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.

Pooled Registered Pension Plans Act

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Speaker, I am pleased to discuss the very important measures that are contained in Bill C-25, an act that is key to implementing the federal framework for the PRPP, the pooled registered pension plan. I can ensure personally that Canada's seniors will have the retirement that they deserve with the implementation of this kind of plan.

It is innovative. It is new. It is privately administered. It is low cost. It is an accessible pension option, and I highlight the word “option”, to help Canadians meet their retirement goals.

This is particularly significant for small and medium-size businesses like mine. I was in business for 35 years. I only wish there had been something like this for me to offer, not only to my family, but also to my employees. Certainly many of us would not be sitting in challenging situations today without options. The legislation would enable many owners and employees to have access to a large-scale, low cost private pension plan for the very first time.

By pooling the pension savings, PRPPs would offer Canadians greater purchasing power. Basically, Canadians would be able to buy in bulk, then they would have the opportunity to get a better bang for their buck. Achieving lower prices than would otherwise be available means that they would get greater returns on their savings. More money would be left in their pockets when they retired.

The design of these plans would also be straightforward, to allow for simple enrolment and management. Simplicity is always best.

Finally, they are intended to be largely harmonized from province to province, which would further lower administrative costs.

Automatic enrolment would encourage regular savings in PRPPs by making participation the default choice of employees who do not actively make a decision to opt out. In other words, a reverse onus would encourage more people to participate.

Canada's finance ministers, both provincial and federal, decided to proceed with this PRPP framework precisely because it was considered the most effective and the most appropriate way to target those modest- and middle-income families and individuals who may not be saving for retirement. It is an option available to people who have not been served before, in particular, those who currently do not have access to an employer-sponsored registered pension plan.

Certainly I never did; neither did my employees and many of the thousands of self-employed people in this country.

With the federal PRPP legislation introduced, provinces could easily and seamlessly use it as a model for their respective frameworks so that the system could get up and running. Really, it is not necessary to go into a full duplication of a bureaucratic maze to administer this. Once the provinces put in place their PRPP legislation, the legislative and regulatory frameworks for the PRPPs would be operational, thus allowing PRPP administrators to develop and offer plans to Canadians and their employees. This would be a very competitive process, thus driving the price down even more.

It is crucial that we continue to maintain this momentum for a stronger retirement system. The PRPP would not carry the system entirely on its own, but it certainly would go a long way toward dealing with people who have not been served.

I also want to take time today to discuss other actions our government is taking and has taken to secure Canadians' retirement income needs and to strengthen Canada's retirement income system.

One particular instrument which I think is very important, yet is not given its due consideration, is financial literacy. For example, this is an area where we are working to improve the retirement income outcomes.

A strong system depends upon the ability of its users to make informed decisions that are critical to its success. I was very pleased when the member sitting in front of me, the chair of the finance committee, put forward a private member's bill that strongly promoted financial literacy in this country. I think that bills like that serve Canadians well.

Federal, provincial and territorial governments are also continuing our work by reviewing options to improve the CPP. While the CPP is efficient, effective and well managed, there are serious considerations around imposing mandatory payroll deductions in the context of the fragile state of the global economy that have to be taken into account.

CPP is an option, but due to time constraints and the economic malaise, it is deemed by many, particularly our provinces, to not be the right decision at this time. As a matter of fact, it could even be harmful to our recovery.

As I made clear at the outset, changes to a system that is so interconnected with our economy must be considered with a great deal of care. A lot of thought has been put into this across the country. The minister of state has spent a couple of years travelling across this country literally meeting with every financial authority and provincial representative. Collectively, they have come up with the unanimous mindset that this is the way to move forward.

We must be mindful that any legislation must have a bottom line. Above all else, it must do no harm. I am confident that we are on solid ground there.

Canada's retirement income system has been recognized around the world as a model for reducing poverty among seniors and providing high levels of replacement income to retired workers. Be assured that our government will make the right policy decisions to ensure it stays that way.

We welcome ideas and considerations, particularly those that are not just driven by a parliamentary ideology that we sometimes find ourselves in, in rather disturbing circumstances in this House of Commons, but are driven by some really sharp, well intentioned and capable suggestions.

In recent years, our government has introduced measures to support a system with a proven record of success. This has included, as most people here would know, but I repeat this as I think it is important, a number of steps.

We have provided over $2 billion in additional annual targeted tax relief to seniors and to pensioners through measures such as pension income splitting. That is huge in a riding like mine. I have the second highest concentration of seniors in the province of Ontario, so I recognize the need for programs to allow them to have a disposable income. We increased the age credit amount. There was a doubling of the maximum amount of income eligible for the pension income credit. It included reforming the framework governing federally regulated pensions to better protect pensioners.

It also included working collaboratively with the provinces to modernize the CPP, making it more flexible for those transitioning out of the workforce to better reflect the way that Canadians live, work and retire. Most recently, in our latest budget, we announced a top-up to the guaranteed income supplement for Canada's most vulnerable seniors.

In conclusion, with the introduction of the PRPPs, we would address the remaining gaps in the system by providing an attractive additional pension option. This would not be one size fits all; it would be an additional pension option to both individuals and employers.

Through all of these measures, combined with the government's determined efforts to make PRPPs a reality, I sincerely believe that we are making a retirement system that is good. Can it be better? Yes. Is it strong? Yes. Can it and should it be stronger? Yes, that is our duty and our responsibility as parliamentarians.

This is something of which I think we as Canadians, and certainly the Parliament of Canada, can and should be very proud.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Mr. Speaker, I am pleased to rise today on behalf of the constituents of Fleetwood—Port Kells to participate in the debate on Bill C-25.

Bill C-25 proposes to establish pooled registered pension plans, extending pension coverage to the self-employed and those who work for small companies. It is geared at those small businesses and entrepreneurs, who do not have access to affordable pension plans and will help them secure financial freedom in their retirement.

Speaking with residents in my riding, especially those approaching retirement age, there is grave concern for their future. More and more I am hearing worries over whether they have enough money for their retirement.

The next generation of retirees includes a large number of workers without pensions who are left to their own devices and facing an uncertain financial future. As formal pension plans become increasingly less common, many Canadians face a savings burden that many are unable to shoulder.

For a big chunk of the population, for the self-employed, for those who work at small businesses, for professionals, for immigrants, a secure, comfortable lifestyle after working for years is now in question. At a time when our population is aging, more than six out of ten Canadians have no formal pension plan. That is more than eight million Canadians.

