House of Commons Hansard #69 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was plan.

Topics

Questions Passed as Orders for Returns
Routine Proceedings

3:20 p.m.

Conservative

The Speaker Andrew Scheer

Is that agreed?

Questions Passed as Orders for Returns
Routine Proceedings

3:20 p.m.

Some hon. members

Agreed.

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

Pooled Registered Pension Plans Act
Government Orders

3:20 p.m.

Conservative

The Speaker Andrew Scheer

Five minutes remain for questions and comments following the speech by the hon. member for LaSalle—Émard.

Are there any questions or comments?

Resuming debate. The hon. member for Vancouver East.

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3:20 p.m.

NDP

Libby Davies Vancouver East, BC

Mr. Speaker, I am pleased to have an opportunity to speak to Bill C-25, which is the pooled registered pension plans.

I will begin by commenting on the remarks made by the Minister of State for Finance during the debate earlier this morning and again in question period in response to one of his own member's questions on this bill. He said that they were doing a great job on pensions and helping seniors. I was surprised to hear the minister of state say that Bill C-25 would be accessible. He kept stressing that it would be accessible.

When we look at the bill and the proposal the Conservatives have, there is absolutely nothing accessible about it. How can something be accessible when one cannot afford it? How can something be accessible when to go ahead with this kind of savings scheme would be to put one's money at risk in very volatile markets? How can it be accessible to the 1.6 million seniors who are considered to be living in poverty, as estimated by the Canadian Labour Congress? I was very surprised to hear the Conservatives describe this proposal as something that is accessible.

I was further surprised when the minister of state remarked that currently in the RRSP plan there is, I think he said, $600 billion room for people to make contributions into RRSPs and that this would be a great opportunity to do that. Surely that begs the question as to why Canadians are not taking up what already exists under RRSPs if there is $600 billion tax room available that they could use individually. The answer is that most Canadians cannot afford to make RRSP contributions or, if they can, they are concerned about the security of their money, whether it is in various kinds of stocks, mutual funds and so on. Therefore, they have not been taking up that so-called room in RRSPs.

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3:25 p.m.

Conservative

Tom Lukiwski Regina—Lumsden—Lake Centre, SK

Mr. Speaker, I rise on a point of order. I apologize to my colleague for interrupting. It is not a point of order on her presentation. I just want to correct the record going back to routine proceedings and questions on the order paper. Questions 403 and 404 were included in my submission, as well as 402 and 405, as orders for return.

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3:25 p.m.

Conservative

The Speaker Andrew Scheer

I thank the hon. member for that clarification.

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3:25 p.m.

NDP

Libby Davies Vancouver East, BC

Mr. Speaker, getting back to Bill C-25, I want to make it clear that this so-called pooled registered pension plan would not guarantee an actual pension. There is also no guarantee about how much money would be left when people retire if they had been able to afford to put money into such a plan.

As we read through the legislation, it becomes clear that the risks of such a plan are borne entirely by the individual who is making the contribution, as well as the employer, if he or she decided to make a contribution.

We should also be aware that this so-called pension plan that has “accessibility” would be managed by for-profit financial institutions, like banks, insurance companies and trust companies. There would be no caps on administration fees or costs.

This so-called plan, which is no plan at all, from the Conservative government would push people into the marketplace. It is basically saying that if people can afford it they fend for themselves. That is the basis of the government's plan here today.

We should be very clear that this proposal would not require matching contributions from employers. It also encourages hard-working Canadians to basically gamble on failing stock markets.

I find it quite incredible that, on the basis of public policy, a government would come forward with this proposal and say that it is the answer to the severe pension problems we have. It wants to just shuffle everybody off and tell them to go in the marketplace and see if it will fix it for them.

We know that is clearly not the case. For everybody who watched their RRSPs plummet over the past year or so, they know how risky it is to have their savings tied to the stock market and how risky it is for their retirement.

I also want to illuminate the bigger picture. We heard the Prime Minister's speech in Davos, Switzerland, last Thursday about a fix for a generation, which he mentioned several times. I would say that it is more like a rip-off for generations to come.

