House of Commons Hansard #139 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was budget.

Topics

Pooled Registered Pension Plans
Government Orders

12:20 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, I disagree with the member's statement on the crisis situation that he has tried to portray to Canadians in regard to the OAS program. As a result, the government is going to increase the eligibility age from 65 to 67, something with which the Liberal Party totally disagrees. It is not necessary and the evidence is clear to demonstrate that.

The Liberal Party supports the principle of a pooled pension plan. For this plan to be as effective as it could be, a number of things should have happened. Amendments should have been accepted that would have modified the program.

There is one other component that is really important, and that is the participation of provincial governments in the plan and how they would be engaged in promoting it and bringing in legislation to support it.

Could the member provide an update as to what other provincial jurisdictions are doing to support or complement this program that the government is bringing in through this legislation?

Pooled Registered Pension Plans
Government Orders

12:20 p.m.

Conservative

Harold Albrecht Kitchener—Conestoga, ON

Mr. Speaker, my hon. colleague may have misunderstood the intent of the OAS changes. He said that we see a crisis. Nobody on this side of the House has said there is a crisis.

The system we are putting in place would be implemented starting in 2023. I do not see a crisis in looking that far ahead. We are going to avoid a crisis that would see the country thrown into a situation where there would be no long-term, sustainable Canada pension plan. By planning ahead to 2023 to begin implementation of the plan, to have it fully implemented by 2029, is a practical, measured approach that would ensure future sustainability.

My colleague mentioned provincial co-operation. I did mention in my speech that all provincial and territorial finance ministers agreed that this was the way to move ahead.

Pooled Registered Pension Plans
Government Orders

June 12th, 2012 / 12:25 p.m.

NDP

Claude Gravelle Nickel Belt, ON

Mr. Speaker, I am happy to rise today and speak on Bill C-25, an act relating to pooled registered pension plans. In truth, it is legislation from the Conservative government that is really a savings scheme, not a pension plan. Like the omnibus Trojan Horse budget bill, it reminds Canadians of the mess the Conservatives have created for Canada and for our pensioners.

This hole that Canadians find themselves in becomes unacceptable, especially when we see the shovels in the hands of the Conservative government digging the hole.

Let us separate fact from fiction in the government's spin on being good managers of the economy. In fact, the Conservatives' us-them, winners and losers ideology has exposed them as very bad managers of the economy.

Fact number one is that 1.6 million seniors live in poverty.

Fact number two is that 12 million Canadians lack a workplace pension plan.

Fact number three is that most Canadian workers have no RRSPs, but the proposed legislation advises that they invest despite disastrous investment returns.

Fact number four is that last year, only 31% of eligible Canadians contributed to RRSPs. How little money Canadians really have for their RRSPs is evident in the fact that unused RRSP room now exceeds $500 billion.

Fact number five is that the Conservatives tolerate overall poverty numbers of around 10%, one in every ten Canadians. They write off three million Canadians from contributing to productivity or paying taxes. The Ontario food bank estimates that the bill to Canada that the Conservative government writes off is costing our country close to $90 billion.

Facing all these facts, what do the Conservatives do? They bring forward legislation with limited benefits for the self-employed and for those with small and medium-sized businesses. They stick with our country's miserly pension plan rather than bringing it up to the level of other countries that more fairly and generously look after their seniors.

The proposed legislation would do nothing to fix our pension crisis. There is too little money on the revenue side for our country precisely because of the spending and the deep hole that the Conservative government has dug with its ideology-driven priorities.

There is no money for Canadian seniors and their pensions because the Conservative government ignores a declining crime rate and goes on a multi-billion dollar spending spree on crime that the provinces say they do not want and cannot afford.

There is no money for seniors, but there is money for F-35 fighter jets. There is money for a minister's $16 glass of orange juice and money to spend on search and rescue personnel to ferry the Minister of National Defence on his own errands.

The Prime Minister has said that the Canada pension plan is adequately self-financing, but “for those elements of the system that are not funded, we will make the changes necessary to ensure sustainability.”

What changes does the government propose? It plans to cut old age security, denying it to seniors who are 65 and 66. This program provides $526.85 a month to seniors below the income cut-off.

New Democrats recognize the demographics in our country showing that the number of Canadians older than 65 will double in the next 20 years. We also recognize that the pension plan is financially sustainable in its various demands, up and down, over the next 20 years.

The Parliamentary Budget Officer has backed us up with strong evidence, but what is increasingly having Canadians lose confidence in the government is its failure to manage the economy and deal with the inequality that exists in our communities.

There is less money for seniors because of ridiculous spending decisions by the Conservative government. It reduced corporate taxes and had ministers for the G8 spending like drunken sailors.

We on this side of the House have no problem with an honest dialogue with Canadians about belt-tightening, about hard choices that have to be made regarding our pensions and pensioners. However, we will not frame these choices as the Prime Minister does, ignoring the facts and making our seniors pay.