Statistics Canada finds the percentage of the population with some sort of pension has been dropping steadily for three decades, to 38% of Canadian workers in 2007 from 46% in 1977.

The problem is most acute at smaller businesses. There are about 5.1 million Canadians, or 48% of the private sector workforce, at small companies.

According to the Canadian Federation of Independent Businesses, only about 15% of small and medium-sized businesses offer some form of retirement savings plan for their employees.

A joint federal-provincial working group, established in May 2009, undertook an in-depth examination of retirement income adequacy in Canada. The working group concluded that while overall the Canadian retirement income system was performing well, some modest and middle-income households were at risk of not saving enough for retirement. From the working group's exhaustive research came a plan to pursue a framework for a new type of pension plan.

Our government aims to help millions of Canadians save for retirement more easily by introducing pooled registered pension plans. There will be an innovative new pension plan designed to address the lack of low cost, large-scale retirement savings options available to many Canadians.

Pooled registered pension plans, or PRPPs, are defined contribution pension plans that will be available to employers, employees and the self-employed.

The design features of PRPPs will remove a lot of the traditional barriers that might have kept some employers in the past from offering pension plans to their employees. The design of these plans will also be straightforward to allow for simple enrolment and management.

A third party PRPP administrator will take on most of the responsibilities that employers bear in existing pension plans, including the administrative and legal duties associated with administering a pension plan.

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

PRPPs are also intended to be largely harmonized from province to province, which also lowers administrative costs. In short, PRPPs would be efficiently managed, privately administered pension arrangements that would provide greater choice to employers and individuals, thereby promoting pension coverage and retirement savings.

Reaction to Bill C-25 has been overwhelmingly positive. The Canadian Chamber of Commerce believes that pooled registered pension plans would give businesses the flexibility and tools they need to help their employees save for retirement. The Canadian Taxpayers Federation feels the legislation is a very good legislation, both for Canadians planning for retirement and for taxpayers. All the provinces are on board with the idea. British Columbia finance minister, Kevin Falcon, believes that our government has “responded to a real need out there in providing pension opportunities for small business people and those that don't have access to their own private pension plans”.

Pooled registered pension plans are the latest in a series of important steps our government has taken to strengthen Canada's retirement income system. This system is already seen around the world by experts like the Organisation for Economic Co-operation and Development as a model that succeeds in reducing poverty among seniors and in providing high levels of income replacement to seniors.

We recognize, however, that we can always do more. That is why we have already made a number of targeted improvements to the system. Bill C-25 is just one more step our government has taken to assist Canadians as they age and enter their retirement years.

Since first coming to office, we have offered more than $2.3 billion in annual targeted tax relief specifically for our seniors. We have also provided over $2 billion in annual tax relief for seniors and pensioners. We have completely removed 85,000 seniors from the tax roles. We have raised the GIS exemption from $500 to $3,500. We have introduced pension income splitting. We have introduced an automatic renewal of the GIS, meaning that our seniors no longer have to reapply each year. We have made significant investments in affordable housing for low-income seniors. We have raised the age credit amount twice. We have doubled the pension income credit. We have provided a top-up benefit to the guaranteed income supplement that will provide up to $600 extra per year for single seniors and up to $840 per year for senior couples. We have introduced the tax-free savings account. We have modernized and streamlined the application process for the Canada pension plan and old age security, making it easier for seniors to apply and receive their benefits. We have allocated $220 million over five years to the targeted initiative for older workers, which has thus far assisted over 10,000 unemployed older workers.

In addition, we have appointed a Minister of State for Seniors, someone who can bring the concerns of older Canadians to the cabinet table and stand up on their behalf. We also created the National Seniors Council to provide advice to the federal government on matters related to the well-being and quality of life of seniors.

Our government is supporting older Canadians and we are committed to ensuring that they have the opportunity to enjoy their retirement in comfort with an improved quality of life.

Bill C-25 is important legislation that deserves the support of all members in the House. We would be helping millions of Canadians save for retirement and more easily meet their retirement goals.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

Mr. Speaker, I appreciate the opportunity to stand and speak to Bill C-25, the pooled registered pension plans act. When we speak to this piece of legislation it is important to recognize who will benefit from this, if they will benefit at all. Sometimes we lose sight of the person on the receiving end of the legislation we put together. I am talking about seniors in our country who from time to time find themselves in very desperate situations.

Any suggestion of doing something that will be less than helpful to a senior requires public debate and public discussion and that is what we do in the House of Commons. So when a member of the government suggests that members of the opposition are raising questions, putting doubts in people's minds, and saying the sky is falling when they speak to a piece of legislation, in reality that is what debate is all about. The only way to formulate sound policy and good legislation is to listen, learn and to recognize that no one individual and no one party has all the answers.

When we look at this piece of legislation, we are saying that while it is a tool, it is not the be-all and end-all. We are suggesting that we look at other options and that the government should work with us and recognize that other parties can make a contribution as well, that we have some sound advice that should be taken into account. I have real problems when we are dealing with issues that have an impact on seniors and somehow there is not the willingness to listen to what others have to say.

Take a senior, for instance, whose income is about $13,000 a year. I have seniors with that income in my riding, as do all of us. We know how difficult it is for them to make ends meet. They need to find ways to put some savings aside. It is very hard for them to do that. When they scrape to somehow have a little bit of savings that maybe they can invest, then they need to know that they are going to be the beneficiaries of that investment.

The problem with Bill C-25 is that by and large when we are talking about pooled investments it is the banks that will benefit from the high fees associated with these pooled investments. I say to members of the government, look at what happened in Australia. Why can we not learn from the mistakes that others make instead of going full steam ahead and making the same mistakes? That is exactly what we are doing here.

In fact, we found out that a similar pooled pension system in Australia, in its first 12 years, posted a disappointing $161 billion in net investment earnings largely because plan providers scooped up a generous $105 billion in fees. Now that is money that seniors could not avail themselves of, because it was used to manage the pooled investment plan. That is not what should be happening.

We should be looking at opportunities for seniors that will enable them to live a life of dignity, to be able to live in comfort to the extent possible, given their income anyway. OAS is not a lot of money. Here I will refer to a quote from a York University professor, a political scientist, who said:

The OAS isn't really a lot of money.... The OAS isn't going to cause the federal budget to crash

That was Thomas Klassen.

