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.

Third Reading

[Merv Tweed, Conservative, Brandon—Souris, MB]

Mr. Speaker, I am pleased to stand and speak to Bill C-25.

I would think that all members of the House would see this as a benefit to all Canadians, particularly, as previously stated, the self-employed, small and medium-sized businesses and organizations that are probably too small to have their own plan but would like to offer another form of investment in the people they employ and an opportunity for people to grow within that company and stay with it based on the fact that they would have a plan at the end of the day that provides for their retirement.

As many are aware, our government understands the importance of a secure and dignified retirement for people who spent their entire lives building a better and more prosperous Canada and for their families themselves. This legislation would take Canada's retirement income system one step further by helping more Canadians realize their retirement goals.

A lot of work was put into developing this proposal. Canada's retirement system is strong but that does not mean it cannot be improved, that we cannot offer enhancements to pick up those individuals outside of the circle and offer them something better and an opportunity to invest for their retirement. This legislation addresses exactly that.

We all have memories of the crisis of 2008 and how it brought out concerns with regard to retirement. We all asked ourselves if our pension would be adequate, if we would be able to retire in the style we choose. I suspect upon reflection many people found they would not be able to. Things changed dramatically after 2008. If people were in the stock market or in RRSPs or in any type of investment, they took a hit. There is no question about it. The proposal we are putting forward would address that.

We did not do this blindly. We did it through co-operation and discussion with provinces and finance ministers across Canada, with people in our communities and, as the previous speaker mentioned, small business people. I was a small business person too. We always looked for opportunities to provide our employees with better security and better programs. Quite often we had to make the decision that we could not afford it.

This would address many of those issues. As I said, we did not do this blindly. We did it with a lot of consultation. We are trying to provide Canadians with an adequate standard of living upon retirement, and that is what everyone wants.

During the consultation period we found out that modest and middle income Canadians risked facing retirement with insufficient savings. Of particular concern was the declining participation in employer-sponsored RPPs. The proportion of working Canadians with such plans declined from 41% in 1991. Canadians are not taking full advantage of other retirement saving tools, like the RRSP.

I have been told that there is $600 billion in unused RRSP room. That is a clear indication that Canadians have priorities, and their families are their priorities. Sometimes we make those decisions and forget about the future. We need to always be aware of that and have that in our view.

With these findings, our government went to work on behalf of Canadians. We consulted, we met with provincial and territorial counterparts and held discussions with many businesses and we came to today's legislation.

In short, PRPPs are a new, innovative, privately administered, low cost and accessible pension option to help Canadians meet their retirement goals.

PRPPs are particularly important and significant for small and medium-sized businesses. It is quite often unaffordable for business owners to provide these types of benefits. The bill would give them that opportunity, because it would enable owners and employees alike to have access to a large-scale, low-cost private pension plan for the first time. We basically would piggyback on larger corporations. We would get a better buy-in and we would get a better return because of the pooled funds.

Professional administrators would be subject to a fiduciary standard of care to ensure that funds were invested in the best interests of the plan. That is obviously a given, but I think it needs to be said.

By pooling pension savings, PRPPs would offer Canadians greater purchasing power. Basically, we would be buying in bulk. We would be getting a bigger, better deal for less money. By achieving lower prices than would otherwise be available to Canadians, it would mean more money left in the pockets of those same Canadians when they retire.

The design of the plan would also be straightforward to allow for simple enrolment and management. People in small and medium-sized businesses, the self-employed, I suspect, and the employees themselves will like the simplified form.

Finally, they are intended to be largely harmonized from province to province, which further lowers administrative costs and makes the transferability a lot easier to deal with.

Overall, these design features would remove any of the traditional barriers that might have kept some employers from offering pension plans to their employees.

It is my belief that this would lead to a greater willingness for small and medium-sized businesses to offer PRPPs. That is crucial. It is crucial because, incredibly, more than 60% of Canadians do not have a workplace pension plan. That is a huge number. When the members opposite look at it and talk to their friends, they will see it would include a lot of the people who support them and work with them in their day-to-day lives, and it is important that we try to include them in the discussion.

With PRPPs, participation would be encouraged by automatic enrolment of employees into a PRPP where an employer offered one. The automatic enrolment would encourage regular savings by making participation the default choice of employees who do not actively make a decision to opt out.

I remember the best advice I ever received as a young person entering the workforce in a family business was from a financial advisor who told me to just take a little bit off my cheque every month as I would never miss it. Then, as I grew older and my needs changed and my income earnings changed, I could increase it. It is the best advice I have ever received and the best advice I have ever given my children or their friends.

Canada's finance ministers decided to proceed with the PRPP framework precisely because it was considered an effective and appropriate way to target the modest and middle-income individuals who may not be saving enough for retirement, particularly those who currently do not have access to an employer-sponsored pension plan. These PRPPs would strike the right balance.

I know that if the NDP members had their way they would double CPP benefits and increase payroll taxes on small and medium-sized businesses, but that is not the way this government operates. At a time when Canada's economic recovery is still fragile, imposing a job-killing tax on the creators of those very jobs would be simply irresponsible.

PRPPs would be an efficiently managed privately administered pension plan that would provide greater choice to employers and individuals and promote pension coverage and retirement saving.

Once the provinces put in place their PRPP legislation, the legislative and regulatory framework would be operational. This would allow administrators to develop and offer plans to Canadians and their employers. Working together with the provinces, I know and I am confident that we can get these important new retirement vehicles up and running for Canadians in a timely manner.

It is important to remember that PRPPs would not just stand by themselves. They would be part of a bigger picture, part of Canada's retirement income system. We must always remember that. This bill is designed to help the many who do not qualify or are unable to have a pension plan within the confines of where they work. I know the Minister of State for Finance has gone to great lengths to listen to Canadians and to hear what they asked for and what they need. I believe this bill responds to their needs in a very positive way.

I encourage all Canadians and all members of Parliament to support this legislation.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, I am delighted to be sharing my time with the member for Brandon—Souris.

Our government understands that hard-working Canadians and seniors want an effective and sustainable retirement income system that will help them achieve their retirement goals. That is why I am pleased to have this opportunity to speak to Bill C-25, an act that would implement the federal framework for pooled registered plans, or PRPPs.

PRPPs would mark a significant step forward in improving Canada's retirement income system by providing a new pension option to Canadians. Currently, 60% of Canadians do not even have access to a workplace pension plan. Most of these Canadians work for small and medium-sized businesses or are self-employed. Clearly, this represents a gap in Canada's retirement income system, a gap that PRPPs would fill.

PRPPs would allow these Canadians to access a pension plan for the very first time. In short, PRPPs would be a broad-based, low-cost, privately administered pension plan option. We may think of it this way: pooling pension savings would spread the cost of administering the pension funds over a large group of people. This would allow plan members to benefit from lower investment management costs, lower than those typically associated with the average mutual fund. Do members know what this would mean? It would mean that more Canadians would have more money left in their pockets for when they retire.

Simply put, the PRPP is the most effective and targeted way to address the gap in Canada's retirement income system. How will it do that, one might ask? PRPPs would address this gap by providing a new, accessible, straightforward and administratively low-cost retirement option for employers to offer to their employees; allowing individuals who currently may not participate in a pension plan, such as the self-employed or employees of companies that do not offer pension plans, to make use of this new option; enabling more people to benefit from lower investment management costs that result from membership in a large pooled pension plan; allowing for the portability of benefits, facilitating an easy transfer between plans; and, finally, ensuring that funds would be invested in the best interests of plan members.

Clearly, PRPPs are what Canada's retirement income system has been waiting for. This is why it is so important that the provinces follow the lead of our government and implement PRPPs as quickly as possible. Doing so would enable Canadians from coast to coast to coast to take advantage of this great new pension option.

Unfortunately, not everyone feels the same way. While our government is trying to implement PRPPs, the NDP would rather take the irresponsible and reckless route. It wants to double CPP. Do people know what that would do? It would result in higher CPP contribution rates for employers, employees and the self-employed. In the case of small and medium-sized business owners, it would act as a payroll tax, and that is a tax on job creators.