One of the cores of that speech was his musings about how the Conservatives would tackle something that is very basic to Canadians, which is our old age security system. I find it quite reprehensible that we have a government that could make clear choices about economic performance and about how tax revenue is collected and where tax revenue goes and yet it has made clear choices and had the gall to announce those choices in Switzerland to a bunch of billionaires. The government did not even have the guts to be in Canada to roll out its plans. It did not have the guts to say it in the election.

We have a government, as we learned from the Davos speech, the “fix it for a generation” speech, that now plans to take aim at the old age security system and our pension system. The opening shot is the proposal that we have here today.

By contrast, the NDP has done an enormous amount of work studying, researching and analyzing what does need to be done to ensure pension security for Canadians who are already in retirement or Canadians who are planning to retire and are quickly approaching that age.

I want to pay tribute and thank the member for Hamilton East—Stoney Creek for the amazing work he has done in bringing this issue forward. He has very doggedly, time after time, whether it is in question period, in bills he has proposed for the NDP and brought forward in the House, in the forums he has held across the country or in speaking with seniors organizations, made it clear on our behalf, on something that we all support, that the NDP has brought forward a very comprehensive plan for retirement income security.

We would not leave people out in the cold. We would not leave people to the vagaries of the marketplace. We would not say to people that they might have to get a bit older before they can collect their old age security. Our plan is based on income retirement security that is fair, equitable and, most important, affordable.

The member outlined earlier this morning the plan that works in our country, and that is the Canada pension plan and the Quebec pension plan. We would increase it to a maximum of $1,920 a month. We would ensure that it would be sustainable and that Canadians would get a fair and decent retirement pension.

We would also amend the bankruptcy legislation to ensure that pensioners and long-term disability recipients would be at the front of the line, not the end of it, of creditors when their employers entered court protection to declare bankruptcy. How many cases have we heard in the House of seniors who have worked hard over the years and paid into their pension plans only to see them go up in smoke because of bankruptcy proceedings? They found out that they were at the very bottom when it came to seeing some justice from the system such as it exists now. We have put forward legislation to correct that situation.

Finally, we have made it very clear that we would increase the guaranteed income supplement, the GIS, to a sufficient level of about $700 million a year to lift every senior out of poverty in Canada immediately. Again, this is something that is affordable, realistic and it is the right kind of public policy decision to make at this time.

In debating the legislation today, we have to be very clear that we have a Conservative government that likes to make announcements in front of its billionaire elite supporters in Davos, Switzerland. It likes to put forward proposals that drive people into a marketplace situation, saying that they should go out there and fend for themselves, but if their savings get wrapped up in some kind of volatile market and they lose it, that it is not its problem.

That is not our approach. We do not want to see income inequality grow in our country. What was announced at Davos was nothing more than a further step to huge corporate interests such as we have seen with the corporate tax cuts. We have to be very clear for Canadians that there is an alternative. We do not have to be driven by this kind of agenda. I hope Bill C-25 is the beginning of a massive campaign to show that Canadians will not allow their pension system to be tampered with.

Other prime ministers have tried to do this. Other Liberal and Conservative prime ministers tried to get in there and make changes and they heard the wrath of Canadian seniors, who are a very organized group. I hope today the bill will be the first opportunity to mount a campaign as to what we see as an attack on public services, on our public pension system and on seniors who are some of the most vulnerable in our society.

We have to say no to the idea that it is just about the marketplace and yes to sound public policy decisions that are fair, equitable and affordable. That is what the NDP has put forward.

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3:30 p.m.

Conservative

Brian Jean Fort McMurray—Athabasca, AB

Mr. Speaker, the member easily criticizes the government in relation to what our proposed plan is, or what she expects it to be. I am curious as to what the NDP plan would be. We have heard the NDP continuously suggest spending and more spending, billions upon billions of dollars.

Where will that money would come from? Sooner or later it has to come from somewhere and somebody has to pay the bill. What is her suggestion relating to the large demographic we have? It looks like by 2030 there will be three times the yearly expense for these program. What proposal is her party coming forward with in this regard? It is spending more money. Sooner or later somebody has to pay for it. Who is going to pay for it?

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3:30 p.m.

NDP

Libby Davies Vancouver East, BC

Mr. Speaker, I am happy to answer that question because it gives me an opportunity to bring forward very solid information about how the NDP has proposed that we pay for something like raising the GIS.

