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

Pooled Registered Pension Plans Act
Government Orders

3:50 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, we in the Liberal Party look at retirement as an issue with many different facets. The biggest and most important issue of concern to Canadians is the guaranteed income supplement, and so forth. Following the Prime Minister's recent comments on increasing the age from 65 to 67, to putting in freezes, to the possibility of having cutbacks, there are discussions taking place today throughout Canada as seniors try to understand what the Conservatives' hidden agenda really is in regard to the whole government pension program.

I am wondering if the member would be able to provide some clear and concise commitments that would assure Canadians from coast to coast that those pensions and the amounts and the age at which people are eligible to receive pensions, that is, at age 65, will continue under the present government. Is he prepared to make that commitment?

Pooled Registered Pension Plans Act
Government Orders

3:55 p.m.

Conservative

Chungsen Leung Willowdale, ON

Mr. Speaker, we are still in a period of consultation on this.

For retirement a senior has to rely on an array of things. The OAS and the GIS and the CPP are government programs that we have inherited. We are trying to provide a better array of savings plans, including the tax-free savings account plus the proposed new pooled pension plan, to allow them greater options to save for their future. Probably one of the best pension plans for an individual is to invest in their own principal residence, but that is only one aspect of it.

Canadians are financially savvy and financially literate, and it would be a bonus to them to have these options to choose how they wish to retire.

Pooled Registered Pension Plans Act
Government Orders

January 30th, 2012 / 3:55 p.m.

Conservative

John Weston West Vancouver—Sunshine Coast—Sea to Sky Country, BC

Mr. Speaker, the parliamentary secretary has established himself already as a well-known member of Parliament. He has gone across the country and has even been working internationally. Many of us, including me, knew him well before in his role as a prominent businessperson both in Canada and abroad.

I am wondering if he could put on his businessperson's hat for a second and give us a sound commercial analysis on why this approach would make sense for Canadians.

Pooled Registered Pension Plans Act
Government Orders

3:55 p.m.

Conservative

Chungsen Leung Willowdale, ON

Mr. Speaker, I thank my colleague from West Vancouver—Sunshine Coast—Sea to Sky Country for his accolades.

I have done business both in Canada and internationally. From the employer's standpoint, in order to provide working income for staff and to expand the company's market and to make sure that the business is a going concern, there are a number of factors contributing to that. First is a stable environment, and second a low cost tax regime, and third the ability to access capital. From that base the employer then builds a business.

Employees are key to any corporation. Money is easy to borrow. Employers never exploit their employees, at least not in the five or seven companies that I have built, so it is key that we ensure that we retain those employees. To retain those employees we need to offer them the employment security they need in order to work for a long time in our corporations.

Pooled Registered Pension Plans Act
Government Orders

3:55 p.m.

NDP

Anne Minh-Thu Quach Beauharnois—Salaberry, QC

Mr. Speaker, I would like to go back to something that the member opposite touched on when he spoke about the shared responsibility of employees, employers and the government, and the viability of the PRPP system being proposed by the Conservatives.

We find this system to be completely disconnected from reality for a number of reasons, mainly because the risks would be borne only by employees. They are being offered a plan that would produce results based on the market. We hope that the investment income will grow. However, we know that Australia introduced this type of plan and realized, 12 years later, that the plan was completely ineffective because management fees were too high and inflation was almost as great as income. This plan does not provide any guarantee that investments will grow in the end.

If all the risks are borne by employees, what responsibility will the government and employers have?

Pooled Registered Pension Plans Act
Government Orders

4 p.m.

Conservative

Chungsen Leung Willowdale, ON

Mr. Speaker, the government is providing three pillars in the retirement system for employees, those who are approaching retirement. There is the government portion, which is the traditional CPP-QPP, OAS and GIS. Then there is the individual portion which is the RRSP, and there are those who belong to a larger corporation. Only about 30% or 40% of Canada's population have those plans. That is the RPP.

We are providing another portion for those who are in small and medium size businesses which traditionally cannot go to a financial institution for a plan, because they only have three to five employees. For example, people in a private practice, such as lawyers, accountants, doctors, plumbers and restaurant owners do not have the ability to entice financial institutions to set up a registered pension plan.

With this pooled pension plan, the investment aspect is regulated to prevent the failures of the market of over-zealous managers. At the same time I think the costs will be pooled in such a way to manage it at a reasonable cost. Most of the pension plan costs run somewhere around 1% and 2%. That is a very reasonable cost.