Members need not take my word for it. Let us hear what the Canadian Federation of Independent Business had to say. According to its research, “to double CPP benefits would kill 1.2 million person-years of employment in the short term”. Only the NDP would propose something so reckless. That is the difference between our Conservative government and the irresponsible NDP.

While our government is committed to generating economic growth and long-term prosperity, the NDP has no problem jeopardizing Canada's fragile economic recovery by imposing higher taxes on job creators. That, to me, is unbelievable.

It should be clear that doubling the CPP is the wrong decision for Canada and our economy. Unlike the NDP, our government believes that lower taxes help to generate economic growth and create jobs for Canadians.

Let us just look at the facts. Since July 2009, more than 750,000 net new jobs have been created. What is more, Forbes magazine ranks Canada as the best place for businesses to grow and create jobs. When it comes to the economy, there is no doubt why Canadians trust this government. This government gets results. That is why Canadians trust this government to keep Canada's retirement income system strong.

I will take a moment to tell the House just how much our government has done to ensure that Canada's retirement income system will continue to be the envy of the world.

Since 2006, our government has increased the age credit amount by $1,000 in 2006 and by another $1,000 in 2009. Next, we doubled the maximum amount of income eligible for the pension income credit to $2,000. Our government introduced pension income splitting, and we increased the age limit for maturing pensions and registered retirement savings plans, RRSPs, to 71 from 69 years of age.

What is more, budget 2008 introduced the tax-free savings account, which is particularly beneficial to seniors as it helps them to meet their ongoing savings needs on a tax-efficient basis. Our record also includes important improvements to several specific retirement income supports. Budget 2008 increased to $3,500 the amount that can be earned before the GIS is reduced. This means GIS recipients will be able to keep more of their hard-earned money without any reduction in GIS benefits. Budget 2008 also increased flexibility for seniors and older workers with federally regulated pension assets that are held in life income funds.

Budget 2011, the next phase of Canada's economic action plan, announced new measures to improve seniors' financial security and ensure they can benefit from and contribute to the quality of life in their communities. The plan includes a new GIS top-up benefit targeted to the most vulnerable seniors. Since July 1, 2011, seniors with little or no income have been receiving additional annual benefits of up to $600 for single seniors and $840 for couples.

The plan also provides an additional $10 million over two years to enhance the new horizons for seniors program. This additional funding will enable more seniors to participate in social activities, pursue an active life and contribute to their community. It will also provide funding for projects that will increase awareness of elder abuse and promote volunteering, mentoring and improved social participation of seniors.

Canadians just have to look at our record to know that this Conservative government is on their side, and the proposed PRPP is just the latest example. However, members need not take my word for it. The Canadian Chamber of Commerce states:

PRPPs—with simple and straightforward rules and processes—will give many businesses the flexibility and tools they need to help their employees save for retirement.

Greg Thomas, the federal and Ontario director of the Canadian Taxpayers Federation, says:

Canadians will be able to save more for retirement with this new pension plan. People saving for retirement will enjoy lower costs and more flexibility throughout their working lives.

It seems clear to me and to Canadians that PRPPs are the way to go.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Mr. Speaker, I rise today to debate Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

I am trying to bring a little balance to the debate today. I have listened to what the members of the NDP and Conservatives have said. I understand the government has realized that Canadians are worried about their retirement or realized, finally, that something has to be done.

I think it was two years ago that my friend, the Minister of State for Finance, travelled across the country, had consultations and came up with something called a pooled registered pension plan, which is an offshoot of the registered retirement savings plan. Now the government is making a big PR event out of it. Again, I agree with the member for Burlington, that it is an extra tool in the toolbox. That is why we support it. However, that is not the answer to the crisis we are having or the retirement savings and their future that people are worried about.

We have had six years of the Conservative government, with increases in hidden taxes. That has been part of the cause. Canadians have less money in their pockets to put toward retirement. We have had a lot of pressure on Canadians, whether they have lost their jobs or have had to take on other responsibilities. We have seen Canadians of all age groups having less money in their pockets, for various reasons. As I have said, most of this had led to some of the policies of the Conservative government.

Even those who do have savings are worried about retirement. We have seen rates of interest that have been the lowest ever in history. Therefore, even people who have money put away in a savings account are barely getting 1%. A lot of times it has been 0.5% or 0.25%. Canada savings bonds used to pay 10%. They are now paying less than 2% and 3%, if people are lucky because they have been holding on to the bonds for six or seven years. We expect these interest rates to continue to be low.

Canadians have taken risks. They may be retiring in a couple of years and need to get their retirement savings up. How do they do that? Maybe they take a gamble on something, but are they not sure what it will be. Some people have put it in the stock market.

We saw what happened a couple of years ago with the tech bubble where people put tons of money in companies like Nortel, which was supposed to be the most secure company around. It was an offshoot of Bell Canada. Some people got their shares for free, like my parents. They decided to keep them. The stock went up to $100 then $200 a share. They decided to buy some more because it was going to go to $400, trading in multiples based on sales never heard before. That was the way these tech stocks were evaluated. All of a sudden, overnight, stock portfolios of millions and millions of dollars went down to zero. We are still seeing lawyers making money from the Nortel bankruptcy. People who have disability plans and pension plans with Nortel cannot get their money out. They cannot get paid because the lawyers are holding up the distribution. The government is not willing to help these people. There is some money stuck out in some tax haven and the only people making money are the professionals, and people see this.

As recently as the bank crisis a couple of years ago, people thought it was secure to have stocks in the banks. They put their money in the banks thinking it was as secure as ever. Then we saw the bank closures in the states. We were lucky in Canada, but we cannot put all our eggs in one basket, as most personal investment advisers say. They will also advise to diversify. People who took the advice of professional advisers, they would have lost some money a couple of years ago by having their money in bank stocks.

Again, people are worried. People have invested money in resources. People have invested money in the past in metals such as gold. As recently as a few years ago, gold was at a couple of hundred bucks. Now, if one was lucky enough to have invested in gold, it is at $2,000 an ounce practically, but who can forecast those things?

Some people have their money invested in secure investments such as bonds, but countries have gone bankrupt and are unable to pay their bondholders. They are being renegotiated. Who is making the big money? It is the big players. I do not see how individuals who are busy trying to raise a family will make any more money than they can make today.

Again, some people are taking more risks, such as in real estate. We see what is happening in the real estate market across the country if one is fortunate enough to buy a condo. It seems like the condo market is fine. Those who live in a condo may buy another one to rent out to maybe make some money. However, as soon as the condo market collapses, as is predicted, they may have to take some money out of their retirement savings to supplement these real estate deals.

Therefore, I do not see how the government could think that people can easily put some money into a pooled savings plan that is administered by somebody we do not know and all of a sudden, miraculously, their retirement savings will be secure for a 5, 10, 15 or 25-year period.

For years, the Liberal Party has said that we should start with the Canada pension plan. In Quebec, it is the Quebec pension plan. It survived relatively well in comparison to many of the other private pension plans, so we should be working with that.

Elderly Canadians are not the only ones who are beginning to worry. As I have said before, we have young people who are worried about their future. We see Quebeckers who are going to the streets based on the fact that their tuition fees and cost of living are going up. They see a crisis developing in the next while. That all means they know their retirement will be affected because the Conservative government has told them they will not be able to retire until the age of 67.

This is nothing new. We have had crises, whether it be over pensions or other issues. In the 1990s, the Liberal government recognized that the Canada pension plan was not sustainable and action had to be taken. What did we do? We consulted with individuals and stakeholders, not just our friends. We met with the provinces. We looked at how we could secure the CPP in the long term and we did not just issue talking points.