I will begin with January 1. This year alone we will see a corporate tax cut of $3 billion. I forget the exact number, but I think we have had over $60 billion since 2004 in corporate tax cuts. The loss of public revenue that the Conservatives have perpetuated and brought forward is driving their agenda and they are now saying that we have to have cuts. We know that it is about looking at where the revenue comes from and where the expenditures go.

All the proposals that the NDP have made for pension reform that would produce better access, fairness and be more equitable are based on affordability and on an ability to pay. Our tax system should be based on ability to pay. It should be progressive. The idea that we can just shave off the top and say that the bigger one is the less one has to pay is wrong. That is what is robbing our system and driving these cuts. We have to stand up to that, as I think Canadians will, and say that it is completely unacceptable.

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3:35 p.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

Mr. Speaker, I want to thank the hon. member for Vancouver East. I know her social democratic convictions. She explained quite well in her speech the problem with the program we are currently discussing. I would like her to say a few words about the current situation with women in their golden years.

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3:35 p.m.

NDP

Libby Davies Vancouver East, BC

Mr. Speaker, there is no question that women face a disproportionate share of living below the poverty line. Many women worked but they did not necessarily contribute to the Canada pension plan. Therefore, the whole issue of unpaid work or wages is very big. There is a huge gender difference in terms of income equality in our country.

The government's proposal is just really pie in the sky in terms of telling people to go out and have a ball, invest money in stocks and in their own plan. It completely misses the point in terms of the tens of thousands of women who survive on old age security and the guaranteed income supplement and who maybe made contributions to the Canada pension plan.

The previous Liberal government supposedly said that there should be gender analysis of legislation, although it really did not seem to live up to that. That kind of thing has now gone completely by the wayside. It really requires that kind of examination because it would then show that seniors who are women are having a much more difficult time.

This brings me back to the point that it is just so reprehensible that we have a Prime Minister at a conference in Switzerland musing about his big agenda, which I think most people find incredibly scary. Our job here is to ensure he does not get away with it.

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January 30th, 2012 / 3:35 p.m.

Willowdale
Ontario

Conservative

Chungsen Leung Parliamentary Secretary for Multiculturalism

Mr. Speaker, I am honoured today to add my voice in support of today's debate on pensions and retirement income security.

I have been a small business owner in Canada for 20 years. I have also worked for larger corporations. Therefore, I think I should have some knowledge of retirement and what it means.

Contrary to what the hon. members of the NDP may choose to believe, our government continues to work with all stakeholders to improve the security of retirement benefits in Canada. Promoting the retirement income security of Canadians is an important goal of the Government of Canada. We will continue to ensure that our policies, programs and services meet the evolving needs of Canada's workforce and retirees. We recognize the contribution seniors have made, and continue to make, to our nation.

In the wake of economic shocks from beyond our borders, Canadians are concerned about the long-term viability of their pension plans. We are listening to their views on how we can leverage Canada's financial sector advantage to strengthen the security of pension plan benefits and ensure the framework is balanced and appropriate. We are working toward a permanent, long-term solution to protect the pensions of Canadians.

In our effort toward greater retirement security for Canadians, our government is building on the inroads already made to strengthen the framework by federally-regulated private pension plans.

In 2009 we consulted Canadians from coast to coast on these earlier initiatives and subsequently introduced a number of significant changes based on the advice of individual Canadians. Our action included ensuring that an employer fully fund benefits if the pension plan was terminated.

Since taking office in 2006, our government has also introduced several important improvements to the tax rules for registered pension plans, that is RPPs, and registered retirement savings plans, also known as RRSPs. For example, the age limit for converting RPP and RRSP savings into a retirement income vehicle was increased to 71, from 69. Changes were introduced to allow more flexible phased retirement arrangements under a defined benefit RPP. The surplus threshold above which employer contributions to a defined benefit RPP must be suspended was increased to 25%, from 10%.

Let us talk about the pooled registered pension plans.

These private pensions plans already benefit from Canada having one of the soundest financial sectors in the world. With Bill C-25, our government would harness this advantage and further strengthen Canada's retirement income system.

Similar to my colleagues on this side of the House who have already spoken on the subject, let me say that pooled registered pension plans, or PRPPs, would mark a significant step forward in advancing our retirement income agenda and would be a vital improvement to Canada's retirement income system.