We need to recognize the importance of providing for our seniors. When I hear the Prime Minister speaking in Davos and suggesting that we need to look at raising the age from 65 to 67 for a senior to receive OAS, I wonder where the Prime Minister is coming from. He obviously is not speaking to the same constituents I deal with on a daily basis, people who are looking forward to being able to access, not a lot of money, but at least a secure income, which a lot of seniors do not have right now.

When the Prime Minister chooses to go to Switzerland and make those remarks and does not have the courtesy to announce in Canada what he is thinking, where the individuals who are going to be impacted live, then I have a real problem with anything he is proposing with respect to seniors. Is it any wonder that we question this particular piece of legislation?

Okay, it is a tool, and we need to make sure that our seniors have access to as many opportunities as possible, and that tool is just one of them. However, whatever we do, we should not close our minds to other possibilities. The government should work with other parties and recognize what the Liberal party is proposing, a voluntary plan where seniors can invest their savings, if any, on a voluntary basis and be able to realize the gains from that investment instead of having the banks and the other institutions who are going to be responsible for the pooled management plan taking exorbitant fees and benefiting from the meagre incomes of our seniors.

We should never lose sight of what it means to a senior to have to exist from day to day on a limited income. We are seeing food banks grow. We are seeing many more food banks becoming established, and we are seeing seniors availing themselves of those food banks. It should never happen.

We have so many Canadians who do not even have a private pension plan. They have nothing to fall back on but OAS. Any suggestion at all of raising the age from 65 to 67 does not even warrant consideration when we consider that there are people right now between the ages 60 and 65 who are really looking forward to receiving their old age pension. It is a security tool for them. It is one they desperately need. The possibility of that being taken away from them must leave them wondering how they are going to survive.

What the Prime Minister and the government have done is to manufacture a crisis where no crisis exists. That is exactly what Thomas Klassen has said. The OAS that we are talking about is not a lot of money. It is not going to break the bank. If the Conservatives want to save money, if they need to deal with the deficit they have created, then they should look in the Prime Minister's Office, where we have seen an incredible 30% increase in expenditures.

Why would we be increasing the number of MPs in the House of Commons? Why would we be building megaprisons when everything is pointing to the fact that crime is on the decline? Why can we not learn from the example in the U.S.? Again, we could learn from their mistakes. They built megaprisons and today they are saying it was the wrong thing to do, yet this government is going full steam ahead to do just that.

There are examples. We do not have to reinvent the wheel. We do not have to try something. If it has not worked elsewhere, let us learn from that.

If the pooled pension plan did not work in Australia, if the megaprison system did not work in the U.S., and Texas in particular, why would we bother to go down that path? It does not make sense. Let us get our priorities straight in this country.

The government needs to recognize that this is about people, but more important, it is about seniors.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Mr. Speaker, it was very interesting listening to my hon. colleague. He seemed close to the point of rapture with his satisfaction with Bill C-25. I am very glad that he is very happy about it.

. Bill C-25 is the PRPP and then, apart from that, we have the social safety net programs: the Canada pension plan, the GIS and the OAS. Yesterday on television, the House leader said that the CPP and the GIS would not be touched. I will take the government's word for it but it seems that the OAS may be touched at some point in the future.

Does the member feel that with the PRPP, this legislation, plus those other programs, the pension needs of Canadians will be addressed for the foreseeable future?

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I would like to thank the member for Rosemont—La Petite-Patrie. He referred to all of the problems with the stock market in 2008. The government had to intervene because the rules governing the market failed. Governments reinvested in banking systems. This suggests that Bill C-25 is very dangerous and risky for the people, who would take on all of that risk. Many union leaders and economists have said that we would be better off enhancing the Quebec pension plan and the Canada pension plan, which would cost no more than going ahead with the proposal in Bill C-25. Let us choose stability and security for retirees and seniors.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I would like to thank the member opposite for his question. I will concentrate on what we are discussing, namely, Bill C-25. When we talk about contributing to a public plan and helping people, we must take into account the economic times. Right now, we are in a situation where we must help people, not further jeopardize their future. It is said that we are in a precarious situation and that we must be careful with our money. If we must be careful with our money, we have to be careful with the money of Canadians in general. If we allow people to contribute to a stable system like the CPP or the QPP, we are showing them that we are fiscally responsible and that we respect them. We cannot play Russian roulette with their savings. In addition, people who want to save for their retirement already have access to RRSPs and TFSAs. According to the statistics I have here, 70% of people do not contribute to RRSPs or TFSAs because they do not—

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, it is always an honour for me to rise in this House as a member of Parliament to speak on behalf of the people of Beauharnois—Salaberry. I would like to take this opportunity to wish all my colleagues and everyone in Beauharnois—Salaberry a happy new year. I especially want to thank my assistants, who work hard and do an excellent job.

I am very proud to be here to represent Canada, a country that to me and to many of my constituents represents not only a peaceful and welcoming land and a land of opportunity, but also a society that respects individual differences, that takes into account individual social realities and protects the least fortunate. In these tough economic times, it is very important to remember this country's basic values, the values of solidarity and justice that are the envy of countries the world over.

It is in that spirit that I rise today to speak to the fundamental issue of the retirement of Canada's seniors. What the Conservative government is proposing here in its Bill C-25 is a legal framework for the establishment of pooled registered pension plans. These plans are designed for self-employed workers and workers in small and medium-sized businesses who do not have access to the pension plans of large companies or the public service. The goal is commendable, but my colleagues and I fear that this bill will do nothing to resolve the problem retirees are facing.

Bill C-25 would create a new kind of savings plan, the pooled registered pension plan, enabling plan members to pool their funds. Employees would contribute a portion of their earnings to a retirement fund, and that money would be invested in stocks, bonds and investment funds, which are very volatile. The plan would be administered by the banking sector—once again, the private sector—and employers would be able to contribute if they wanted to. As for any other defined contribution plan, the amount of money available upon retirement is not guaranteed. I repeat: no guarantees. That is very risky. In 2008, we saw the bottom fall out of the stock market, eating away at people's savings in the process. We all suffered as a result. Given the subprime mortgage scandal that dragged financial institutions worldwide into a huge mess, we have reason to be skeptical about the future of our savings.

The Minister of Industry says that the plans provided for in Bill C-25 would give workers “an innovative new, privately administered, low-cost and accessible pension vehicle”. Let us take a closer look at that.

The government makes many claims in this bill, but does not back those claims up with fact. We already have optional savings plans, such as registered retirement savings plans, or RRSPs. These programs work well for the middle class, but there are still over 12 million Canadians who do not contribute to optional plans because they do not have any money to save.