We realized there was a problem, and we did not turn to private institutions to solve it. We negotiated truly, we invoked thought-provoking discussions and, miraculously, we came to an agreement with all of the provinces. It was not self-imposed. It was not dictated to them, as the current government likes to do. We recently saw that with the health accord. The previous Liberal government sat down with all the provinces and discussed the issues and the needs, came to an agreement and signed a 10-year health accord. The Conservative government has said that it does not need to discuss anything with the provinces. It will give them some money and increase it at a certain level. After that, it is their problem, even though it knows that the cost of health care will increase within five to ten years.

Coming back to the bill, the government says that it will secure people's pensions. In actual fact, the only thing we think it will do is make the banks and insurance companies happy by allowing them to offer pooled registered pension plans to employers and the self-employed in federal jurisdictions. It would also provide a framework for provinces to pass similar legislation.

The budget tabled recently in the Quebec National Assembly provides for companies to offer this pooled registered pension plan to their employees, which we have not seen in the other provinces.

I do not believe the province of Ontario passed it in the last budget and there has not been any movement with the other provinces. I am sure somebody on the other side will correct me.

We also think it is great that the administrators of the plans will be regulated. Financial institutions need a special licence from the Superintendent of Financial Institutions, and we have no problem with that.

The only problem is that most individuals already have trouble saving. A lot of them are working in low-paying jobs. Many of them work for small companies, which do not have the time, energy, resources or ability to set up these plans no matter how easy it is. It will be very difficult to see any of these smaller companies implement a registered pension plan. As an accountant by trade, I just do not see it.

A lot of employers would not want to make RRSP contributions, even for employees who want to have them deducted from their pay cheques and put aside. They do not want to take on that responsibility. There would have to be separate accounting, extra cheques would be involved, for example, and administration. They would have to hold the money in an account, ensure there is enough money in that account a month later to make the remittance, and then ensure the amounts are deposited into the correct employees' accounts. I could go on and on. I do not see why we would not use the tool available to us, which would be the CPP or the QPP.

Companies would have the option of rolling into a plan. If it is not made mandatory and companies would have an option, I am not so sure how many companies would take us up on that, unless of course they have a dedicated payroll resource person and they really need to keep these employees and the employees all agree they need to have this plan.

Again, we are not asking the employer to contribute, and we are not asking all the employees of a certain company to opt in. They have the option of opting out. A company may only have 10 or 20 employees. If only 2%, 3%, or less than 50% of them opt in, I do not see why that company would go to the trouble of setting up a pooled registered pension plan.

Also, the troubling part is that this new option is another private registered savings vehicle, which more than likely would help the financial institutions. I think it was a member from the Conservative Party who stated Canadians, on average, have $80,000 of unused RRSP contributions. If there were an urgency because Canadians have totally utilized all their RRSP room, I would understand the purpose of coming up with something like this.

Right now, the only people I am aware of who are using their RRSP to the maximum, again, using my background as an accountant and speaking to my accounting friends and bankers, are people who can afford it. That means it is the higher-income people. I do not see the necessity to start a program just for these people.

The Liberals believe the solution is that we do not need to look any further than working with the Canada pension plan and the QPP to help people save for retirement. The CPP and QPP have proven track records. They have been stable and secure. Even through these economic downturns, they have been quite strong.

We see it in Quebec. The QPP has rebounded in the last two years, with rates of return close to 10%. There was a bit of a crisis about three years ago where it lost tons of money in certain investments in the banking sector. It changed its management. It changed its direction. It made recent statements that it is going to change direction again. It will be looking at making investments in infrastructure and other areas that would require a lot of money that individuals do not have in their RRSPs.

Even if we wanted to take the example of these pooled registered pension plans, there would not be enough money in these pooled plans to be able to diversify risk, as the CPP and the QPP are doing today. Supplementary CPPs could allow those who want to investment more in a secure retirement vehicle to do so.

Again, we are not sure about the fees. I know we are very worried about the fees. Even if these registered pooled pension plans start with low management fees, it would be a matter of time before the banks and insurance companies get a hold of people's accounts and hold them hostage. If the funds do a good job and the return is high, we know what would happen. All of a sudden, the fees will go up. If there is no return, the fees will stay the same. I do not see how we are going to win with this.

Again, we would be adding another level of complexity to people's options for savings, such as deciding what to do their money when they change employers: “Do I keep it in this pooled retirement savings plan? Do I keep it with the bank? Do I move it to an insurance company. What point am I at in my life? Am I going to be retiring in five years, ten years, fifteen years?

The administration of what an individual is to do with the money in that pooled registered pension plan would be a headache for unsophisticated investors, and the areas they would want to invest in would add another level of complexity.

We could look at options for opening it up further. One of the options would be for government to look at options to help those who are in the low-paid workforce. These are people who are moving from job to job, and they are the people who need the most help with their retirement savings.

In making these decisions, we need to look at the evidence. Policy decisions, such as retirement savings plans for Canadians, were not made on a whim but rather based on solid evidence.

Somebody also stated that Australia implemented a similar program to the pooled registered pension plans. After 10 years, it was obvious that the only ones making money were the financial institutions. In Australia, $161 billion of investments were made in pooled pension plans versus $105 billion in fees that were taken out of these plans. It is not dollar for dollar, but 80¢ was charged for every dollar that was put into the pooled pension plan.

A recent study by the Rotman International Journal of Pension Management found that despite the presumed role of competition, the investment performance of the system continued to be restrained, again by high fees and costs. We think this could be averted by using the CPP or QPP as the supplementary retirement investment tool.

As parliamentarians, we should also be concerned by all of this and perhaps look at how we could improve the pooled registered pension plan, or look at other options. The other option is easily the CPP, QPP.

However, we have seen that the Conservatives have already made up their minds. Like many other things, they will not listen to anyone else's opinion, or reason. They will not even look at evidence on a lot of issues. They will blindly follow this approach and put their hands over their ears and march on.

As we have seen today, the Conservatives have moved time allocation so we can no longer debate this issue. The very reason each and every one of us is elected to this House is for debate, but they decided they have heard enough, or they have pretended they have heard, and have imposed time allocation on this particular bill. This is one of many bills on which they have imposed time allocation. In Parliament, they have imposed time allocation over 60 times, and if we include committees, we are almost at the 300-point mark.

It is important to talk about how we got to a point where we suddenly have to rush through the bill. The minister of state consulted on this for about two years, and then all of a sudden there seems to be a rush to get the bill through. There have been concerns about retirement security for some time, while the Canada pension plan, and I repeat, the Canada pension plan has been secure for at least 75 years. It is not just the CPP that has been secure, but also QPP.

Canadians also need to save more for retirement to live comfortably. We all agree with that.

It was in 2009 that the Conservatives announced the consultation on pension reform. Now, all of a sudden, as I said, it has been a rush. In December 2010, the Conservatives announced this program, I will not call it a scheme, but a program.

I will wrap it up. I have a lot more notes that I could go through.

Retirement income for Canadians is important. Pensions all of a sudden have become an issue. It has always been an issue, but as we get older it becomes a greater issue.

The government has created a crisis by changing the age of retirement for being able to collect OAS. I am in favour of the flexibility the OAS will provide, but I am not in favour of changing the age from 65 to 67. One of the first people it would affect would be me. The government will be taking about $12,000 out of my pocket, and I have not even got there yet.

I do not see how Canadians could be happy with that. I do not need the money, but imagine how Canadians my age, who are relying on this money, feel about $12,000 being thrown away overnight like that.

[Kevin Sorenson, Conservative, Crowfoot, AB]

Mr. Speaker, it is an honour to rise in this place and represent the constituents of Crowfoot and speak on their behalf in this House of Commons.

I realize that the introduction to this will not necessarily deal immediately with the pooled registered retirement plan, but over the last couple of days here on Parliament Hill we have had some major announcements about some things that I had never heard about.

Two days ago, the Minister of Health and a couple of other ministers made an announcement about a drug known as “bath salts”, which was a negative part of the drug culture and basic culture around the world, where people, young and old, were using this new drug, and so we banned it. My point is that our government was stepping forward to protect Canadians from something that some of our young people may not have even realized at the time would be such a potent, devastating tragedy just waiting to happen.