Pooled Registered Pension Plans Act
Government Orders

4 p.m.

NDP

Joe Comartin Windsor—Tecumseh, ON

Mr. Speaker, I would ask the indulgence of the House to split my time with the member for Hamilton Mountain.

Mr. Speaker, it is important when addressing Bill C-25 that we set it in the context of what is being attempted here by the government and what is needed with regard to pension reform in this country. It is not only important to do that in terms of the historical context but also in the context of relativity to other jurisdictions and other nations.

In that regard, it is important to understand historically where we have come over the last 50 or 60 years with respect to government pensions or pensions partially contributed to by government. We have established a regime in that regard. We could study some of the reports and minutes of meetings issued during that period of time when the CPP was being established. It was quite clear at that time that an understanding was entered into that the CPP and the QPP which came after, would provide roughly 25% to 30% of what was needed to retire in dignity, and the rest would be provided by the private sector. At age 65, old age security would kick in and that would help to offset the balance. That is where it came from.

If we study that historically right up to the present time, another mechanism that was there, other than private pension plans, is the RSP. It has been a substantial failure in providing that level of security because of its lack of ability to attract enough funds and the inability of most Canadians to contribute significantly enough to an RSP in order to retire in dignity, that combined with the CPP and old age security.

That left the pension plans. As we have heard repeatedly this afternoon, and I am sure as this debate goes on we will hear it a number of times, there are too many Canadians who do not have access to private pension plans. We are at a stage in our history where the system is in need of major reform.

I will compare our status in this area with that of other countries. Across the border in the United States, its social security provides roughly $30,000 a year in Canadian dollars. The full amount of our CPP including the full OAS provides maybe $18,000 or $19,000. That is the context in which we are functioning.

Again, the vast majority of Canadians who are not covered by private pension plans have no ability to make that up and have to rely on RSPs.

What does the government do? Rather than looking at other alternatives, which I will come back to in a moment, it wants to continue with this mostly failed plan of RSPs but turn it into a pooled RSP. This is not just us talking. Even conservative think-tanks like the Fraser Institute have basically said this will not work. There is a list of reasons why it will not work. Let us start with the contributions.

There has been a committee functioning in my riding for what will be three years in May. It is looking at the need for pension reforms. Some members are from unions and others are from the private sector. They have been doing an analysis of what is needed in the way of reform. They have looked at this and have said that it will not move any significant additional dollars or people into the category of being able to retire with dignity in terms of their economic status and economic ability to pay their basic costs of living.

The reason for that is if people have the ability to contribute now, they are contributing to an RSP. Thirty-one per cent contribute and depending on the economic conditions in the country at the time, somewhere between 3% and 7% of that 31% contribute the full amount. The doctor or lawyer doing well financially will contribute the full amount. Even most people within the professions do not.

This begs the question, if they are not able to do that with their own RSPs which they control, why would they put it into this pooled plan where they are going to have to pay very substantial fees? This bill does absolutely nothing to control the amount the people accepting this money, anywhere in the financial sector, can charge in fees.

It is important at this point to juxtapose the reality of what we have seen in a number of these types of investments, the stock market, bonds, whatever, where there is a financial adviser controlling those funds. We have seen that the ratios of the fees are five to six times the fees and administrative costs for the Canada pension plan. That is the reality in Canada today.

Quite frankly, this one is so unattractive that the cost will probably be even higher, because it is so unattractive for a major financial agency, a bank or insurance company, to get into this market. The administrative costs are going to be extremely high because of the low participation. We are going to see huge fees, and this bill does nothing to address that issue.

Another point to look at is when it is that small investor who has some ability to put money aside in an RSP, it begs the question why the investor would do that after what we just saw happen in 2008. We can go back to the high-tech bubble of the late 1990s and any number of times I have watched this happen.

Why would people trust their money going into this pool where there are very few regulations when we have seen what has happened in the U.S. with the housing bubble burst and all of what we have found out as to how funds were handled in that regard? Why would people even consider, if they have these funds, putting them into a pooled registered pension plan as opposed to maintaining control and deciding how best their money could work for them?

For those reasons, it is simply not going to be of any use whatsoever. Bill C-25 is a smokescreen. The government wants to try to convince Canadians that the reform which is so badly needed in our pension system, whatever source there is, is being handled by this one plan, and it is not. It is not at all. It is not going to work.