The emergence of the PRPPs is the culmination of a journey that began in December 2010, when Canada's finance ministers agreed on a framework for the introduction of PRPPs. This collective approach was taken because PRPPs were considered the most effective and appropriate way to target those modest and middle-income individuals who might not be saving enough for their retirement, in particular, those who currently do not have access to an employer-sponsored RPP, registered pension plan.

There are a number of factors that contributed to this decision by the finance ministers, including declining participation in employer-sponsored RPPs. The proportion of working Canadians with such plans has declined from 41% in 1991 to 34% in 2007.

Some Canadians may also be failing to take full advantage of the discretionary savings opportunities offered to them through individual structures like the RRSPs. Participation in RRSPs reached a peak of 45% of the labour force in 1997, before levelling off to 39% in 2008.

While aggregate RPP/RRSP participation rates for middle and higher-income earners are quite high, research nevertheless indicates that a portion of Canadians may not be saving enough.

PRPPs would address this gap in the retirement income system by providing a new, accessible, large scale and low cost defined contribution pension option to employers, employees and the self-employed. They would allow individuals who currently may not participate in an employer-sponsored 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.

This is especially important for millions of small business owners and their employees, who will now have access to large-scale, low-cost pension plans for the very first time, with professional administrators working to ensure that funds are invested in the best interests of the members.

Since these plans will involve large pooled funds, plan members will benefit from the lower investment management costs associated with the scale of these funds. Essentially, they will buy in bulk.

This sentiment is echoed by Dan Kelly, the senior vice-president of legislative affairs for the Canadian Federation of Independent Business, who believes that PRPPs will help deliver on the promise of a lower cost alternative for small business owners and that the pooled feature should allow lower costs than traditional pensions as there will be a much larger group in the pension vehicle than in traditional arrangements.

Similarly, the president of the Canadian Bankers Association, Terry Campbell, agrees that “PRPPs will make it possible for small and medium-sized businesses to offer to their employees registered pension plans that will be simple to administer. As well, PRPPs will allow self-employed individuals to participate in private sector pension plans for the first time.”

The design of these plans will be straightforward. They are intended to be largely harmonized from province to province, which will also facilitate lower administrative costs and portability. These features will remove barriers that might have kept some employers in the past from offering pension plans to their employees and that prevented employees and self-employed individuals from participating in large-scale pension plans.

Moving forward, we understand that Canadians want their governments to work together to deliver results for them, and the PRPP is a prime example of what we can accomplish for Canadians when we do.

The bill before us today, the PRPP act, represents the federal portion of the PRPP framework and is a major step forward in implementing PRPPs.

In addition, the tax rules for PRPPs have been developed by the Government of Canada and were released in draft form for comment on December 14, 2011. The tax rules for PRPPs will apply to both federally and provincially regulated PRPPs.

Once the provinces put in place their PRPP legislation, the legislative and regulatory framework for PRPPs will be operational, thereby allowing PRPP administrators to develop and offer plans to Canadians and their employers.

As Frank Swedlove, the president of the Canadian Life and Health Insurance Association, stated, the PRPP is a great opportunity to make a fundamental difference in the landscape for pensions in Canada and we hope the legislation reflects that opportunity.

Once implemented, PRPPs will be a key element of the third pillar of Canada's retirement income system, which provides tax-assisted vehicles to help and encourage Canadians to accumulate private savings for retirement. PRPPs will complement and operate alongside RRSPs and employer-sponsored RPPs.

As I noted at the outset, we have already taken significant action to strengthen the existing elements of this pillar, like RPPs and RRSPs.

RPPs are sponsored by employers on a voluntary basis and can be either defined contribution or defined benefit plans, with employers, and often employees, responsible for making contributions.

RRSPs are voluntary, individual, defined contribution savings plans. Employers may provide a group RRSP for employees and may remit a share of contributions on behalf of their employees.

Contributions to RPPs and RRSPs are deductible for income for tax purposes, and investment income earned in these plans is not subject to income tax. Pension payments and withdrawals are included in income and are taxed at regular rates.

The cost of tax assistance provided on retirement savings is currently estimated at approximately $25 billion per year in foregone revenue for the federal government, and about one-half that amount in foregone provincial revenue.