Yesterday, we had another announcement about human trafficking where we stepped up and said that we would protect Canadians.

Our government is implementing plans across the country and across a wide scope of areas to protect Canadians. We are implementing plans to create jobs and enable small businesses to provide opportunities for retirement, which is what we are here debating today, because we want Canadians to be secure on our streets, in a job and in retirement. Bill C-25 is part of that plan.

Our Conservative government's efforts to help Canadians save for their retirement do not begin with a pooled registered pension plan. It begins with a vast number of other plans that we want to see stable and secure. We see and have heard that our CPP is stable and strong. In the 75 year projection, CPP will be very strong and it will be there when Canadians need it.

However, not always does one size fit all. Not always can we tell Canadians that only if they wait CPP will take care of them at the end of the day. I think every economist and all individuals who are trying to better their life or pass on some financial instruction to their children would encourage their children to save, not just to go out and get a job and pay into CPP, but that they look at a number of different avenues in which they can protect their retirement and have a strong retirement.

This is a modern-day effort to assist Canadians who are self-employed or who work for small firms or businesses that do not have part of a benefits package that includes a pension plan. Our intent is to help Canadians who work where there is no pension plan. Sometimes the opposition members stand back and say that we should just throw more money into CPP or we should have that wealth transfer so the wealthy can put more money into it and we will all get a bit more. The CPP is strong and maybe we can make it stronger but there needs to be more avenues than just the CPP and more avenues than just this pooled retirement pension plan.

Many constituents in my riding of Crowfoot do not have access to a pension plan. The colleague who just spoke said that 60% of Canadians do not have access to a pension plan. I live in a rural riding and I believe that is true in most rural or remote ridings in Canada.

I spoke to this bill at second reading. When I had town hall meetings, met with constituents and had satellite office days, constituents came to me and asked me about the pooled registered retirement savings plan. I explained to them that we were not trying to incorporate a mandatory plan for all Canadians. I told them that it was not another tax grab, that it was not another opportunity for the government to put more of a premium down on CPP or any one plan. I told them that this was an opportunity, if they so chose to do it, to invest in a pooled registered retirement plan.

Around our place this summer, we will have a different type of summer. My oldest child, my daughter, is getting married. With that has come all the fun things with being involved in wedding planning. For years we have sat down and talked to our children about planning for the future and about some day in the future buying a home. We have told them that even when they come right out of college they should purchase an RRSP, that they should look into all of those different avenues.

Now, as my daughter is preparing to get married, she and her fiancé have asked me to n go with them to look at a house. They are just out of college and yet they want to invest in a home. I have for years told my children that they want to buy a home with 20% to 25% down. Now my daughter is telling that, even though I always told her that it was important to have that 20% to 25% to put down, she does not have 5% to put down, which is why she needed me to look at a home. The point is that some of these lessons are learned. Our children learn that it is important to have equity in a home and that it is important to invest and prepare for the future. As a father, I want to be able to help where I can.

As a government, we also want to be able to help where we can. As a government, we want to be able to say that we will not only be satisfied with the CPP, that we will not only be satisfied with the tax free savings account and that we will not only be satisfied with a pooled pension plan, we want people to pick and choose and perhaps invest but to prepare.

In the rural constituency that I represent there are many farmers and many agricultural based companies who do not have a pooled registered pension plan. This is one of those opportunities. I commend our government for bringing this forward. I encourage the opposition to get off the bandwagon of one-size-fits-all and to recognize that when people have a registered plan they have something to count on.

Not only do we have agriculture in Crowfoot but many people work in the oil patch in Crowfoot. Many people today will be contracted to work for one company but in a year or two will be working for a different company. The thing I like about this plan is that people would be able to take the plan with them because it is a plan in which they invest. When they leave that company, maybe after two years, they would not need to decide whether to pull out that little chunk of money they put away in a pension plan and put it into an RRSP, which is really the only way to protect that money. There is the tax free savings account, but to save some taxes people can invest in an RRSP.

Now, as people switch from one company to another, one job to another or one contract to another, the pooled pension plan would remain constant. Now, when they go to the next place of employment that does not provide a pension plan, they would have this tool in their toolbox. It is something they will appreciate.

I encourage the opposition to recognize that there are many Canadians with many different groups. People cannot always reach into their toolbox and pull out a hammer. We reach in and pull out the tool that best suits our needs for the job that we are doing.

We are fortunate sitting here because we have pension plans. That is the topic of discussion, as well, in my constituency. I think it is time to say that this opportunity needs to avail for all those who want to take advantage of it. Our government is providing that tool and I congratulate it.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, I would like to thank my hon. colleague for her speech.

However, I want to make it clear that this product will merely encourage people to save; it will not guarantee anyone's retirement income.

My colleague said that people can invest in these pension plans. But consider TFSAs, which are a similar product to help people save tax-free. Only 41% of Canadians have a TFSA, and nearly half of them earn $100,000 or more per year. Only 24% of those surveyed said they are using their TFSA to save for retirement. The product envisaged in Bill C-25 is the same as an existing retirement product.

Why does my colleague say that people will invest more if they are not required to, even though he knows that people who do not have money do not invest for their retirement?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I am pleased today to speak to Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

At first glance, this measure seems to be a good one. However, it turns out to be a half measure when we take a closer look. That is exactly what was done by the House of Commons Standing Committee on Finance and even more so by the NDP in the House. This bill really has holes and problems. It has to be studied in its entirety, and we must figure out why the government has introduced this bill.

In Bill C-38 , the Conservatives attack seniors. That is clear. Just look at the provisions concerning the old age security program and the guaranteed income supplement.

The government has decided to increase the retirement age from 65 to 67 without providing any explanation. We posed questions to the Minister of Finance at the Standing Committee on Finance. The opposition was very insistent and, in the end, the government admitted that the savings would amount to $10.8 billion in 2030. The government is therefore balancing its budget at the expense of seniors and future generations, and that is a problem. We must understand where the government is coming from when we study this bill.

One of the first things that is obvious about the RPPP is that this product is very similar to an existing product, the RRSP.

In fact, RPPPs are more comparable to RRSPs—because they are administered by banks and financial institutions that will invest the money in the markets—than to a pension plan for seniors or future retirees.

On the weekend, one of my constituents told me that when he was younger, people talked about retiring at 55. They believed that if they invested as much as their advisor told them to into a retirement plan or their RRSP, they would be able to retire at 55, no problem. Today, that constituent is still working even though he is over 55 because these retirement investment products fluctuate with the market and the market has been turbulent lately. The investor's retirement income depends on the market.

What we are talking about today is exactly the same thing. It seems like the government has learned nothing from past mistakes and is doomed to repeat them. It claims it is introducing a product for the people who need it. Obviously everyone wants to have a stable and guaranteed retirement. However, this product does not offer such guarantees.

I would say it is like an RRSP because the employee is told to invest in this plan, but the employer is in no way forced to contribute to it. Therefore it is the employee who assumes all the risk. Of course, the employer might contribute, but that depends on his goodwill.

The government currently has tools such as the Canada pension plan and, in Quebec, the Quebec pension plan. These are solid plans.

No one across the way can deny that the Canada pension plan works, that it is well run and ensures a good retirement for those who are lucky enough to benefit from it: workers, self-employed workers, and people in the public and private sectors.

This plan exists and that is why we are saying that instead of creating a product that is similar to RRSPs or TFSAs, which we already have, the government should be investing in a plan that works. According to witnesses at the Standing Committee on Finance, the cost-benefit ratio for taxpayers is very high. It costs less to administer the CPP than to create a new product.

One problem is that this product is administered by financial institutions that want to generate profits. We know this; it is normal. At whose expense are these financial institutions going to make their profits? At the expense of those who have invested in this product. In this case, there is no guarantee. We talked about the fact that regulations might be brought in to ensure that the fees are not too high. However, there can be no guarantee that those fees will not go up over time. And when those fees go up, who loses? Who will have less money in the end? The people who paid in will lose. In this case, it will mainly be employees.