Let us look at the alternatives for a minute. The expansion of the CPP is clearly one of the routes to go. I heard the last speaker for the Conservatives talk about the stability of the CPP and its ability to deliver and that it is not available for the small merchant. That is one of the reforms that is necessary. We could do that. There are very clear proposals that have come from a number of groups over the last two to three years about how to reform the CPP to attract those people, to give them access to the CPP. It is an expansion of it. The administrators of it say it is possible to be done.

That is only one example of what could be done. I see my time is just about up. There are other reforms that need to be made with regard to the CPP. For instance, priority under the bankruptcy legislation needs to be given to pension funds. The OAS needs to be increased as opposed to what we are hearing, that the government is going to take away benefits by increasing the age. The GIS that needs to be addressed as well.

There are plans out there that are obviously better than this bill which is a smokescreen and should be defeated.

Pooled Registered Pension Plans Act
Government Orders

4:10 p.m.

Conservative

The Acting Speaker Barry Devolin

Before we go to questions, it is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Sudbury, Consumer Protection; the hon. member for Châteauguay—Saint-Constant, Royal Canadian Mounted Police; and the hon. member for Windsor West, Canada-U.S. Relations.

Pooled Registered Pension Plans Act
Government Orders

4:10 p.m.

Conservative

Joy Smith Kildonan—St. Paul, MB

Mr. Speaker, I have a lot of respect for the member for Windsor—Tecumseh. He is an extremely intelligent person in many respects. However, there are some considerations that I would ask the member to take a very close look at.

We will have more senior citizens than young people within approximately three years. That is what the demographics are showing. The number of Canadians over the age of 65 will increase from 4.7 million to 9.3 million over the next 20 years.

Listening to the parliamentary secretary and to the speakers who have stood on this side of the House, let us be clear, there will be no changes to the benefits seniors currently receive and any changes that are made would have a substantial notice and adjustment period.

As I listened to the member's speech, with the aging demographic, we also have less workers working toward those taxes. Is it not important to ensure that the OAS continues, but also that we look at the whole program to ensure that we have these very important programs sustained in Canada, not for 5, 10 or 15 years, but for the next 60 years?

Pooled Registered Pension Plans Act
Government Orders

4:15 p.m.

NDP

Joe Comartin Windsor—Tecumseh, ON

Mr. Speaker, the question of the member for Kildonan—St. Paul gives me the opportunity to raise the issue of the sustainability of the OAS.

Nothing has changed with regard to the sustainability of the OAS from where it first started to where it is now. This has always been carried by current funds. We have never had a reserve fund for the OAS in the history of it. What has changed with regard to the revenues that are coming in is the government has consistently said that it will give preference in the economy to certain groups and it will give large corporations major tax breaks. There have been over $100 billion so far and it will almost double before those tax breaks are finished.

If we take that out of the accounting column, on one side the expenses are continuing, the OAS expenses are continuing, and we are lowering the revenues on the other side. That is where the sustainability problems come. It has nothing to do with OAS; it has everything to do with policy decisions by the government with regard to tax breaks for the big corporations.

Pooled Registered Pension Plans Act
Government Orders

4:15 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, I wonder if the member could provide me some information in terms of the NDP policy. Whether it is the OAS, GICs, or CPP, all these are wonderful pension programs, we understand, in terms of where the Conservatives are coming from on this, which creates a great deal of concern, not only for Liberals but, I suspect, also for New Democrats and for the vast majority of Canadians.

Where I am a bit confused is in terms of what degree does the NDP, as a political entity, believe that an individual should be encouraged or the government should be providing any sort of incentive for individuals to participate in pension programs that go beyond those government programs, which in good part were formed by Liberal governments in the past.

Pooled Registered Pension Plans Act
Government Orders

4:15 p.m.

NDP

Joe Comartin Windsor—Tecumseh, ON

Mr. Speaker, most of our pension system came out of the CCF and the NDP proposals over the last approximately 80 years when we first started and were eventually picked up by other political parties and implemented.

With regard to the basic question, what he is asking is if people should plan for retirement and contribute to it. From any side of the House, we are all going to say, yes, we all should be doing that.

