Bill C-25 (Historical)

Pooled Registered Pension Plans Act

An Act relating to pooled registered pension plans and making related amendments to other Acts

This enactment provides a legal framework for the establishment and administration of pooled registered pension plans that will be accessible to employees and self-employed persons and that will pool the funds in members’ accounts to achieve lower costs in relation to investment management and plan administration.

Second Reading

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I have been listening to the Parliamentary Secretary to the Minister of Transport here and in my office.

My colleague is absolutely right. We do not understand why the NDP does not understand that pensions, including the CPP, are funded by investments in the marketplace. In fact there is a board that looks after the public service retirement plan and invests in the marketplace.

If we hurt businesses trying to do well in the marketplace by adding to their tax burden, they will be less profitable, less able to contribute, and it will hurt pensioners.

I do not know why those members are afraid to understand that the marketplace will help create value in pensions, which will eventually be returned to those who collect those pensions.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Mr. Speaker, there is one thing I do not understand about this plan. If a company has excess resources to offer its employees via a pension plan to which it would contribute, why would it not just call in a company like London Life and have it create a group plan?

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

That is what this does.

[Ted Menzies, Conservative, Macleod, AB]

At 3%.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

It can already be done, Mr. Speaker. Therefore, my second question is about the following.

If an individual has some money to invest for retirement, he or she can go to the bank and buy a mutual fund and the risk in that mutual fund will be spread out over thousands of people in the market. The individual can choose a very low risk mutual fund or a GIC.

I just do not understand why this proposal is so special.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, the plan is special for one particular reason, which those members seem to miss. If a business belongs to a pooled registered plan, employees are required to opt out if they do not want to be part of the plan. I do not want to use the word “force“, but it requires them to participate. An employee has to opt out.

First, individuals who have not been thinking about their retirement may not go to a bank and invest in an RRSP. Second, the RRSP system is very expensive. Canada has one of the highest cost RRSP systems of any nation in the world. However, with a large pooled system, the costs can be lowered, which will add to the pension amounts people will be able to collect after they retire. That is why having a pooled system is better than individuals doing it on their own.

[The Acting Speaker, Conservative, Bruce Stanton]

Before I recognize the hon. member for Vancouver Centre for resuming debate, I will let her know that I will need to interrupt her speech at about 2 o'clock for the commencement of members' statements.

Resuming debate. The hon. member for Vancouver Centre.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, I am really glad to stand in the House and speak about Bill C-25 and its pooled pension plan. I know everyone has had various emotional and other responses to it, but first and foremost, I have to be cynical. I suggest that the government is playing games with Canadians' financial security when they retire.

It is playing games because we know that its own consultant, who has been working with the OECD and the World Bank on pensions, has said very clearly that there is no crisis with the OAS at the moment, that in fact we do not need to raise the retirement age at the moment and that we are one of a few OECD countries with the lowest investment in public pensions. Accordingly, there is room for us to look at how we would invest in a public vehicle to help Canadians who cannot afford to retire.

A game is going on here. In the last election we know that the Prime Minister promised the government would not cut transfers to health, education and to individuals. However, it is obvious what a difference a few months and a majority government will make to promises made and promises broken. Slashing health transfers, attacking old age security and raising the retirement age to 67, I can only name as a few of those broken pre-election promises.

I listened yesterday to members on the other side talking about how we must respect the provinces, that we must listen to the provinces and not tell them what to do. I suggest that perhaps the government should heed its own advice to us when the provinces ask it to hold a premiers' conference on health and it does not listen to them. When the provinces tell the government it cannot unilaterally decide without consultation to cut transfers, the government is not listening to them. It is the same when the government forces the provinces to pay for the cost of its omnibus crime bill as well. One cannot speak out of both sides of one's mouth, but the government manages to do it quite well.