Let us be clear: our seniors and future pensioners need protection and real help. Pool registered pension plans fail to protect retirement security because they encourage families to gamble even more of their retirement savings on failing stock markets. Anyone who has watched the RRSP plummet over the past years knows how risky savings tied to the stock market are.

How out of touch can the Conservative government be to sell such a scheme to Canadians?

The bill is designed to appeal to the self-employed and workers at small and medium-sized firms, companies that often lack the means by which to administer a private sector plan.

The plan created would be a defined contribution plan. Employees would contribute a portion of their salary into the retirement account, where it could be invested in stocks, bonds, mutual funds, et cetera. Some companies would make a matching contribution, up to a certain percentage. The account would grow through contributions and investment earnings until retirement.

In such a direct contribution plan, there are no guarantees about how much of a person's money will be left when he or she retires. The risks are borne entirely by the individual. In these types of plans, the amount of money available at retirement depends upon the outcome of the investments, which cannot be relied upon. Defined contribution plans lack the security of defined benefit pension plans like the CPP and the QPP, which pay a guaranteed set amount upon retirement.

There is also the profit margin taken from these plans by the regulated financial institution, such as banks, insurance companies and trust funds. Bill C-25 also fails to place a cap on administration fees or costs and merely assumes lower costs will emerge through competition in the marketplace, and unlike the CPP and the QPP, the pooled pension plan would not be indexed to inflation.

On the other hand, the NDP has put forward a series of retirement income security proposals that would bring genuine security to our pensioners.

We want to double the guaranteed CPP-QPP benefits, to a maximum of $1,920 each month. Growing the CPP and QPP is the best and lowest-cost pension reform option we have.

We have committed to work with the provinces to build the flexibility of individuals and their employers to make voluntary contributions to individual public pension accounts. We would amend federal bankruptcy legislation to move pensioners and long-term disability recipients to the front of the line of creditors when their employers enter court protection or declare bankruptcy.

New Democrats would increase the annual guaranteed income supplement to a sufficient level, in the first budget, to lift every senior in Canada out of poverty immediately.

These are real reforms. This is the real help for seniors barely getting by or workers forced to delay a hard-earned retirement.

Let me quote the commentary of the Canadian Labour Congress on this bad bill.

The proposed PRPPs [pooled registered pension plans] do not guarantee low management fees that would prevent large management fees from eating up such a large portion of your savings. In fact, there is only a promise that the design of PRPP will result in large pools of capital that might lower fees, with no guaranteed or legislated results. Nothing in the PRPP proposal sets management expenses at levels equal to or lower than those of the CPP. As a result, CPP is still a better deal than PRPP; not only because of its guaranteed indexed retirement income, but because of its much lower management fees.

The government is already engaged in damage control on trying to increase the retirement age from 65 to 67. It is trying to reassure seniors that it would not affect those now retired or soon to be retired. What the government should be afraid of is the large number of Canadians aged 50 to 65, the people who vote in this country, who are seeing freedom 55, and now freedom 65, slip away.

Our seniors have worked hard and managed their budgets, only to see the government dig this very deep hole by giving up revenue it would have had from corporations and spending it on its priorities that are now not the priorities of many Canadians.

This will be the fight of their lives. New Democrats will join this fight. We need to value our seniors, not beat up on them.

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

NDP

Sadia Groguhé Saint-Lambert, QC

Mr. Speaker, according to Statistics Canada, more than 14% of senior women who live alone are living in poverty. The NDP supports enhancing the Canada pension plan to address these instances of poverty.

However, with respect to the pooled registered pension plan scheme, benefits will depend on investments and the stock markets. This scheme will do nothing to address poverty among the elderly, especially senior women.

Could my colleague comment on that?

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

NDP

Claude Gravelle Nickel Belt, ON

Mr. Speaker, I thank my colleague for her very good question. She is quite right.

The Conservative government's plan will force Canadians to invest their money in the markets. Everyone knows what happens when the market drops: pension plans shrink and Canadians no longer have the money to retire.

This is the NDP's plan: we want to increase the CPP and the QPP to lift the poorest people out of poverty. The members on this side of the House are aware that only the poorest seniors receive old age security. The government's plan will make the poorest even poorer. The poorest of the poor, especially women, will be affected, not the rich.

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, over the years I have heard a great deal about the importance of CPP, OAS and GIS through the Liberal critic for seniors and how we need to invest in, enhance and improve these programs. I share in the passion for improving and moving forward with those programs, so I appreciate the comments of the member from the New Democratic Party on that particular point.

Where I disagree, and where I would ask the member to respond, is with respect to this: why would the NDP oppose outright the opportunity for some individuals to benefit from this pooled registered fund?

My understanding is that even the New Democratic Party in Manitoba was supportive of this fund being brought in. What I do not quite understand is why the federal New Democratic Party would vote against allowing individuals to benefit. It is a small tool, but it will derive some—

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

Conservative

The Acting Speaker Bruce Stanton

Order. The hon. member for Nickel Belt.

