Fire fighting is a dangerous and physically demanding occupation. In the course of their duties, fire fighters are required to perform extremely strenuous tasks, enter confined spaces in burning structures, endure exposure to burning toxic chemicals and suffer exposure to communicable diseases. More recently, there is growing awareness and recognition that fire fighters suffer an increased risk of certain cancers as a direct result of their occupation.
Because fire fighting is a physically demanding and dangerous job, early retirement for fire fighters has long been accepted as being in the best interests of fire fighters and the public they serve. Accordingly, Canada’s Income Tax Act regulations identify fire fighting as one of six Public Safety Occupations who are permitted to retire early, at age 55.
A fire fighter who has spent a career in the line of danger on behalf of the public is deserving of an equitable pension in their retirement. But in a typical scenario, a fire fighter retiring at age 55 does not currently have the ability to make CPP contributions from age 55 to 60, even though this five-year period is within the definition of their contributory period.
The CPP “drop-out” provision that allows a worker to exclude their five years of lowest earnings from their CPP calculations applies equally to all workers and does not help fire fighters catch up to other workers in terms of CPP benefits. And without any other mechanism to make up for lost retirement income, a fire fighter retiring early at age 55 will typically have a retirement income of 60 per cent of their pre-retirement earnings, which is well below the benchmark of 70 per cent for working Canadians.
In response to this problem, the federal government in December, 2003, enacted a regulatory change under the Income tax Act regulations specifying that fire fighters can benefit from an increased annual pension accrual rate of 2.33 per cent for each year of credited service, a welcome move that stands to enable the majority of Canada’s professional fire fighters to fight for a higher accrual rate at the provincial and local levels.
Fire fighters whose pension plans are not integrated with the CPP and are not assisted by the accrual rate regulation could achieve pension equity through direct changes to the CPP itself; specifically, through amendments that would enable them to receive reduced CPP benefits at age 55 and unreduced benefits at age 60. Typically, this will help them achieve the 70 per cent pre-retirement income benchmark.
In the past, the need to amend the Canada Pension Plan for fire fighters has been formally recognized through the introduction of private members’ bills and motions in the House of Commons. Examples from the 39th Session of Parliament are Bill C-306, introduced by Conservative MP Jeff Watson (Essex, Ont.) and Motion M-25, which was introduced by NDP MP Peter Stoffer (Sackville-Eastern Shore, N.S.) M-25 stated:
M-25 - That in the opinion of the House, the government should consider amending the Canada Pension Plan to allow for early pension entitlement for police officers and fire fighters.
The IAFF supports the reintroduction of M-25, or the introduction of another bill or motion that addresses this issue, as effective ways to advance the issue of CPP reform for professional fire fighters.
The IAFF agrees that it is fair to consider the question of cost with this issue as it is with any legislative demand. There is no question that increasing fire fighters’ access to CPP benefits would have a financial impact on the CPP, the approximate total of which would be a matter for actuarial investigation by the federal government.
Regarding the sustainability of the CPP, David Denison, CEO of the Canada Pension Plan Investment Board, stated in January, 2009 that he is confident in the long-term health of the plan despite market turmoil which impacted the CPP and other pension plan funds beginning in late 2008. The CPP’s annual payments to beneficiaries are fully funded by workers’ contributions, and in addition the CPP fund in late 2008 had $117.4 billion in assets above and beyond its annual liabilities.
It is also important to note that the issue of pension equity for professional fire fighters is a matter of fairness and the cost impact on the CPP should not be the determining factor in this case.
The IAFF supports any legislative or regulatory change that helps all professional fire fighters achieve pension equity with other working Canadians, including the enactment of legislation that would allow fire fighters earlier access to CPP benefits.
It is now specified in the Income Tax Act regulations that fire fighters whose pension plans are integrated with the Canada Pension Plan can benefit from an increased annual pension accrual rate of 2.33 per cent. This stands to benefit professional fire fighters whose pension plans are integrated with the CPP.
But the federal government can ensure that all of Canada’s professional fire fighters have the ability to benefit from an equitable pension with changes to the Canada Pension Plan (CPP) that would allow fire fighters to have access to reduced CPP benefits at age 55 and unreduced CPP benefits at age 60, five years earlier than the general public. Legislative initiatives, such as Bill C-306 and Motion M-25 from the 39th Session of Parliament, were a welcome step toward enabling all of Canada’s professional fire fighters to benefit from an equitable pension in their retirement and the IAFF supports their reintroduction.
For more information about this issue or any other issue affecting Canada’s professional fire fighters, visit www.iaff.org/canada or contact the IAFF Canadian Office in Ottawa at (613) 567-8988. The International Association of Fire Fighters represents 293,000 professional fire fighters in North America, including more than 20,500 in Canada. The IAFF is affiliated with the AFL-CIO and the Canadian Labour Congress.