Of course, tax-assisted private savings works hand in hand with the other pillars of Canada's retirement income support system. That includes the old age security, OAS, and guaranteed income supplement, GIS, programs, which provide a basic minimum income guarantee for seniors; and the Canada pension plan, CPP, and the Quebec pension plan, QPP. These are mandatory public targeted benefit pension plans that provide a basic level of earnings replacement for all Canadian workers.

We have a solid and inclusive system, but our government is continually looking for ways to improve it. The road ahead will likely include more discussion between Canadians and government at all levels. As these issues are complex, we cannot force a decision without understanding the long-term implications for both Canadians and the Canadian economy. We need to get this right, and so far I firmly believe we have.

Over the past two years, our government's commitment to a stronger system has taken my colleague, the Minister of State for Finance, to communities across the country, consulting with Canadians, engaging in challenging the opposition parties in constructive dialogue, discussing key considerations with business and labour groups and receiving valuable input from some of the most respected experts in the retirement income field.

Passage of this legislation being debated today will mean that we have made real progress as a result of these efforts. It is not just the Government of Canada that understands this. B.C. finance minister Kevin Falcon recently stated, “The province supports an initiative where people currently without occupational pension plans are able to take advantage of a low-cost option”.

Working together, I am confident we can get these important new retirement vehicles up and running for Canadians in a timely manner. We have the support. According to Tom Reid, senior vice-president of group retirement services at Sun Life Financial, “The PRPP legislation is an important, much-needed and well-targeted reform to Canada’s retirement system. It reflects an equitable balance of responsibility among individuals, employers and government that is key to the success and sustainability of our world-class pension system.”

In addition, the Canadian Taxpayers Federation's federal and Ontario director Gregory Thomas called the PRPP legislation good for Canadians planning for retirement and for taxpayers. He stated that “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.”

Through the cross-country consultations, Canadians made it clear that this is an issue too important to get wrong. While our government is determined to make it even better, I should stress that Canada's retirement income system has already been recognized around the world by experts like the Organisation for Economic Co-operation and Development, the OECD, as a model that succeeds in reducing poverty among Canadian seniors and providing high levels of replacement income for retired workers.

While the OECD has reported that the Canadian poverty rate in the mid-2000s among seniors was at 4.4%, one of the lowest rates in the OECD compared to the OECD average of 13.3%, the poverty rate is defined as 50% of the medium income in our country. The average income of Canadians aged 65 years or over is about 90% of the average income of all Canadians, which is the third highest of selected OECD countries.

Canada's seniors have worked hard to build a better country for future generations and today's workers should be given every chance to follow in their footsteps. Our record shows that our government is committed to the financial well-being of Canadian seniors, as well as many Canadians who are currently still working to realize their retirement dreams. They deserve not only our respect but also our support to allow them to enjoy their later years after a lifetime of contributing to our society.

The PRPP is the latest in a range of government measures providing them with just the support they need. I would therefore encourage all members of the House to vote in favour of this bill and join the government in building an even stronger retirement income system for the future.

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3:50 p.m.

NDP

Charmaine Borg Terrebonne—Blainville, QC

Mr. Speaker, my question is for the hon. member opposite. The government has presented a lot of half measures since the beginning of the session in September, and even in June. There are many small businesses and self-employed workers in my riding. When they heard about this bill, they were excited at first. However, when they read the bill, they realized it was a savings plan and not a pension plan or a retirement plan. It is a savings plan, like the one for students.

How does this government expect low-income individuals to put money aside, as this program requires? It is not a solution. It is a half measure.

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3:50 p.m.

Conservative

Chungsen Leung Willowdale, ON

Mr. Speaker, there are no half measures. A pension plan is a pension plan. It provides an option for the employee to contribute to a plan that will grow in the absence of taxes on capital gains or income. Therefore, it is essentially a deferral of income from the savings. There is an array of things and this government is providing the employee a choice. There is the CPP and the RRSP. Those who are lucky enough to be employed by a company that provides a registered pension plan will have that, too. However, keep in mind that some plans are not portable, with the exception of the RRSP, which is a self-funded plan. This pooled pension plan would be portable, universal and an additional vehicle for the employee to have a choice.