For those who are more vulnerable, those with disabilities, limited incomes, maybe a series of times when they were unemployed, there has to be a plan in place for government to be play a role there to assist them so they can retire in dignity because they have contributed to this society throughout that period of time. It is always a question of the details and to what degree, such as how much should government be doing, how much should the private sector be doing, how much should the individual be doing.

Bill C-25 does not address that in any realistically plausible way of being successful.

Pooled Registered Pension Plans Act
Government Orders

4:15 p.m.

NDP

Chris Charlton Hamilton Mountain, ON

Mr. Speaker, I am pleased to get a chance to rise in the House today to debate one of the most important issues of our times: pensions.

It is unfortunate that the Prime Minister and I fundamentally disagree about what those pensions ought to look like. In fact, judging by recent polling of seniors, there are not many Canadians who believe that the Prime Minister is on the right track when it comes to the income security of Canadian retirees. No wonder he waited until he was on the other side of the Atlantic to announce, in Davos, Switzerland of all places, that he would be cutting big chunks out of Canada's old age security system. So much for accountability to Canadians.

Thankfully, Canadian pensioners are much more savvy than the Prime Minister gives them credit for. They are not frail and disengaged. On the contrary, when it comes to their income security, they are ready to fight for what is right. After all, they have worked hard all their lives, they have played by the rules, but now everywhere they turn, every bill they open, they pay more and get less.

It is a well known fact that increases in the cost of living hit seniors disproportionately harder than any other segment of the population. When Statistics Canada determines the annual cost of living upon which adjustments are based, its basket of goods include electronics like iPods, plasma TVs and computers, which are all goods coming down in price and reducing the cost of living figures. However, they are also goods that seniors are not buying. The items they spend money on are essentials like heat, hydro, food and shelter, all of which are outpacing their incomes.

It is no wonder that the vast majority of Canadians are deeply worried about not having enough money to live on after retirement. They are worried about the solvency of their private pensions and the adequacy of both CPP and public income supports. Let us talk about each of those for a bit.

Record job losses, the decline of entire industries and the collapse of larger employers are throwing hundreds of thousands of hard-working Canadians out of work. Far too many bankrupt employers are leaving underfunded pension plans in their wake. Through no fault of their own, workers are now finding that despite their years of making pension contributions, they can no longer count on a secure workplace pension.

However, workplace pensions are just part of the problem because only one-third of Canadian workers have a workplace pension. Similarly, only one-third of Canadians contribute to an RRSP and those who have just watched billions in precious savings vaporize in the stock market crash of this last recession.

The current system is leaving too many people without the retirement savings they need. There is too much at risk and not enough security. Let us face it, for more than a generation, wages have failed to keep pace with the cost of living and most Canadians have not been able to save what they need.

The urgent question before us today is this. What is the best way to help today's workers save enough money for tomorrow? The answer to that is clearly not to be found in the Prime Minister's speech in Davos.

In the past, Canadians came together during crisis to create solutions, to minimize risk by sharing it. That is what we did when we created public health care and, yes, that is what we did when we created public pensions. However, not under this Prime Minister. Instead of looking to opportunities to strengthen our pension system, he said that the demographic pressures from our aging population, “constitute a threat to the social programs and services that Canadians cherish”. Instead of securing our pension system to ensure sustainable prosperity for seniors, he announced that he would limit spending on pension programs.

While no one is quite clear on what exactly he meant, there is a widespread belief that the Conservatives will raise the minimum age at which people become eligible for full old age security payments, from 65 to 67. However, what is clear from the same speech is that we can afford to ensure that Canadian seniors live in the dignity to which they are entitled. As the Prime Minister correctly pointed out in Switzerland, Canada is no Greece.

Government debt levels as a percentage of gross domestic product are low. The federal deficit is being reduced ahead of schedule. There is no fiscal crisis in our country. Funding OAS takes the equivalent of 2.4% of the GDP. It is among the lowest of OECD countries. Italy, by contrast, spends 14% of GDP on public pensions.

True, by 2031, as the wave of baby boomers reaches retirement age peaks, the OAS' share of GDP will increase to 3.14%, an increase of 0.73% of GDP from today's level. However, as UBC economics professor Kevin Milligan points out, an increase of 0.73% cannot be ignored, but neither is it disastrous. When the baby boomer bulge starts to recede, as it will from about 2020 on, spending on the elderly will start to decelerate on its own.