Rather than helping employees and people who are going to retire, the government is helping financial institutions, which, clearly, are already at an advantage thanks to the choices this government has made with previous budgets and the most recent budget. All the government is doing is continuing to reduce their tax rate so they can generate more profits. However, those profits do not go back to the common people. They do not go to those who want to retire with dignity and prepare for their future. Once again, clearly, this government does not have the best interests of seniors at heart.

My colleague from Thunder Bay—Rainy River introduced a bill to protect pension plans in case of bankruptcy. During the last election campaign, I met people. One person came to see me to say that we had come up with a very good idea, something that would protect them. He had spent a good part of his life working for Nortel, investing, working hard and keeping the economy going. Money was invested in his pension for the future. He was promised that he would be protected when he retired. We all know what happened in the end. Nortel went bankrupt. Because pensions were not protected, he is now living in misery. That is what he told me. This man's plight touched me deeply. He had tears in his eyes when he said that he had worked, he had invested, he had done everything he was expected to do, and yet the government failed to protect him.

What I find so difficult to understand is why the government does not really want to protect seniors, the people who truly helped build this country, who worked very hard. Thanks to these people, Canada has made progress in terms of the economy and quality of life. The government should be thanking them and telling them that they have worked hard, but what is it doing instead? It is giving them the cold shoulder. Not only that, but it is also attacking them. They worked hard and set money aside, but the government does not even want to protect them. What a shame to see that kind of attitude from the government.

As I said, that is what we are seeing in the budget, in Bill C-38. All of that and various changes have resulted in a record gap between rich and poor. That gap has been growing steadily since the Second World War. Of course, former Liberal governments have to take some of the blame, but so does the Conservative government.

The Conservative government is aware of the situation. The Conference Board of Canada and the OECD are saying it. The facts are there. The gap between the rich and poor is growing wider and wider, particularly in Canada, where it is growing more rapidly than in the United States. Imagine that. The United States has always seemed to be the prime example when it comes to this gap. Of the industrialized countries, Canada has surpassed the United States and other countries in how fast this gap is widening. It is because of measures like the budget and this bill that we are seeing these differences. Why? It is because the government is not helping those who need it most.

When we talk about old age security and the guaranteed income supplement, we are talking about people— seniors who are living on the edge of poverty. This government's solution is to tell them to work two years longer—to increase the age of retirement from 65 to 67—and that things might be better for them later. This is a completely ideological way of doing things. As the OECD said, there is no problem; this is purely a government decision.

The House resumed from June 4 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 third time and passed.

Bill C-25—Time Allocation Motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

moved:

That, in relation to C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts, not more than five further hours shall be allotted to the consideration at the third reading stage of the bill; and

at the expiry of the five hours, any proceedings before the House shall be interrupted, if required for the purpose of this order, and in turn every question necessary for the disposal of the said stage of the said bill shall be put forthwith and successively, without further debate or amendment.

Bill C-25—Notice of time allocation motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Madam Speaker, our government remains focused on jobs, growth and the long-term economic security of Canadians. That includes planning for their retirement and ensuring that Canadians do have a secure retirement. Bill C-25, the pooled registered pension plans act, will create a new low-cost plan for these Canadians to help them save for their retirement.

In the last election, we committed to implementing this bill as soon as possible. It has been over a year since the election and Canadians expect the government to keep its commitments. Thus, it is with regret that I must advise that an agreement has not been reached under the provisions of Standing Order 78(1) or 78(2) concerning the proceedings at third reading of C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

Under the provisions of Standing Order 78(3), I give notice that a minister of the Crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at that stage.

Pooled Registered Pension Plans Act

[Eve Adams, Conservative, Parliamentary Secretary to the Minister of Veterans Affairs]

Mr. Speaker, I listened to the hon. colleagues across the aisle and the NDP members just do not seem to get it. They continue to advocate for something that is neither feasible nor has the support perceived.

I am talking about their proposal to double the Canada pension plan. There are several problems with this proposal. I will outline them for the NDP and see if it can be convinced once and for all that doubling the CPP is simply not practical.

Any change to the Canada pension plan is subject to a formula specified in the legislation. In case the NDP did not know, I mean the legislation governing the Canada pension plan. The legislation clearly stipulates that the CPP can only be amended by a consensus of two-thirds of the provinces, representing two-thirds of the population.

At the 2010 finance ministers' meeting, a number of provinces had strong objections to expanding CPP benefits. However, the ministers made a unanimous decision. They unanimously decided to set up a framework for pooled registered pensions plans.

Unlike the NDP's proposal, which does not have the support of the provinces, the decision to move forward with pooled registered pensions plans was unanimous. That is not the only problem with the NDP plan. To expand CPP benefits or, in the NDP's case, to double them, we would have to raise contribution rates.

Higher contribution rates would mean higher payroll costs for small and medium-sized businesses and higher premiums for workers and the self-employed. Unlike the NDP, our government remains focused on the economy. This means focusing on job creation and economic growth and Canada's long-term prosperity. Our government does not believe that now is the time to jeopardize Canada's fragile economic recovery by imposing higher costs on job creators.

The House might be interested to hear that many other groups share our government's philosophy that expanding the CPP in these turbulent economic times is the wrong choice.

For example, according to the Canadian Federation of Independent Business, CFIB, for every 1% increase in CPP premiums beyond the current 9.9% tax rate, it would cost 220,000 person years of employment and force wages down roughly 2.5% in the long run. For those who want to double the CPP, they might be interested to know that, according to CFIB calculations, to double CPP benefits would kill 1.2 million person years of employment in the short term.

All these so-called solutions proposed by the NDP would be detrimental to Canada's economic performance. They would result in lower economic growth and lower job creation. This would mean more unemployed Canadians, a sort of the NDP way.

Members can rest assured that our Conservative government will not engage in such a reckless plan. Our government has a strong record of job creation and job growth. In fact, I am pleased to say that, since July 2009, over 750,000 net new jobs have been created in Canada. That is a result that Canadians appreciate and a result that the residents of Mississauga—Brampton South appreciate.

It is important to remember that Bill C-25 represents the federal portion of the PRPP framework. In order to make this available to all Canadians, the provinces must put in place their own PRPP legislation. Once that happens, PRPPs will be a key element to Canada's retirement income system.

However, my constituents may be denied the opportunity to partake in a PRPP. Unfortunately, the McGuinty government has indicated that it may tie the introduction of PRPPs to an expanded CPP. Simply put, such a decision serves only to deny hard-working Ontarians of a low-cost, broad-based workplace pension plan.

Guess what? Many others feel the same way. This is what the Canadian Chamber of Commerce, the Canadian Federation of Independent Business and the Canadian Life and Health Insurance Association think of Mr. McGuinty's plan. In their words:

We do not support the concept that PRPP implementation should be tied to CPP enhancements. Given the time and processes involved in making any changes to CPP, this would only serve to delay an initiative that, in its own right, is viable, innovative and beneficial to Ontarians.

They go on to say:

It is time for Ontario now to step up to ensure that Ontario residents, particularly those who work for small and medium-sized businesses, can reap the benefits of a low-cost, accessible pension plan.

Why is the McGuinty government denying Ontario residents and my neighbours the ability to save for their retirement? Perhaps it is because, like the NDP, it does not understand how PRPPs work.

[Chungsen Leung, Conservative, Parliamentary Secretary for Multiculturalism]

Mr. Speaker, as a former small business owner, I wish to speak in support of the pooled registered pension plan.

In these tough economic times, our Conservative government continues to work hard to create jobs for Canadians. Naturally, one way of doing this is to support job creators. What do I mean by this? I mean supporting small and medium-sized businesses.

I am proud to say that this is one of the great aspects of Bill C-25, an act that would implement the federal framework for pooled registered pension plans.

The bill would remove traditional barriers that might have kept small and medium-sized businesses from offering a pension plan to their employees in the past.

Members may ask what are traditional barriers. One is responsibility. Under the PRPP framework, the fiduciary responsibility related to the management of pension plans would be shifted from the employer to a licensed third-party professional administrator.

