average men live until age 79, so we collect our pensions for four years on average, whereas the average MP may collect it for 24 years. Therefore, why is it proportional? Our pensions simply cannot cost as much as MPs' pensions. The payout cannot be as significant as the MP payout because we do not draw it as long, yet we are paying the same proportion.
Why is it calculated that way? That makes me uneasy about all this pension stuff. If I were a public servant, I would be really uneasy about it as well.
Ms. Arnold: I am not certain, but I believe that on average senators have more service than members of the House of Commons.
Senator Mitchell: They pay for it proportionately. That all evens out.
The Chair: Has there been any discussion about separating the Senate from the House of Commons?
Ms. Arnold: Not to my knowledge. That does not mean it is not occurring somewhere.
The Chair: If anyone would know about it, we would expect that it would be you.
Thank you very much for being here. You can see that there is some unease about certain things, and it is basically because we do not fully understand this. The more discussion we have like this, the more we will understand it. Thank you.
(The committee adjourned.)