Clearly this attack on the OAS is nothing more than an ideological assault on public pensions. So what do we get instead? Pooled registered pension plans, the enabling legislation for which is before us in the House today.

Ostensibly designed to address the fact that modest and middle income households are at risk of under-saving for retirement, the Conservatives want to work with the provinces to create an option of pooled workplace pensions administered by financial institutions.

In other words, the Conservatives are encouraging families to gamble even more of their retirement savings on failing stock markets. It is a voluntary defined contribution plan that is run by wealthy financial institutions investing in tumbling markets. That uncertainty and volatility leaves families without any guarantees that their savings will be there for them when they retire.

As one critic of the bill so aptly put it, we must conclude that this is an agreement to do nothing except perhaps a handout to the financial services industry at the expense of the average Canadian.

Let us face it, we do not need to reinvent the wheel when it comes to pension security. We do not need Bill C-25. The best way to help today's worker save enough money for tomorrow is through an improved Canada pension plan. Over the next several years we must lay the foundation to double CPP benefits for the future.

The CPP has been proven time and again to be a safe, secure and efficient retirement savings plan. As the Prime Minister himself noted, the CPP is “fully funded and actuarily sound”. It is portable from job to job and across provinces. It keeps up with inflation and 93% of Canadians are already members.

Because the CPP operates independently from government, there is no cost to taxpayers. In fact, there is the potential for governments to save money over time.

Higher and more secure pension savings means seniors will be less likely to rely on income supports like the guaranteed income supplement or provincial and local social supports for medicine, housing and food.

The cost to workers and employers is manageable. Over seven years, CPP premiums would only have to rise by 0.4% each year of pensionable earnings.

We all need to save more for retirement and putting that little extra into the CPP makes more sense than investing in risky RRSPs, pooled or otherwise. It is safer, easier, in fact it is effortless, and it earns more.

It is time for the government to come clean. The Conservatives found $9 billion for prisons. They found $30 billion for fighter jets. They found $6 billion for more corporate tax cuts. However, they say they cannot find the money to protect the pensions of Canadian seniors.

Clearly this is not about money; it is about choices. I choose to invest in people. I choose to stand up for Canadian seniors and for retirement with dignity and respect.

Pooled Registered Pension Plans Act
Government Orders

4:25 p.m.

Conservative

Joy Smith Kildonan—St. Paul, MB

Mr. Speaker, I would agree that this is about protecting seniors. This is about dignity and respect. Clearly our side of the House has made it quite clear there would be no changes to the benefits that seniors currently receive. Very substantial notice would be given to any changes that would be made and an adjustment period, which would not reflect upon retirees or those close to retirement.

In actual fact, our government has shown a great deal of responsibility by projecting into the future. To do that, we have to ensure that these very special programs like CPP and OAS remain strong in our country.

With the aging demographic and with the change in the demographic in the country, we have to ensure that needs of seniors are met. It is about doing things in a balanced way that would ensure the future.

I would like to ask the member a question about some of her comments. How does she intend to have this balance maintained in our country if we do not look at these pension plans and do the right thing?

Pooled Registered Pension Plans Act
Government Orders

4:25 p.m.

NDP

Chris Charlton Hamilton Mountain, ON

Mr. Speaker, the answer is fairly simple. The right thing to do is to invest in seniors instead of investing in megaprisons that we do not need and fighter jets that do not work. This is about choices.

The member says that that would not impact the people who are currently seniors. Oh, really? I do not think we have seen any of that before in this House. We have not received any guarantees. Except for what some of the members were saying this afternoon, we have not heard any specifics. Even if that were true, the people who would be impacted are the very workers who today are losing their jobs in plants from coast to coast to coast. Those workers are losing their workplace pensions because the government did not do its due diligence with respect to the Investment Canada Act, as was the case with Stelco when it was bought out by U.S. Steel. The workers there are now worried about their pensions. Workers at Vale are worried about their pensions.

I invite the member to go to London and talk to the folks working at Caterpillar. They are now worried about their pensions. They cannot count on their workplace pensions and now the government is telling them that they cannot count on their OAS pension either because it may be taking that away from them as well. If we do the math, that is taking $12,000 away from the people who are counting on their public pensions to support them in their retirement.

I do not know how the member can stand in the House and say that she supports retirements with dignity and respect when the government is taking money away from hard-working Canadians and not allowing them to have the retirement they have earned.