Order Fixing the day after the day on which this Order is made as the day on which Division 19 of Part 6 of the Act Comes into Force: SI/2018-114

Canada Gazette, Part II, Volume 152, Number 26

Registration

SI/2018-114 December 26, 2018

BUDGET IMPLEMENTATION ACT, 2018, NO. 1

Order Fixing the day after the day on which this Order is made as the day on which Division 19 of Part 6 of the Act Comes into Force

P.C. 2018-1577 December 14, 2018

Whereas subsection 402(2) of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, provides that Division 19 of Part 6 of that Act, other than subsections 361(1) and (2), sections 365 and 371 and subsections 372(3), (5) and (6), 392(1), 399(2) and 401(3), comes into force, in accordance with subsection 114(4) ^{footnote a} of the Canada Pension Plan ^{footnote b}, on a day to be fixed by order of the Governor in Council;

Whereas subsection 114(4)^{footnote a} of the Canada Pension Plan ^{footnote b} provides that where any enactment of Parliament contains any provision that alters, or the effect of which is to alter, either directly or indirectly and either immediately or in the future, any of the matters referred to in that subsection, the provision shall come into force only on a day to be fixed by order of the Governor in Council, which order may not be made and shall not in any case have any force or effect unless the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to the enactment;

Whereas Division 19 of Part 6 of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, contains provisions that alter, or have the effect of altering, either directly or indirectly and either immediately or in the future, one or more of the matters referred to in paragraphs 114(4)(a) to (e)^{footnote a} of the Canada Pension Plan ^{footnote b};

And whereas the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all of the included provinces, has signified the consent of that province to the enactment;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to subsection 402(2) of the Budget Implementation Act, 2018, No. 1, chapter 12 of the Statutes of Canada, 2018, and subsection 114(4)^{footnote a} of the Canada Pension Plan ^{footnote b}, fixes the day after the day on which this Order is made as the day on which Division 19 of Part 6 of the Budget Implementation Act, 2018, No. 1, other than subsections 361(1) and (2), sections 365 and 371 and subsections 372(3), (5) and (6), 392(1), 399(2) and 401(3), comes into force.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

Pursuant to subsection 402(2) of the Budget Implementation Act, 2018, No. 1 (the Act), this Order brings Division 19 of Part 6 of that Act into force on the day after the day on which this Order is made.

Objectives

• To fix the coming into force date of legislative amendments made to the Canada Pension Plan (CPP) through the Act.
• To ensure that the agreement in principle reached by Canada’s Ministers of Finance to conclude the 2016–2018 Triennial Review of the CPP, which has been legislated thorough the Act, is implemented.

Background

As joint stewards of the CPP, the federal and provincial Ministers of Finance review the CPP every three years to ensure it continues to respond to the needs of retirees, workers and employers.

On December 11, 2017, and as part of the 2016–2018 Triennial Review, Canada’s Ministers of Finance agreed in principle to move forward with changes to CPP benefits, as well as regulations to ensure the sustainability of the enhanced portion of the CPP. Ministers also agreed to make best efforts to have these changes take effect on January 1, 2019. The Act, which received royal assent on June 21, 2018, amends the Canada Pension Plan in a manner consistent with the agreement reached by Canada’s Ministers of Finance.

Division 19 of Part 6 of the Act amends the Canada Pension Plan to

• (a) eliminate age-based restrictions on the survivor’s pension;
• (b) fix the amount of the death benefit at $2,500;
• (c) provide an additional benefit to disabled retirement pension beneficiaries under the age of 65;
• (d) protect retirement and survivor’s pension amounts under the CPP enhancement for individuals who are disabled (i.e. disability “drop-in” for the CPP enhancement); and
• (e) protect benefit amounts under the CPP enhancement for parents with lower earnings during child-rearing years (i.e. child-rearing “drop-in” for the CPP enhancement).

Division 19 of Part 6 of the Act also makes amendments to maintain portability between the CPP and the enhanced Quebec Pension Plan, as well as amendments to authorize the making of regulations in support of the sustainability of the CPP enhancement. These changes will not require increases to legislated contribution rates. ^{footnote 1}

Under the federal legislation governing the CPP, an enactment that has the effect of altering benefits, contributions, management and operation of the CPP, and/or the Canada Pension Plan Investment Board Act, requires that seven provinces representing two thirds of the population provide formal consent through the issuance of Orders in Council. Given that the changes outlined in Division 19 of Part 6 of the Act ^{footnote 2} meet these criteria, formal provincial consent is required. The Act also requires that a federal Order in Council be issued to bring the legislation into force.

Implications

The legislated changes being brought into force through this Order represent a progressive package of reforms that will unambiguously raise benefits without raising contribution rates.

As required by legislation, the Chief Actuary of Canada published a report assessing the sustainability of the Plan in light of the changes contained in the Act. The 29th CPP Actuarial Report, tabled in Parliament on May 1, 2018, confirmed that both portions of the Plan (i.e. the base CPP and the CPP enhancement) are sustainable at their current legislative contribution rates over the long term.

Moreover, the Actuarial Report also shows that the legislative changes to the CPP will result in greater financial support for parents, persons with disabilities, young survivors, individuals who become disabled later in life, and families of low-income workers. In the short-term (i.e. in 2019), the Actuarial Report shows that

• 40 000 beneficiaries are projected to receive higher benefits as a result of the removal of age restrictions on survivor pensions;
• about 29 000 beneficiaries of the death benefit will receive increased benefits; and
• 3 000 disabled retirement pensioners are expected to receive the new post-retirement disability benefit.

Over the long-term (i.e. in 2050), the Actuarial Report shows that

• 500 000 individuals are expected to benefit from a disability drop-in, increasing their retirement pensions;
• 170 000 new retirement pension recipients are expected to have their benefits increased because of the new child-rearing drop-in; and
• together, the drop-ins are projected to increase the number of retirement pensions paid by $627 million.

Consultations

Pursuant to subsection 114(4) of the Canada Pension Plan, the legislative amendments in Division 19 of Part 6 of the Act require the formal consent of at least two thirds of provinces, representing at least two thirds of the population, in order to come into force. The necessary formal consent from provinces has been obtained.

Departmental contact

Martine Lajoie
Senior Director
Income Security Section
Federal-Provincial Relations Division
Department of Finance Canada