I should not have to point out that one in four Canadians works at a low-paying job and has trouble making ends meet as it is. In my riding alone, 12% of residents are seniors. More than one in ten of my constituents lives on very little income.

Bill C-25 would entrust responsibility for the proposed retirement funds to the private sector because, according to the government, the private sector will save us money. Yet Bill C-25 does not cap the management costs or fees that fund managers can charge. Small-scale management will increase management fees, and once again, workers will foot the bill.

Entrusting these plans to the public system would ensure far greater economies of scale and the burden would not be on the workers. We should not forget that we are talking about self-employed workers and employees of small and medium-sized businesses. I do not believe that they would like to have their savings eroded by management fees or inflation. Yes, I did say by inflation because the plan proposed by the Conservatives will not be indexed to the cost of living. Once again, it is fairly risky.

The government claims that the proposed pension plans will be accessible. If we consider that more than 60% of Canadians do not contribute to a pension plan at work, it is naive to believe that another plan, similar to what is already available on the market, will spur people to save, especially if there is no guarantee that their employer will contribute to the fund.

The Australian example clearly illustrates the limitations of such a savings plan. An analysis of the Australian super fund, a similar program, shows that even though people saved, the return on investment was not much higher than inflation, a disappointing result due mainly—and I will say it slowly—to the high management costs in the private sector.

The pooled registered pension plan does not resolve the basic issue that we are currently facing: how to ensure all Canadians can retire with dignity, no matter their financial situation. What the government is not saying is that it intends to slash the whole Canada pension plan. The statements made by the Prime Minister in Davos, Switzerland, provide insight into this government's real intentions. The Conservatives want to make changes to the Canadian retirement income system. But what are they? We have every reason to believe that they will slash public programs that Canadians value.

We should not forget that old age security is the last defence against poverty and isolation, and it is vital to those who have lived and continue to live on low income and who have not been able to save for their old age. Many women are in this situation, because they hold the majority of part-time or precarious jobs. If programs such as old age security are cut, that will have a direct impact on the physical and psychological health of the most vulnerable in our society.

Well, I would remind the Prime Minister and the members of the government that they have an obligation to govern for all Canadians, including seniors, regardless of their earnings or their financial status. If the Conservatives really want to make reforms that will ensure the continuity of the Canadian pension system, we in the opposition have four alternatives to propose.

First, we must increase Canada pension plan and Quebec pension plan benefits. Both plans are working perfectly well and simply need investments. Some 93% of the population already contributes to those plans, which is very effective. Second, we need to work with the provinces to make it easier for people to contribute to an individual pension plan. Third, we need to amend federal legislation to ensure that when businesses go bankrupt, they do not take off with all of the workers' savings. Fourth—so there are several choices—we must increase the guaranteed income supplement to lift seniors out of poverty and help them live in dignity.

How will we achieve all of this? Where will we get the money? That is what the Conservatives always ask. Well, we make political choices, social choices. Instead of handing billions of dollars in tax breaks to large corporations that are already earning huge profits, we could redistribute that revenue equitably and fairly among the population.

Must I remind the House that over a million Canadian seniors live below the poverty line? That is serious. Thus, the federal government has a responsibility towards our seniors. It should be investing in areas where it could make a real difference in public pension plans, instead of letting financial institutions and insurance companies line their pockets.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Mr. Speaker, I am pleased to join this second reading debate on Bill C-25, An Act relating to pooled registered pension plans.

As the hon. members of the House know, pension plan coverage is an important issue to those Canadians who have not had access to pensions because they are employed by small and medium-size businesses or because they are self-employed. We want to help those Canadians. Therefore, we will be working with the provincial and territorial governments to meet the budget 2011 commitment to introduce a new kind of pension plan called the pooled registered pension plan, or PRPP as it has become known. This commitment is among the many commitments that this government has made to help improve Canada's retirement system.

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

We are happy to see that our government has also provided $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 a doubling of the maximum amount of income eligible for the pension income credit.

I have heard from many seniors in my riding of Leeds—Grenville who appreciate what we have done to relieve the tax burden. Often when I am out at events around the riding, and I do attend many of them, this is what I hear. In my riding the average age is a little higher than it is in other parts of Canada. This is something that is very important to my constituents.

In addition, in budget 2008 we introduced the tax-free savings account, the TFSA, something that is particularly beneficial to seniors, as it is to everyone, as it helps them meet their ongoing savings needs on a tax-efficient basis after they are no longer able to contribute an RRSP.

Our record also includes important improvements to several specific retirement income supports. In budget 2008 we increased flexibility for seniors and older workers with federally-regulated pension assets that were held in life income funds. In our latest budget we also increased the guaranteed income supplement that is available to seniors.

The introduction of the pooled registered pension plan is only the most recent action that has been taken by our government to strengthen Canada's retirement income system.

Going forward, a key component of ensuring financial security for Canadians will be this PRPP.

Today's PRPP legislation will play a critical role in improving the range of retirement savings options available to Canadians by providing a low cost retirement savings opportunity for employees with or without a participating employer, as well as those who are self-employed.

PRPPs will make well-regulated, low cost, private sector pension plans available to millions of Canadians who up to now have not had access to such plans. Many employees of small and medium-size businesses and self-employed workers will now have access to a large-scale pension plan for the very first time. This will be a key improvement to Canada's retirement income system.

PRPPs will also complement and support the Government of Canada's overarching objective of creating and sustaining jobs, leveraging business investments, securing our economic recovery and encouraging sustainable private sector driven growth.

Some of the retirement income system proposals that we have looked at in our consultations would have significantly raised costs for employers and employees. They would have been unacceptable at a time of a very tentative economic recovery.

Canada's finance ministers opted to prioritize the PRPP framework over other options because it was considered the most effective and targeted way to address the prime areas for improvement identified in our working group's research, particularly the modest and middle-income individuals who did not have access to employer-sponsored pension plans.

PRPPs address this gap in the retirement system 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 and employees of companies that do not offer a pension plan, to make use of this new option; enabling more people to benefit from the lower investment management costs that result from membership in a large pooled pension plan; allowing for the portability of benefits that would facilitate an easy transfer between plans; and ensuring that funds that are invested are in the best interests of the plan members.

These are all important areas where our retirement income system can and should be improved. That is why federal, provincial and territorial governments are working to implement PRPPs as soon as possible.

If it were up to the NDP, it would double CPP contributions, meaning increased payroll taxes on small and medium-sized businesses, the types of businesses that are very prevalent in my riding of Leeds—Grenville.