The second traditional barrier is the administration of the pension. Under the PRPP framework, the administrative burden of the employer would be reduced. Again, most of this burden would be shifted to a licensed third-party professional administrator.

With these significant barriers removed, employers would be able to offer a workplace pension plan to their employees for the first time. In fact, the business community has already commented on how the reduced administrative burden would be of great benefit. For example, Thomas Lambert, the CEO of Canadian Multicultural Radio said:

The PRPP is just the kind of option we've been searching for. With the savings on the administrative costs we can incentivize our staff towards better retirements savings.

By offering a low-cost and administratively simple pension plan, employers would have a new tool to attract and retain skilled employees. I ask hon. members if they would not like to work for a company that offers a low-cost pension option to its employees, a pension option that aims to leave more money in their pocket when they retire. According to the Canadian Chamber of Commerce, that is exactly what PRPPs would do. It said:

...(PRPPs) would be a great option to attract new talent to our business. A pension plan draws a lot of the skilled people that we need to the larger corporations and this would be a nice edge to add to a great business.

There is even more. The introduction of PRPPs would be of great benefit in the self-employed medical profession. Here is what the Ontario Medical Association had to say:

The creation of pooled registered pension plans (PRPPs) levels the playing field by providing the self-employed, including physicians, with better access to additional savings opportunities that have up until now been unavailable.

Mr. Speaker, I am just reminded that I will be sharing my time with the Parliamentary Secretary to the Minister of Veterans Affairs.

Allow me this opportunity to explain how PRPPs would help these employees and self-employed Canadians achieve their retirement goals.

One of the great features of a PRPP is auto-enrolment. Where an employer offers a PRPP, all employees would be automatically enrolled. Not only would this increase participation, but it would also encourage more Canadians to save for their retirement.

Another great feature is portability. This means that when employees changed jobs, they could take their PRPP with them from job to job.

Another innovative feature of the PRPP is that the contributions by members would be locked in. This would ensure that plan members would have savings when they retired.

I would be remiss if I did not talk about one of the major benefits of the PRPP, and that is its low costs. It is clear that the opposition members do not fully understand this concept. Please allow me a moment to explain its key feature to them.

Essentially, PRPPs would facilitate low cost through their scale and design by achieving certain economies of scale. It does not matter whether a person manages $1 million or $100 million; the effort is the same.

As I mentioned earlier, PRPPs would have a broad-based availability. By pooling all these pension savings, the cost of administering the pension funds would be spread over a larger group of people. This would enable plan members to benefit from the lower investment management costs that are typically associated with the average larger mutual funds.

The low cost feature of PRPPs is something that stakeholders around the country are raving about. I will share with hon. members some of the feedback following our broadly based consultation. According to the Canadian Federation of Independent Business:

A new voluntary, low-cost...retirement savings mechanism will allow more employers, employees, and the self-employed to participate in a pension plan....

The Canadian Taxpayers Federation comments:

Canadians will be able to save more for retirement with this new pension plan. People saving for retirement will enjoy lower costs and more flexibility through their working lives.

Unfortunately, instead of jumping on board with this great incentive, the opposition members would rather expand the Canada pension plan. Clearly, the opposition members are not interested in creating jobs. They are interested in taxing the job creators.

Make no mistake; our Conservative government would never take such a reckless and irresponsible position. Our government understands that the last thing job creators need in a time of global economic uncertainty is another tax hike.

Unlike the opposition, our Conservative government understands it is tax reduction that facilitates the creation of jobs and economic growth. That is why in our economic action plan 2012, our government is committed to extending hiring credits to small and medium-sized businesses for another year.

Do members know what this would mean? This would mean jobs, growth and long-term prosperity. On the economy, our record is clear. Since July 2009, more than 750,000 net new jobs have been created. That is a result Canadians appreciate.

With the passing of Bill C-25, federally regulated workers as well as those in the Northwest Territories, Nunavut and the Yukon would be able to take advantage of PRPPs.

I would hope that every province would pass legislation to implement the PRPP as soon as possible, so that all Canadians would be able to access the low-cost, broad-based pension plan.

The legislation is a win-win for both employers and employees. By introducing the PRPP, we would be strengthening Canada's retirement income system, a system that is viewed around the world with envy.

When it comes to PRPPs, our government is on board, small and medium-sized businesses are on board and, most important, Canadians are on board. The only real question is: Why are the members of the opposition not on board?

I would encourage all members of the House to stand and support the swift passage of Bill C-25. The sooner PRPPs are available, the sooner more Canadians could start saving for their retirement.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I rise today to speak to Bill C-25 at third reading. I am very happy to do so. I know that all members in the House share the common goal of making sure that all Canadians have security in their retirement. However, I am rising to speak against the pooled registered pension plan scheme for many reasons.

One of the reasons is that it would not actually guarantee a pension. As many on my side have pointed out, we should not be calling this a pension plan. Instead, it is a savings scheme. The second reason is that it would put the burden solely on employees and would not require any contribution from employers. It would allow employers to say they are doing something for employees' retirement, but they will pay for it. In that sense, the style of the plan is a bit deceptive.

It would not be indexed to inflation. When we combine that with no cap on administrative fees or costs, it means that the risks would be entirely borne by the employees. Therefore, when it came time for employees to retire, there would be no guarantee that they would even get back payments equally valued to the contributions they made.

How do we know that? We have seen the evidence from the Australian plan, which was put in place more than a decade ago, similar to this, called the Australian super fund. In the study of that plan by the Australian government recently, it showed exactly what I said, that the benefits were only equal to the rate of inflation. In fact, the employees who contributed were simply treading water and not really planning for secure retirement.

I have heard members on the other side ask why on earth I would oppose what is another tool in the tool box for retirement savings. I would first say that I am worried it would become another tool in the tool box of investment planners and banks to make more money for their long-term security instead of making more money for the people who actually contribute to those plans. Their tool box is already full, from my point of view, and there is no need to give them another profit source as I think this plan would obviously do.

Is it a real tool for employees to save for their retirement? It would certainly take money out of their cheques. Most families are struggling as it is just to make ends meet by providing housing, putting food on the table and providing for their kids. The vast majority of employees do not have any spare money to risk in a plan like this. Their money would be much better invested in an expanded Canada pension plan. The Canada pension plan is not a theory or ideology but a proven plan that has shown it has lower costs. Why does it have lower costs? Because it spreads out the administrative costs over the entire population. It is a plan that has lower risk. Why does it have lower risk? Because it spreads the risk across the entire population and provides a defined benefit indexed to inflation.

The CPP has a couple of other benefits that we do not often talk about. One of them is that increasing benefits in the CPP would ultimately reduce costs for government because it would reduce the demand for GIS payments. In other words, if people had been allowed to put money into a plan that would provide them a secure retirement and pay for it themselves, they would not be dependent on welfare at the end of their lives in terms of the GIS. That is no criticism of those who collect GIS. Most Canadians have not had the opportunity of having secure jobs with workplace pension plans that pay enough to provide secure income. The easy way to do that is to expand the Canada pension plan.

This has been on the public agenda since 1996 when the NDP government of British Columbia first put an expanded CPP on the table and tried to convince governments at that time. If it had begun with a slow increase in the contributions made by both workers and employers back in 1996, we would be in a place where the CPP would be providing double the benefits it provides now. We would have made a great dent in the problem of seniors poverty. It is still not too late. The NDP campaigned in the last election to do just that: begin with modest increases in the contributions by workers and employers and, over time, double the benefits that are being paid out by the CPP. Again, workers would be paying for their own secure retirement. It is not a welfare program. There would be no cost to government.

The Canada pension plan along with its parallel, the Quebec pension plan, have been major contributors to helping end poverty among seniors. As I said, it is an earned pension with all the dignity and self-esteem that comes with having provided for one's own retirement.