When government first announced it was looking at Canadians' retirement security in January 2009, it agreed it would look at expanding the public vehicle, the Canada pension plan, as the way to go, and that it would seek agreement from the provinces. That was not impossible. In the mid-1990s, when the Liberal government looked at the CPP and all provinces were getting very worried about retirement pensions, the Liberal government talked to the provinces. We built trust and listened and looked at securing the CPP for 75 years. The CPP was secured for 75 years, and that was done with the provinces. It is a very secure vehicle that we can now look at as we try to help Canadians to retire with some dignity and some comfort, instead of looking at a private pension scheme as the first tool in the toolbox.

[The Acting Speaker, Conservative, Bruce Stanton]

When we next resume debate on this matter, the member for Vancouver Centre will have six and a half minutes remaining for her speech and five minutes for questions and comments.

The House resumed consideration of the motion that Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts, be read the second time and referred to a committee.

Pooled Registered Pension Plans Act

[The Speaker, Conservative, Andrew Scheer]

The hon. member for Vancouver Centre has six and a half minutes left to conclude her remarks.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, as I was saying earlier, if the government were really interested in securing retirement income and pensions for its citizens, it would do what the Liberal government did when we looked at the Canada pension plan and secured it for 75 years. We did not send it off to some private sector to look after, but decided it was really important. Because that Canada pension plan is secure now, I would want to know why the government would not look at expanding the Canada pension plan to meet the needs of seniors for their retirement. It could look, for instance, at people who are in the non-paid work force and expand it to them, so that instead of their having to depend on OAS only, they would get a CPP pension down the road. This is the kind of creative thinking that the Conservative government does not seem to care about.

It is easy to dump on seniors. It is easy to cut whatever they are hoping for in the next few years, and there are going to be a lot of people in this House who are going to suffer the consequences of this. If the government were really interested in looking at changes that would benefit seniors and, at the same time, in looking for sustainability in the system, what it would do is to look at the evidence. The CPP is a good example and expanding it might be a good way to go. Let us look at the evidence of Australia, which has, for a decade, this same kind of pooled pension with private sector and insurance and financial institutions running it. After 10 years the Australians discovered that the financial institutions were the only ones that benefited from it.

So did the government listen to the evidence? Does it look at evidence when it is talking about the way to help Canadians? Does it listen to experts? We have the economist Don Drummond saying that if we are going to increase the retirement age by two years, it is going to have a severe domino effect on the workplace across all economic sectors and that it should take about 20 years to phase in. However, the Conservative government does not listen to the experts or to evidence. It is manufacturing a crisis when the OECD and the World Bank has said that there is none.

Here is what the government might be able to do to help Canadians save for retirement. Instead of making the already-rich financial and insurance sectors richer, it might want to look at a non-profit way of doing this. We have been told by the OECD that here in Canada we are one of the lowest contributors to a public pension plan. So here is a way that the government could contribute to the public pension plan if it does not like the CPP idea and if it wanted to look at a non-profit way of doing this. It could do it and it would help a lot of people who are trying to put aside money for retirement.

The argument is that people will be asked to voluntarily save in a private sector plan when they are the same people who do not have RRSPs because they do not have the money to put into them. So where would those savings come from? This is a non-starter. It is a no-brainer. It does not make any logical sense at all.

All I have to think is that it is part of the game. The government says it wants to double the rate at which it pays off its deficit, so it is doing it on the backs of the people who it thinks are the least likely to give it a hard time. The government is doing it on the backs of people like veterans, as we have heard earlier, because we know that the veterans who are suffering with post-traumatic stress disorder are not getting any help from the government. We know that the veterans are having a huge problem with being given a lump sum pension, not knowing how long they will live and how long it will last them, which is putting stress on the people who fought for us. We also look at the fact that the government is cutting health care funding without considering whether that is the appropriate thing to do. Is that an investment in productivity or are jails an investment in productivity, unless, of course, building jails is the government's way of looking at a housing and mental health strategy.

However, the problem here is that good fiscal management, if they are talking about deficit reduction, should be looked at from an evidence base and should not be done on the backs of the most vulnerable. One should look at where one cuts and where one invests. An investment means putting money into programs that will reap, down the road, good jobs and economic prosperity to be shared by everyone. This does not do that. We have seen the government make bad choices with its fiscal management of this country, and so this is something we want to talk about.