Might I also remind the NDP the changes to the CPP require the agreement of at least two-thirds of the provinces with at least two-thirds of the population. Federal, provincial and territorial ministers of finance have discussed a CPP expansion, but at this time there has been no agreement. However, they did agree to pursue the PRPP framework. That is because the PRPP strikes the right balance.

Our government understands that during a fragile economic recovery, it is not the right time to increase CPP contributions and tax small and medium-sized businesses any more than they already are.

When it comes to the economy and helping Canadians save for their retirement, they can count on this government to stand up for Canadians.

I and my colleagues on this side of the House could stand here and talk about how great this plan is, but there are other voices to be heard on this issue. I want to take a few minutes to review what others have been saying about the PRPP.

Gregory Thomas, federal and Ontario director of the Canadian Taxpayers Federation said the following:

This new pension legislation is good for Canadians planning for retirement and for taxpayers. 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.

The Canadian Chamber of Commerce released this information. It said:

The Canadian Chamber of Commerce believes 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. PRPPs will also provide individuals and the self-employed with additional retirement savings options.

Dan Kelly, vice-president of the Canadian Federation of Independent Business, stated:

A new voluntary, low-cost and administratively simple retirement savings mechanism will allow more employers, employees, and the self-employed to participate in a pension plan. CFIB is particularly pleased that firms will be given a choice as to whether to register for or contribute to a PRPP.

Many others across Canada have made similar comments. PRPPs will help Canadians save for their retirement. Through numerous cross-country consultations, our government has talked to many Canadians and heard first hand how difficult it can be to prepare for a financially secure retirement. That is why we have devoted considerable effort on the retirement security issue.

We believe PRPPs are a step in the right direction. I urge all members to support the government in this major step forward in securing Canadians' retirement income needs.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I am pleased to rise to discuss Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts. Since this bill does not guarantee a pension, the term savings plan would be more appropriate.

Among other provisions, this bill will create a new type of savings plan enabling the funds from plan members’ accounts to be pooled in order to reduce the costs associated with the management of investments and of the plan itself. The program will be called the pooled registered pension plan, or PRPP. The benefits will be portable.

This bill is designed for self-employed individuals and employees of small and medium-sized businesses, which are often unable to manage a private sector pension plan.

The intentions behind this bill were probably good since, according to the statistics, up to 65% of workers do not even have a pension plan. The attraction of such a pension plan is therefore clear. It would be a good pension plan for those who do not have any plan at all, such as small business employees, the self employed, and others.

However, after further scrutiny, it becomes clear that this pension plan ultimately offers no guarantees, and that is the problem. Instead, it is an investment at the whim of the financial institutions. It is not like the Canada pension plan where Canadians’ money is invested and they know how much money has been invested to date, the age at which the pension can be drawn, and approximately how much money will be paid out. The plan in question is not like that at all.

Moreover, the bill states that employers can participate, but on a voluntary basis. What a fine pension plan. Employers must participate in the Canada pension plan. It is their responsibility. The reason employers must participate in the pension plan is to provide additional money to ensure that the system remains sustainable, which is the case with the Canada pension plan.

The NDP opposes this bill because it does not go far enough. It does not protect workers. The same problem arises when company pension funds are not protected. For instance, we know what happened in Nakawick when the company went bankrupt. The workers lost their pensions.

In Quebec, for example, there was a company that wanted 60% of the pension plan and 30% of the salaries of new workers and, because it did not get these things, it shut its doors and left. That is unacceptable. That is outrageous for a person who has worked all his life.

What did the Conservative government do? It turned around and introduced Bill C-25, which is significant. It is obviously important to examine the bill and determine whether it contains something worth considering. But what do the Conservatives do? They impose time allocation. They do not want to discuss this bill—in a democratic country like ours. We saw this after the election and until December. What has this government done? Once again it has imposed time allocation. This is the place we are able to discuss bills. It is standard procedure for everyone to have the right to talk about the bill and state his or her opinion. That is why we were elected. We have to be able to voice our opinions. Every member of the House must have the right to stand and express his or her opinion about a bill.

Before Christmas, during the previous session, what did the government do? It said that we had been talking about these bills since 2006, that it had heard enough, that it could put an end to the debate and that it was time to vote and move forward. For those who do not know, that is what a time allocation is.

The NDP disagreed with the Conservatives because there were new members who had the right to speak in the House of Commons. Even if we had agreed with them, it does not give them any excuse to now reduce the hours of debate in the House of Commons for the new bills. They introduced the bill on Monday. It is now Tuesday and there has already been a motion introduced in the House of Commons to halt debate.

This will be a wonderful four years. Canadians will have four wonderful years under the Conservative government.

This really is a lack of respect for democracy and the right to speak. I have said this several times in the House of Commons and I will keep repeating it as long as the government keeps acting in this way.

We send our soldiers to fight in other countries to give them democracy, a parliament, the right to speak. We do that to give the citizens of those other countries the right to know the direction their government is going in and the power to have someone speak for them.

But this Conservative government is taking that right away with time allocation motions, as it has just done, so debate ends, even though the subject is important.

This government is prepared to cut pensions for our seniors, for our women and men who have worked very hard. We are talking about the baby boomers, people who started working at the age of 14, people who started working at the age of 13, and people who went away into the woods and worked hard for our country. This government is telling them that they cost it too much and it is prepared to make 67 the age of retirement.

It is shameful, it is monstrous, even to think about that, for people who are reaching retirement. What will we do for people who had bad luck, who were sick or who had to receive social assistance, for example? This government is going to transfer the debt to the provinces. People thought that at age 65 they would finally have an income that would mean they did not have to be afraid to buy groceries to put food on the table, and they thought they would have a little money to live on for the years that were left to them, but the government wants to take that away for two more years, and it wants to transfer those costs to the provinces. They are the ones who will have to pay for it. I hope the provinces will stand up to this and tell the Conservative government it is not acceptable in our country.

Ten years after Australia tried the same pension system as is being proposed here, it was determined that that kind of pension system did not work. We have to have a better system than that.

The system the NDP wants to put in place will double the Canada pension fund. It is a guaranteed program under which people know in advance what they are going to receive.

Experts said it had to be revised because in the past people did not live long; they lived to the age of 67 or 68. Of course. They had no pension and they had to work right up to the last minute. That meant they worked themselves into the ground, they damaged their health, they wore themselves out. Perhaps the reason people’s health has improved is that they are able to retire and live in peace for the years they have left to live. Technology and the new drugs and pills that people take when they are 60 are not the only reason. People have been able to stop working. There are people who have worked hard all their lives. If the government wants to make budget cuts, let it make them somewhere else.