I would point out they are also very good for small business. We are talking about small businesses that are too small, really, to run their own workplace pension plan, that could not bear those administrative costs, that cannot recruit, as the hon. Parliamentary Secretary to the Minister of the Environment talked about, that cannot recruit employees because they cannot offer the same kind of benefits.

Yet, if the benefits under the Canada pension plan were increased, it would level that recruitment playing field for small businesses, because people would be earning an adequate pension in all jobs across the country.

Originally the CPP was designed, along with the QPP, to be supplemented by private pension plans, so the original plan was never meant to provide the full retirement income. It was thought at the time that workplace pension plans and other schemes would fill the gap to bring Canadians up to an adequate retirement income.

What we have learned is that that has not happened for several reasons. One of those, of course, is that more than 12 million Canadians lack any workplace pension plan of any kind. Even those who do have plans are quite often enrolled in plans which are not portable. We all know the days when people go to work for one company and stay there for 30 years are becoming more and more rare. Even if they had a private pension plan, when they are forced to change jobs, people often have to start over in a new private plan or cash out their benefits at that time.

The second problem with workplace pension plans that we have seen in the last years of economic crisis is that they are not secure. When a company goes bankrupt, unfortunately, those with disability pensions and those with workplace pensions are almost last in that line of creditors.

For that reason, the NDP has proposed, as another way of securing retirement incomes, the bankruptcy laws in this country need to be amended to place disability pensions and retirement pensions at the front of the line of creditors in the case of bankruptcy, so that those who have made contributions themselves would have their pension secured before the other creditors of those bankrupt companies. Unfortunately, we are still waiting for action on that very important point.

The Canadian government, under the Liberals, did recognize that retirement savings were inadequate. The government came up with the registered retirement savings plan to allow people to voluntarily put money into a plan to help supplement the CPP in their retirement. A good idea in theory, but the problem with that plan is that because of the high cost of living, the high cost of housing and other difficulties in making ends meet, only 31% of those who are eligible to contribute to RRSPs are actually able to do so. That means that this great solution to fill that gap has not been successful.

More recently the federal government came up with the idea of tax-free savings accounts. Once again, there is an implicit recognition that there is a gap in retirement income for Canadians. So the tax-free savings accounts were set up. Only about 41% of Canadians have established a tax-free savings account. Most of those say that they are not using it to save for retirement.

Most interesting to me, over half of those who have tax-free savings accounts earn more than $100,000 a year in income. They are obviously already able to take care of themselves when it comes to retirement. Most Canadians, obviously, do not earn anywhere near this figure and do not have extra money at the end of every month to put into a tax-free savings account.

The vast majority of Canadians are dependent on the CPP for their own retirement income. When we look at the benefit levels of $12,000 per year, it is clearly not enough. As I mentioned, it was not designed to be enough. It was designed to be supplemented by these other programs which have failed over time to do so.

Now it is time to revamp the CPP and QPP to make sure they provide an adequate retirement income, that we share the risk, that we spread this out over everyone in society, and make sure that everyone is secure in their income.

Clearly there are some other measures that are needed to attack the problem of inadequate retirement income. I mentioned amending the bankruptcy legislation in this country, and I think that is very important.

The NDP also promised that when we are government we will increase the GIS to immediately lift every senior out of poverty at a relatively modest cost.

Why not proceed with the CPP? The government says the provinces are not onside. It requires co-operation to change the CPP and the QPP. As far as I can tell, only one province was really opposed. I have seen no real effort from the federal government to bring the provinces onside to expand the CPP.

In conclusion, I would just like to remind members of the House that all Canadians would benefit from an expansion of the CPP, not just the fortunate few.

It would benefit small business. It would benefit workers changing jobs. In particular, it would benefit those who work hard all their lives in low-wage jobs and are not able to save for their retirement.

I urge the House, rather than create this new plan, which would do nothing to solve the problem, to turn instead to an expansion of the CPP-QPP program.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Mr. Speaker, I will be sharing my time with the hon. member for Esquimalt—Juan de Fuca.

Earlier, some members mentioned the fact that people may be watching us on television. I hope they have something else to do, because today's debate in the House is really going nowhere.

This is yet another bill with a rather confusing title. This bill, I believe, deals with pooled registered pension plans. But it really deals with savings, not pension plans. That makes me think that the people who work for the government legislators and think up the titles must also work for the paint companies like Sico, where long, evocative names are given to very simple things. If one day they brought us a bill proposing to cut down all the trees, they would call it “Prioritizing new species of vegetation.”

This bill does contain good intentions for small employers and small businesses. In itself, that could be praiseworthy, but the reality is different. I was listening to the member opposite talk about his favourite business, saying that it has the best tartufo or tiramisu or cheesecake around; he talked about the muffler repair shop near his house, and all these small businesses. It was wonderful: what a great story. But I have a tendency to think he was talking about some other local businesses, for example, the local branch of the Royal Bank of Canada, which made a profit of $5.7 billion in the last quarter, the Toronto Dominion Bank, which made a profit of $4.5 billion, or Scotiabank, where the profit was $4.3 billion. I could list a few of those.

We could believe that our colleagues across the aisle are acting in good faith. We could believe that they are listening to the little guys. Unfortunately, experience proves that they have a natural tendency to listen to the big guys, the big corporations, and neglect the little guys quite often. “Unfortunately”—that is a long word that reminds me of a five-letter word: Aveos. We cannot say that the government looks out for the little guy when we see how it behaved in that labour dispute.

When I say little guy, I mean the vast majority of the population. I am talking about people whose jobs do not provide them with very good protection plans.

Usually in society we come up with plans and programs to promote the common good, programs such as the Canada pension plan or the Quebec pension plan. What strikes me is that when it comes to the common good for the little guy, the government just throws something together. Again, it prioritized a solution by throwing something together with its buddies: it says it will do one thing, a good thing, but then it turns around and does another. I keep saying this has to stop.

People are judged on their intentions. The intention of the Conservative government, generally speaking, is always to favour the big corporations. It wants Canada to be a good place to do business, big business. As we speak, it is the little guy who is paying for it and that is sad.

In the past six years, the Conservatives have done absolutely nothing to boost retirement security for Canadians. In every one of their interventions—unfortunately, they often intervene in labour disputes—the thing that ends up on the chopping block is retirement security, the security of the working class. Bill C-25 is just another half measure and that is what they are developing.

Canadians deserve better than that. We will not settle for this. It is not necessarily a problem, but it is not enough. Throwing out a few crumbs in order to move on to something else is not good enough for us.

I think it is also very important to bear in mind that, according to the Canadian Centre for Policy Alternatives, most Canadian workers do not have RRSPs. Why? Because they cannot afford them. Last year, only 31% of eligible Canadians contributed to an RRSP, and unused contribution room exceeds $500 billion. When I was preparing my last tax return, the amount that I could have contributed to an RRSP was huge. I do not think I could contribute that much, even if I wanted to. This example simply illustrates how serious the contribution problem is, even though we have a public program that works very well and guarantees some financial security for everyone. However, this government does not seem to care about everyone equally.

Someone mentioned the fact that the Australians tested the same thing 10 years ago. In the end, that initiative did not work. It did not meet expectations. What does the government want, apart from asking its friends on Bay Street if they feel like investing a few billion dollars in this, just for the fun of it? It is unfortunate, but the Conservatives seem to just do whatever they like. They do not consult anyone. They have no interest in consultation. They go ahead with their own ideas. One might think that they have great ideas, but no, they do not have any strokes of genius. They have not heard the voice of God. They simply came along with their biased opinion that their friends are going to like this.

That is what is happening. They are working for the upper class. This is unfair, because this government was elected by the public, by ordinary people. We are not talking about giving even more crazy tax breaks to the big oil companies or banks; we are talking about protecting ordinary people.

A five-letter word is flashing in my mind: Aveos. I hope that one day, the Conservatives will lie awake at night thinking of that word: Aveos. The people at that company lost everything, but the Conservatives do not care at all. That is unacceptable. How can they even introduce a bill that talks about protecting retirees, when these people were run over by a tractor and were told that it was no big deal, that the bosses were right. That is shameful; but that is a whole other story.