When the government says there is a crisis, I would point out that OAS costs 2.4% of GDP today. When the number of baby boomers reaches its maximum in 2031, OAS will cost 3.2% of GDP, and that cost will then begin to drop. So tell me where this crisis is? When is it going to occur? It does not seem that it will occur for a long time.

Therefore, as the government looks at ways to become fiscally sensible and prudent, it should look at evidence and try very hard not to cut the things that will in fact assist people and their quality of life. If pensioners do not have strong retirement incomes, they will need more health care. This does not make sense.

It is about logic. It is about making good financial decisions. However, the government shows that it is incapable of doing any of those things.

[Susan Truppe, Conservative, Parliamentary Secretary for Status of Women]

Mr. Speaker, it is my pleasure to rise in the House today to speak about our government's plan to address the gaps in our nation's retirement income system.

Our Conservative government is squarely focused on what matters to Canadians: jobs and economic growth. As opposed to the opposition's empty rhetoric and high tax plans that would result in massive job losses in my city and across our country, our government has been taking real action to create and sustain jobs and strengthen London's economy.

In budget 2011, our government provided a new hiring credit for small businesses, as well as a one-time $1,000 credit against their increased EI premiums paid in 2011 over those paid in 2010, an investment that will directly benefit Londoners.

What did the members opposite do? They turned their backs on small businesses and their employees and voted no to this and other investments that directly benefit my constituents.

Last week, I was pleased to be joined in my riding by the hon. member for Beauce who, of course, is the Minister of State (Small Business and Tourism). We visited innovative small businesses in London, such as Voices.com, Big Viking Games and EK3. We also sat down with small business owners and London's mayor to discuss issues that are important to small businesses in our city.

We heard them loud and clear. Eight days ago, our Conservative government announced an investment of $5 million in training programs for the manufacturing sector in southwestern Ontario. This investment will directly benefit Londoners. The next day, I was pleased to announce over $1.2 million in research grants for Western University to help drive job creation in our city. As a side note, I would like to offer congratulations to Western University on its new branding. Again, that is an investment that will directly benefit Londoners.

There is more. The following day, along my colleague, the member for London West, I was pleased to announce over $497,000 in funding for job skills training programs at Youth Opportunities Unlimited in my riding, an investment that will directly benefit London's youth.

That is over $6 million of federal investments in London in just one week.

Our Conservative government has continued to build a strong foundation for retired Canadians. Since 2006, our Conservative government has twice increased the age credit amount, by $1,000 in both 2006 and 2009; doubled the maximum amount of income eligible for the pension income credit to $2,000; introduced pension income splitting; and increased the age limit for maturing pensions and registered retirement savings plans to 71, from 69 years of age.

Low income seniors in my riding of London North Centre are directly benefiting from budget 2011, which contained a new guaranteed income supplement top-up benefit for the most vulnerable seniors. Seniors with little or no income other than old age security and the GIS will receive additional annual benefits of up to $600 for single seniors and $840 for couples.

Today, we are discussing an initiative that would build a strong foundation for tomorrow's retired Canadians who do not have access to a workplace pension plan. Currently, many Canadians can only access a workplace pension plan if their employers offer one. Many employers do not want the legal or administrative burden of offering a pension plan. As a result, over 60% of Canadians do not have a workplace pension.

Bill C-25, the pooled registered pension plans act, would afford these Canadians the opportunity to make use of a new low-cost pension plan. PRPPs would be an innovative new pension plan, designed to address the lack of low-cost, large-scale retirement savings options for many Canadians.

Canada's aging population and the global financial crisis highlighted the issue of retirement income security. In this context, a joint federal-provincial working group was established in May 2009 to undertake an in-depth examination of retirement income adequacy in Canada. The working group concluded that, overall, the Canadian retirement income system was performing well and providing Canadians with an adequate standard of living upon retirement. However, some Canadian households, especially modest and middle income households, are at risk of not saving enough for retirement.