For example, when it comes to the F-35 jets, it seems they are going to cost about $29 billion. The federal government is spending on all kinds of things. Let it look somewhere else rather than going after our seniors, our women and men who have worked all their lives. Let it stop going after them. They do not deserve it. These people have worked hard. This is not a matter of just workers. There are even companies that also want a new generation to employ. They want to hire young people. How many people are there in Canada who have no jobs and who are capable of replacing the people who retire, who will make room for them in their place?

It is fine to make decisions like this and say it is the right thing to do, but who is going to pay for it? It will be the most vulnerable people, the people who have not had a chance to have a pension. Bill C-25 is not going to protect those people. They are not going to be protected by this.

Once again, and it cannot be said loud enough, the NDP’s plan is well designed and has been accepted by the Canadian Labour Congress, by all the unions in Canada. The Canada pension plan is what we should be looking at. That would help even the people who are not union members; it would help all these workers who have worked all their lives.

I hope the government will revise this bill, send it to committee where amendments will be proposed, and allow the time to examine it properly. I hope members will be able to examine it, call experts, and propose amendments. However, knowing this government, I do not think that is going to happen. For the four years they are going to be here in the House of Commons, they are going to ignore democracy in our country and in our institution, Parliament.

[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.

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.

Second Reading

[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.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, it is my honour to speak to Bill C-25. I welcome everyone back in the new year and I welcome those who are watching at home. It is hard to believe that people do watch the debates at home but I have two grandmothers who actually watch so I want to say hello to my grandmothers and wish them a happy new year if they happen to be watching today.

I want to talk a bit about how we got here today and why Bill C-25, the pooled registered pension plan, is important. I had the opportunity, as a Conservative member on the finance committee over the last five years in the previous Parliaments, to be part of finance and we did an extensive study on pensions. It took a number of months and, out of that study, came a number of issues, one of which was a pooled registered pension plan. Business, labour and individual business owners were coming to our committee and asking us to look at the possibility of being part of that group of those who were eligible for pensions. As has been previously mentioned, about 60% of people do not have access to pensions. They were looking for an opportunity to have access to a pension plan.

Out of that, we recognized the issue that pensions play, not just currently but in the future. The Prime Minister had the foresight to take the parliamentary secretary at the time and make him a Minister of State for Finance with a focus on pensions. We are the only government in Canada's history that has a focused ministry on that particular item. We care about our seniors, our future seniors and where this country is going in terms of the demographic. We need to be on top of the pension plans and retirement issues that are facing this country, which is why the Prime Minister has dedicated a ministry to that effect. So that is how we got here today.

Who asked for it? Members have heard over and over again from my colleagues on this side of the House about the small business organizations that have come to see us to talk about why they need access to a pension plan. One reason is that it is good for their employees. There is no doubt that having access to a pension plan and having some planning in terms of eventual retirement are important. However, as the Parliamentary Secretary to the Minister of National Revenue previously said, it is also important for retention and attraction of employees. It is very difficult for small and medium size businesses to compete with large businesses that have pension plans and other benefit programs to attract high-quality employees. One of the things small business representatives told us at committee was that they needed a pension plan that would help them, not only retain their great employees but to help them attract new employees to their industry or business. A pooled registered pension plan would allow that to happen.

I want to remind members of the House and those watching that we are at second reading. What we are trying to do today is move this from the House to committee. With the three days that we have allocated for second reading, we have 42 speakers in 42 time slots. The bill then goes to committee so we can discuss the individual issues. We can have witnesses come to talk to us about what components are working, what needs to be changed and what can be improved. That is what we are doing today.

However, let us look at the components. One is the low cost. I have heard my colleagues across the way ask how we can guarantee it would be low cost. I am a member of OMERS as I used to be a municipal employee. OMERS now has the ability to allow me to have my own independent investments through RRSP managed by it. Why does it tell me it is a good idea? First, it is a good investor. It has a good group of people managing it as a third party and they are smarter than me on the investment piece.

Second, because of the numbers OMERS has, there are lower costs than for me to invest individually in RRSPs. It is a pooled system that OMERS is offering to members for other investments that it will manage at a lower cost. This is exactly what the pooled registered pension plans would do. It is large pools of revenue that it is able to invest at a lower cost because it has a larger pool to deal from. it knows that is coming.

Another piece that is vitally important here and that people seem to be missing the point on is this. They are saying that it is just another RRSP. However, people voluntarily put money into an RRSP, whereas if a company has a pooled retirement pension plan, people are automatically enrolled in it. They would have to withdraw from that plan. It is just like the CPP, in which people are automatically enrolled. Someone has to make a personal investment decision as an individual employee to withdraw, otherwise that person is in the plan.

Frankly, I think it is a better way to go to have people automatically enrolled in the program. Then they at least have to look at their investment plan and make a decision on their own. For lots of people, my neighbours and I included, making investment plans and decisions can be difficult. It is often much more practical, efficient and appropriate to leave it to a third party to do. People will be enrolled in this plan and will be saving for their retirement. Someone would have to decide not to save for their retirement to get out of a pooled retirement pension plan. That is a fundamental difference with an RRSP, which we have heard lots about.

Portability is another important issue I want to talk about. In a pooled retirement pension plan, if someone leaves a company to go to another one, that person can continue to have those retirement benefits in the pooled plan.

Let us be honest, if they leave one company to go another and do not contribute to the plan as a new employee, the company will lose that employee's contribution. That is true, and that is a choice people will make when they change jobs. They will have to look at the benefits they are going to get, including the opportunity for retirement, all of which will be part of that pension plan decision and the reasons they might move. At least it is portable and people will not lose those benefits, as they can move from one company to another.

The final thing I want to talk about is that it would effectively be available to everyone. Right now large corporations have some sort of contribution plan. Some have a defined pension plan, which I know is becoming increasingly rare. However, larger firms seem to be able to have contribution plans, as they can afford the management costs and they have HR departments to look after those types of things.

The largest employer in my riding of Burlington employs 600 people. The vast majority of the thousands of people who work in my riding work in small- and medium-sized businesses or sole proprietorships. All three will now have the ability to join a pooled registered pension plan, an option not available now.