In passing, I would like to mention what a number of journalists think, because we are not the only ones who believe that a public plan would certainly be a better option. For example, the Conference Board of Canada has a disturbing statistic: 1.6 million seniors live in poverty and 12 million Canadians do not have a pension plan. According to the OECD, the Canada Pension Plan and the Régie des rentes du Québec are relatively inadequate and other countries have guarantees and much more generous public pension plans.

In the United States—they like it when we talk about the United States—maximum social security benefits are about $30,000 a year. Here, they are about $12,000 a year. Is that not a nice parallel? Do they not care? It is too bad, but they have erred so much in the past that I simply do not trust them. It is unfortunate, but that is also what the vast majority of Canadians think.

I must stop there, but I encourage my colleagues opposite to preach by example, to show some interest in the common good, an interest in consultation. Then, we would be happy to work with them.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, I would like to take this opportunity to explain to the House and the people of Canada how our government's new low-cost and accessible pooled registered pension plan will help millions of Canadians save for retirement. More specific, I would like to touch on how pooled pensions will benefit small businesses, which are the backbone of the economy, not only in my riding of Niagara West—Glanbrook but across this great land.

As a former small business owner, I know first hand how difficult it is to save for retirement. There is simply so much else to focus on. Small business owners wear many hats and often the most menial tasks take priority over thinking of retirement or how to save for it. Therefore, by pooling pension plans together, small business owners can pass on the burden of planning for retirement to a qualified and reliable body, freeing them up to focus on improving other aspects of their business, such as improving customer service or, more important, ensuring their survival in the world of free enterprise.

As a small business owner, I was very committed to providing financial assistance to my employees. For my part-timers, I offered thousands of dollars in scholarships. However, for my full-time and my key employees, who had already graduated or were no longer interested in attending university, I had to find other incentives. Unfortunately, pooled pension plans were not available back then, which would have provided me and fellow small business owners the opportunity to provide our employees with a pension package comparable to any large corporation.

I looked for ways to try and incentivize my staff to try and keep them around, because small business is very competitive. The only thing I could come up with was registered retirement savings plans, which were not a bad thing. The challenge was that they were very complicated to set up. As members can imagine, with a small business owner, with only five or six employees, trying to meet with financial investors and setting them up with staff is not always the easiest thing to do. Therefore, as a business owner, I really would have appreciated having something like this to take away some of the burden on me by being able to lock these funds in for employees who would use them at a later point in time.

What I did was set up some registered retirement savings plans wherein I matched some of the dollars that my key employees put in. The challenge was that they were not locked in for pensions. The money could be taken out at any time. The second issue was it was difficult to manage. Members can imagine having 10, 20, 30 or 40 employees all trying to figure out, with a financial adviser, what was happening and trying to make their own decisions when, quite frankly, a pension plan or some kind of professional management would have been helpful. Therefore, from experience, I understand how important a plan like this would be.

Until Bill C-25 is passed, small business owners will continue to worry about the possibility of their employees being attracted to a larger corporation that offers a more attractive pension plan. This is worrisome to small business owners whose employees form the core of their small business, much more so than the case of large corporations. Small businesses of 5, 6 to 10 people cannot afford the costs of employee turnover. When they lose key employees, it hurts in a big way. In this regard, pooled pensions will benefit small business owners by increasing employee dependability, thereby decreasing the time, burden and costs associated with hiring.

Equally beneficial to small business, pooled pensions will allow millions of Canadians access to a workplace pension for the first time in their lives.

Pooled pensions will improve the range of retirement savings options to Canadians by allowing individuals who are not currently participating in a pension plan, such as the self-employed, to make use of this new type of pension plan. Pooled pensions will enable more people to benefit from the lower investment management costs that result from membership in a large pooled pension plan. Further, pooled pensions will allow for people's accumulated benefits to move with them from job to job, all the while ensuring that their funds are invested in the best interests of plan members.

With our baby-boomer generation nearing the age of retirement, coupled with the ongoing global financial crisis, our government has deemed this time appropriate for the development of pooled pensions. The issue of retirement income security is very important to our government. It is for this reason that the 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 found 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, were living with the risk of not saving enough for retirement.

After over a year of exhaustive research, led by our finance ministers, our government agreed to pursue a framework for pooled registered pension plans.

Pooled pensions are designed to address the lack of low-cost, large-scale retirement savings options available to many Canadians. Many Canadians continue to struggle taking advantage of the savings opportunities offered to them through individual structures like RRSPs. For example, the average Canadian has over $18,000 in unused RRSP room.

In addition, many Canadians can only access a workplace pension plan if their employer offers one. Many employers, especially small and medium-sized businesses, do not want the legal administrative burden of offering a pension plan. As a result, over 60% of Canadians do not have a workplace pension. There is not only the legal issues. The fact remains that it is almost impossible for small businesses to join a pension.

The design features of pooled pensions remove a lot of the traditional barriers that might have kept some employers from offering pension plans to their employees.

The design of these plans would be straightforward to allow for simple enrolment and management. A third-party pooled pension administrator will take on most of the responsibilities that employers bear in the existing pension plans, including the administrative and legal duties associated with administering a pension plan.

Pooled pensions will offer Canadians greater purchasing power, allowing them the opportunity to benefit from greater economies of scale. Achieving lower prices means that Canadians will benefit from greater returns on their savings and put more money in their pockets when they retire. Pooled pensions are intended to be largely harmonized from province to province, which also lowers administrative costs.

Pooled pensions will result in large pooled funds that will enable plan members to benefit from lower investment management cost associated with such funds. The design of these plans will be straightforward and are intended to be largely harmonized across jurisdictions, which would facilitate lower administrative costs.

Pooled pensions will assist Canadians in meeting their retirement savings objectives by providing access to the new low cost pension option. Through the pooled nature of pooled pension investments and the auto enrolment of employees, it is expected that members will be able to benefit from greater economies of scale and lower costs compared to small, singular employee group RRSPs. Since pooled pensions will be subject to pension standard rules, unlike group RRSPs, the management will be held to a higher standard.

Our government decided not to expand the Canadian pension plan because changes to the CPP would require the agreement of least two-thirds of the provinces with at least two-thirds of the population. Federal, provincial and territorial ministers have discussed a CPP expansion, but there has been no agreement. Our government understands that the fragile economic recovery is not the right time to increase CPP contributions, which would be required if CPP were expanded.

That being said, moving forward on pooled pensions does not preclude future changes to CPP.

Our government continues to improve Canada's retirement income system. Budget 2011 announced a new guaranteed income supplement top-up benefit for our valuable seniors. Seniors with low or no income other than the old age security and the GIS would receive additional annual benefits of up to $600 for single seniors and $840 for couples.

In particular, since 2006, our government has increased the age credit amount by $1,000 in 2006 and by another $1,000 in 2009. We have 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 the maturing pensions in registered retirement savings plans to 71 from 69 years of age.

Overall, our government has provided about $2.3 billion in additional annual targeted tax relief to seniors and pensioners through measures such as pension income splitting, increases in the age credit amount and the doubling of the maximum amount of income eligible for the pension income credit.

In addition, budget 2008 introduced a tax-free savings account, which is of particular benefit to seniors because it helps them to meet their ongoing savings needs with a tax efficient way after they are no longer able to contribute to an RRSP.

We have also made several other important improvements to specific retirement income supports. Budget 2008 increased the amount that could be earned before the GIS would be reduced to $3,500, so GIS recipients would be able to keep more of their hard-earned money without any reduction in GIS benefits. Budget 2008 also increased flexibility for seniors and older workers with federally-regulated pension assets that were held in life income funds.

We all win if we make it easier to plan for our future. Pooled pensions would remove the barriers that make it impossible for my business and other small businesses like it to offer the ability to be part of the pension plan for their employees. This is a significant and timeless solution. I am proud of our government for taking steps to provide this opportunity for Canadians.

The House resumed from May 29 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 third time and passed, and of the motion that this question be now put.