Ministers tasked senior officials to work collaboratively to analyze the wide range of ideas put forward to effectively address the issues identified in the research report.

Some Canadians may be failing to take advantage of the savings opportunities offered to them through individual structures, like RRSPs. For example, on average, each Canadian has over $18,000 in unused RRSP room.

The design features of the PRPP would remove a lot of traditional barriers that might have kept some employers in the past from offering pensions to their employees. The design of these plans would also be straightforward to allow for simple enrolment and management. A third party PRPP administrator would take on most of the responsibilities that employers bear in existing pension plans, including the administrative and legal duties associated with administering a plan.

By pooling savings, PRPPs would offer Canadians greater purchasing power. Basically, Canadians would be able to buy in bulk. Achieving lower prices than would otherwise be available means they would get greater returns on their savings and more money would be left in their pockets when they retire.

PRPPs are also intended to be largely harmonized from province to province, which will also lower administrative costs. PRPPs would facilitate low costs through their scale and design. These plans would result in large pooled funds that would enable plan members to benefit from the lower investment management costs associated with such funds.

Earlier today I saw the NDP member for London—Fanshawe stand in the House and speak against yet another federal government investment that would directly benefit Londoners. Instead of supporting her own constituents, the member opposite spoke in favour of a massive and reckless NDP pension taxation plan that would only hurt our city's businesses and result in massive job losses across the board. Perhaps if she spoke to London small business owners, as opposed to offering empty rhetoric, she would realize the direct benefits this bill would provide their city.

I am pleased to say that, unlike the NDP member for London—Fanshaw, I consulted with small businesses in my riding and across the city to obtain their feedback on this important bill. Just what did they have to say?

James McInnnes, CEO of Cyborg Trading Systems, a remarkable small business located in my riding of London North Centre, said: “By pooling resources with other small businesses across Canada, this initiative will help Canadian small businesses support their employees with securing a solid retirement plan.”

Paul Johnson, CEO of Quantum5X Systems, another innovative London small business, added: “The PRPP will offer another way to attract and reward employees. With time and critical mass, the PRPP funds under management should be significant and management expense ratios should be relatively low. These should become attractive options for retirement planning for many people who don't currently have access to a pension plan.”

Peter White, President of the London Economic Development Corporation, said: “The LEDC sees the advent of the PRPP as being an excellent step to ensure that businesses and employees without the benefit of a pension plan could utilize an excellent resource such as the PRPP. With the majority of businesses and employees in London not having a defined pension program, the PRPP would be a great tool to provide a cost effective plan for employees to ensure they are able to provide additional income for their retirement. The ability to use the PRPP plan would provide a well managed, secure program that would encourage employees to save more for their retirement. This PRPP is a great tool for companies.”

Bill C-25 is an investment in small businesses and their employees, an investment in tomorrow's seniors, an investment in job creation, and an investment in economic growth. Most importantly, Bill C-25 is yet another federal investment that would directly benefit Londoners.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, for the past 25 years, the OECD data have clearly demonstrated that costs in the field of health care are far lower when the public sector is responsible for service delivery. The same logic applies to the pension benefits our employees receive. Moreover, Canada's public pension systems are well funded, safe and reliable, according to all the experts.

Can my colleague explain how gambling with Canadians’ money in much higher risk schemes than the ones the government offers will reassure Canadian workers and guarantee them a pension?

[Susan Truppe, Conservative, London North Centre, ON]

Mr. Speaker, we are helping millions of Canadians save for retirement more easily by introducing the pooled registered pension plan. This new, low cost and accessible option would help more Canadians meet their retirement goals. This is especially important for those working for small businesses and the self-employed.

PRPPs would improve the range of retirement savings options for Canadians by providing a new accessible, straightforward and administratively low cost retirement option for employers to offer their employees. It would allow individuals who currently may not participate in a pension plan, such as the self-employed and employees of companies that do not offer a pension plan, to make use of this new type of pension plan. It would enable more people to benefit from the lower investment management costs that result from membership in a large pooled pension. It would allow accumulated benefits to move with the person from job to job. This new pension plan would help all future seniors.