Finally, I want to say this. We have heard lots about the government not boosting the CPP. The parliamentary secretary who spoke before me talked about it. Let us deal with the facts: the facts are that we need the agreement of two-thirds of the provinces, with two-thirds of the population, to actually make a change. We cannot disrespect the provinces and premiers. If they do not want to move on the CPP issue, we do not have the right or legislative ability to override their decision.

However, we do have agreement to move forward with a pooled registered pension plan program. All the provinces, at different levels, will have to have their own legislation. We have been clear about that. We will have to have legislation here, and the provinces will have to have legislation. We have commitments for that to happen. That is why we are moving forward.

We can talk about CPP, as we have as a government with our counterparts at the provincial level, until we are blue in the face, and I do not mean Tory blue, but mean regular blue. However, it will not happen without the provinces' agreement. We will continue those discussions because CPP is an important pillar, an important tool, for the retirement of everyone who is working.

Nonetheless, we need to find other tools. This is one that we have agreement on, and this is one that the business community is interested in. I even had 50 people at my house on Friday night discussing pooled retirement pension plans. These people were asking if they would qualify.

This is something we need to do. We have 42 time slots for discussion. Let us get the bill to committee. If members have problems with this legislation, they can bring their issues forward there. Let us move forward and do something for Canadians, as our NDP friends claim they like to do but never do. We are doing it.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I am pleased to rise in the House today to debate Bill C-25, which, as we know, is about setting up a pooled registered pension plan. This is an important issue today for the future economic security of retirees. Many members have talked about the 12 million Canadians who do not have a workplace pension plan. We have to deal with this issue.

However, the NDP—myself included—believes that the government's proposed solution is a very bad idea. It will distract us from good solutions, and we will end up with a program that does not meet its stated objectives. Let me explain why.

So far, many members have talked about how the economic crisis highlighted the weakness and vulnerability of private pension plans. I am well aware of this because, in my previous life, before becoming an MP, I dealt with very sensitive situations where pensions were at stake, such as the AbitibiBowater employees' pension. Now other companies, such as White Birch, are having problems. In those workplaces, pensions are typically defined benefit plans, not defined contribution plans. These are real pensions that provide economic security, but the present economic climate is undermining that security.

That is what is happening to the Canada pension plan, a defined benefit plan that provides people with economic security because they know how much they will get once they stop working. With defined contribution plans, people do not know how much they will get. That is up to market fluctuations, and it is one of the weaknesses of the government's proposal.

The government often says things to suggest that it accepts the argument that the public pension plans are solid and secure programs; these include the Canada pension plan, old age security and the guaranteed income supplement. It is essential to provide Canadians and Quebeckers with economic security, but the pooled registered pension plan proposed by the government does not do that.

Before getting into the major shortcomings of the proposed pooled pension plan, I would like to address one of the arguments that has been raised many times since the beginning of the debate: that we have no choice but to move in this direction because the provinces have refused—the necessary consent was not given by two-thirds of the provinces. That argument is a fallacy.

I followed the issue when I was in my previous position and I also followed the Kananaskis meeting where this was discussed. I would like my colleagues to refer to an article from the Globe and Mail that was written on the eve of the Kananaskis meeting. I will read it in English because the article is in English.

Provinces are planning to fight for enhancements to the Canada Pension Plan at a key meeting on Monday, setting up a showdown with the [federal] government over how Canadians will fund their retirements.

Just days before federal and provincial finance ministers meet in Kananaskis, Ottawa made a surprise move to reject CPP enhancements for now in favour of a new privately run savings vehicle.

Ontario's finance minister, who is quoted in this Globe and Mail article, said he did not think the provinces would oppose it. In the same article, the only province to oppose improving the Canada pension plan was Alberta. It was possible to get approval from nine provinces at that time. Since the government announced that the option of improving the Canada pension plan was not on the table, the provinces wanted to try to make the meeting worthwhile by proposing any option that might seem like progress. That is what is being proposed right now. To say that we have no choice but to take this direction because the provinces have said no is a fallacy. It is not true. It is baloney.

The Canada pension plan has several major flaws. Now we are talking about another voluntary plan. It will be introduced in a workplace and it will be optional. People will be able to opt out if they want. In other words, it will be a voluntary program. Tons of voluntary programs already exist, including group RRSPs and the more recent TFSAs. Both of these plans offer tax incentives to encourage Canadians to invest. Yet only 30% of Canadians invest in RRSPs, despite the significant financial incentives. It costs the federal government a fortune in tax expenditures. So why do only 30% of Canadians invest in RRSPs? Why do 70% of Canadians not invest? Because they do not have enough disposable income to do so.

I can also talk about TFSAs. Some 40% of Canadians invested in TFSAs last year. Half of that 40% earn $100,000 or more a year. For them, this program in another tax loophole. In the end, over 60% of Canadians are not investing in TFSAs, despite the advantages of the program, because they do not have the disposable income needed to invest. So, there is a good chance that low-income employees will not have enough incentive to participate in the proposed program because they need all of their income to meet their basic needs. Many of the employees who have the program available to them will opt out for that reason. The reason many voluntary programs do not work, despite tax incentives, is because people need to have enough money to invest.

We compared the management fees of the program proposed by the government to those of the Canada pension plan. Management fees associated with the CPP are less than 0.5%. Private plans, such as mutual funds, are also a form of pooled investment, since everyone has a share of the overall envelope in a mutual fund. The largest mutual funds do not benefit from any economy of scale. Management fees range from 2% to 2.5%. This may not seem like much but when a mutual fund generates a return of 3% to 3.5%, the 2% to 2.5% in management fees must be deducted from it. If the Canada pension plan delivers the same return as a mutual fund, only 0.5% must be deducted. Thus, the Canada pension plan already provides a return that is 2% greater than private plans like the one the Conservative government wants to implement.

As a side note, the Canada pension plan delivered a return of 15% in 2010 and 12% in 2011. On average, private plans in Canada delivered a return of 10.5% in 2010—from which 2% to 2.5% must be deducted—and 0.5% in 2011. We are talking about a total cumulative return of 27% over the past two years for the Canada pension plan and a return of only 11% for private plans. If there are any doubts about the effectiveness of the Canada pension plan as compared to private plans in the past two years, a time of economic uncertainty, this fact should dispel them.

With respect to economies of scale and management fees, Australia has a super fund very similar to what the government is proposing. About 10 years after setting up the super fund, Australians discovered that there were no economies of scale and that management fees were the same as for private funds, such as mutual funds.

I have already briefly addressed the third element, defined contributions.

Fourth, this distracts us from the real solution that the NDP has proposed: enhancing the Canada pension plan. Gradual premium increases would make it possible to double benefits, thereby ensuring a secure retirement for Canadians. That would be a true financial security program.

I do not have enough time to point out all the advantages of this solution. I hope that someone will ask me a question about that in the next five minutes. This is the right solution. This solution would also provide economic stability because beneficiaries would spend their bigger pension cheques. After all, they no longer need to save. The money would be reinvested in the economy to play a major role in battling economic uncertainty and fuelling the economy.

That makes our solution far better than the vague one the Conservatives have proposed.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, it is certainly my pleasure to rise in the House today to speak to Bill C-25, Pooled Registered Pension Plans Act. This legislation is the result of some three years of careful preparation and consultation on the part of our government in partnership with the provinces, territories and other stakeholders. As a result, we are now in a position to pass legislation that will help millions of Canadians, who do not have access to a pension plan, to prepare for their retirement.

I would like to begin by taking a moment to reflect on why the legislation is so important and what prompted its creation.

First, governments have known for a number of years that a demographic shift is taking place in Canada. In spite of immigration and the growth of certain sectors of the Canadian population such as among first nations, the overall demographic trend is toward the growing number of Canadians reaching retirement age. This is due not only to the retirement of the baby boomer generation, but also to the fact that more Canadian seniors are living longer.

The challenge this creates for us as the government and for Canada as a society is how we can contribute to a basic quality of life for our aging population in the face of increased strain on our retirement income system. This challenge is made all the more poignant by the immense contributions that our retirees have made to the growth and prosperity of our country. Our seniors deserve dignified retirement. That is why in recent years our government has taken action through a range of measures to support elements of our retirement income system that have a proven record of success.

For example, we built on the framework for federally regulated registered pension plans and took steps to ensure that employers fully funded benefits if the pension plan was terminated. Working with the provinces, we also modernized the CPP making it more flexible for those transitioning out of the workforce.

In budget 2011 we introduced a new guaranteed supplement top-up benefit for Canada's most vulnerable seniors. I would like to note that the opposition voted against that important increase in GIS for seniors. As a result, more than 680,000 low-income seniors now receive additional benefits of up to $600 for a single and $680 for a couple. In addition, we have provided some $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.

Although all of these measures are intended to provide greater flexibility and security to our retirement income system, additional measures are required to safeguard Canadians as they reach retirement age. That is why in May 2009, as the world reacted to the global financial crisis, the federal-provincial-territorial finance ministers met and agreed to form the working group on retirement income adequacy.

After months of consultation, the working group concluded that while our Canadian retirement system was on the whole performing well, some Canadian households were at risk of not saving enough for retirement. A gap identified by the working group was the large number of Canadians, 60% in fact, who had no access to a workplace pension plan.

In December 2010 the finance ministers from across the country agreed that a defined contribution pension plan could be made available to 60% of Canadians and they agreed to pursue a framework for pooled registered pension plans.

Members of the opposition have repeatedly stood in this place during the debate on the bill and have argued against the position of our finance ministers from across the country. They suggest that the key to retirement security is simply to expand Canada pension plan benefits. We know that changes to the CPP would require the agreement of at least two-thirds of the provinces with at least two-thirds of the population. The federal-provincial-territorial ministers of finance have discussed this very notion of a CPP expansion, but there has been no agreement.

Beyond that, if the CPP were to be expanded, Canadians could count on increases to their CPP contributions as a result. Surely a fragile economic recovery is not the right time to increase the amount Canadians have to pay on their CPP contributions.

That being said, moving forward on a PRPP does not preclude some future change to the CPP. The opposition needs to understand that this government is not closing the door on CPP. Rather we are opening the door to a new low-cost and accessible option that will help Canadians meet their retirement goals.

This is especially important for those working for small businesses and the self-employed. Currently, owners of small businesses who might want to create a pension plan for their employees but lack the resources and expertise to do so, or for those in companies that do not have pension plans or are self-employed and want to have access, they are not able to under our current system.

PRPPs would be administered by a financially regulated institution thereby decreasing the cost and complexity for small business owners in setting up such a plan. PRPPs would be accessible to those without an employer-employee relationship, allowing the self-employed to benefit from the advantages of PRPPs, including the lower costs that would result from the pooled funds.

Currently some Canadians may be failing to take advantage of the saving opportunities offered to them through individual structures like RRSPs. In fact, on average, each Canadian has over $18,000 in unused RSP room. Even among those who do make a concerted effort to maximized their retirement income through voluntary contribution structures, a PRPP could provide avid stability.

For example, I will touch on a story of one self-employed Canadian's retirement savings experience. This gentleman worked as a self-employed stone mason prior to retirement and his main form of retirement savings was through RRSPs. Particularly in the last years of his career, he increasingly worked toward maximizing his RRSP contributions and ensured that they were invested reasonably securely, but nevertheless provided some return on investment. Today he is able to live on the retirement income he was able to provide for himself, but only after a lot of hard work on his part to educate himself on RRSPs and investment. In his own words: “It takes years to develop a way of investing that is wise”.

While it is a stated goal of our government to improve financial literacy, we are also aware that many Canadians may not have the time, opportunity or the desire to study investing and not everyone has access to a broker or financial adviser. This is where PRPPs would provide a great benefit because the responsibility for implementing the pension plan would be taken on by the third-party administrator.

The administrator will be responsible for the management of the pension fund and the day-to-day administration of the pension plan. This will include ensuring that the money being contributed into the plan is being managed prudently, that appropriate investments and options are offered and that plan members are informed with up-to-date plan information. Additionally, because PRPP investments are pooled, it is expected that members will be able to benefit from greater economies of scale and lower costs compared to RRSPs.

Another major benefit of the PRPP is its universality and portability. In my own riding of Kamloops—Thompson—Cariboo many people rely on seasonal work for employment, which is a fact of life for many rural Canadians across the country.

For example, let us say that a constituent of mine named John works at the ski resort of Sun Peaks during the winter, but during the summer must find work at a local ranch. Under our current system, John would be left to his own initiative to invest in RRSPs or contribute to his tax-free savings account. Now, thanks to the portability of the PRPP, John can contribute to the same pension plan, regardless of which employer he happens to be working for.

Providing a new, accessible, straightforward and administratively low-cost retirement saving option will allow more Canadians to benefit from secure retirement savings. I am therefore proud to support the government's move to implement PRPPs and hope, with the support of the provinces and territories, that we may speedily implement this important reform for our retirement system.