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

NDP

Claude Gravelle Nickel Belt, ON

Mr. Speaker, the reason we do not support this pooled pension plan is that there are no benefits to it.

When people invest their money in the stock market—which is what the government wants, seniors investing in the stock market—and the stock market falls, the pension plan falls. Therefore, the seniors who lose their money in the stock market would not have a retirement pension plan.

If today's seniors want to invest and have the extra money, albeit there are people in this country who do not have extra money to invest in RRSPs, they can do that now. What we would like to do is increase the CPP and the QPP to include everyone in Canada who could contribute to and collect from the CPP and the QPP.

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

Conservative

The Acting Speaker Bruce Stanton

There are about 30 seconds left for a brief question.

The hon. member for Hochelaga.

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

NDP

Marjolaine Boutin-Sweet Hochelaga, QC

Mr. Speaker, I want to know whether my colleague agrees that the government is trying to distract Canadians by passing a bill with the words “pension plan” in its title to suggest that it is improving the pension system when really the government is more or less creating a pooled RRSP?

Pooled Registered Pension Plans
Government Orders

12:35 p.m.

NDP

Claude Gravelle Nickel Belt, ON

Mr. Speaker, I want to thank my colleague for her question. I would simply say in response that the Conservative government will stop at nothing to violate Canadians' rights.

Pooled Registered Pension Plans
Government Orders

12:40 p.m.

Delta—Richmond East
B.C.

Conservative

Kerry-Lynne Findlay Parliamentary Secretary to the Minister of Justice

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

Before I commence my remarks, I will correct something that I believe the member opposite just said, which is that old age security is only available to the poorest seniors. OAS is universally accessible to our seniors. If he is getting mixed up between OAS and GIS, the guaranteed income supplement, it is true that our poorest seniors can apply for that supplemental income through GIS. However, OAS is universally acceptable.

As all members are well aware, seniors have led the way in making Canada the dynamic and successful nation that it is today. Through their sacrifices, succeeding generations have had the opportunity to prosper. There is at times the perception that our senior population may be forgotten in the rush of modern life but the reality is that when it comes to our government, nothing could be further from the truth.

Since 2006, we have taken important steps to improve government support for seniors. I know I have participated in round tables on seniors issues in my riding and met with numerous seniors groups to hear their concerns first-hand, as I am sure so many of my colleagues have as well.

We believe today's legislation would build on our success by improving the range of retirement savings options available to Canadians. The pooled registered pension plan, or PRPP, would make well-regulated, low cost, private sector pension plans accessible to millions of Canadians who have, up until now, not had access to such plans. In fact, many employees of small and medium-sized businesses and self-employed workers would now have access to a private pension plan for the very first time. This would be a key improvement to Canada's retirement income system.

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

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

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 senior population.

I am the fifth of six children in my family. Quite typically for modern Canadians, my father lived to the age of 89 and my mother to the age of 93. My father was a self-employed electrician and electrical contractor. Except for four years in her later life, my mother stayed at home to raise six children.

At the beginning of my father's working life, Canada did not even have a Canada pension plan. Our country has come a long way in the intervening decades. However, innovation is required and should be welcome.

The Canadian Chamber of Commerce commented in November 2011 that this legislation had the potential to benefit the estimated 60% of Canadians who have either no or insufficient retirement savings. This legislation ushers in excellent opportunities for employers and employees to work together and the self-employed to benefit in a way that can create a more secure future in one's senior years. This would have helped lifelong contributors to the Canadian economy, like my father and his family.

Through these legislative and policy efforts, we recognize the contributions seniors have made and continue to make to our nation. They deserve pension security and we are ensuring that the retirement income system and the tax system support those goals.

We are doing so in a number of ways. For example, the CPP provides a secure indexed lifelong retirement benefit. To ensure that the CPP remains on solid footing, it is regularly reviewed by federal, provincial and territorial governments that have successfully acted as joint stewards of the plan since its inception.

As a result, the chief actuary indicated in his most recent report on the CPP that the plan was sustainable, at least for the next 75 years, at current contribution rates and benefits.

Canada's retirement system includes tax assisted private savings opportunities to help and encourage Canadians to accumulate additional savings for retirement. This includes registered pension plans, RPPs, and registered retirement savings plans, RRSPs.

RPPs are sponsored by employers on a voluntary basis and can be either defined contribution or defined benefit 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 from 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 taxed at regular rates.

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

However, that is not the only way the government helps Canadians ensure that they have more money available when they retire. I will quickly elaborate on some other measures our government has introduced to assist seniors and pensioners which, together, are providing roughly $2.5 billion in additional annual targeted tax relief to seniors and pensioners.

Since 2006, our government has increased the age credit amount by $1,000 on two occasions, 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 RRSPs to 71 from 69 years of age.

In 2012, a single senior can earn $19,542 and a senior couple $39,084 before paying federal income tax. Due to measures taken since 2006, about 380,000 seniors will be removed from the tax rolls in 2012.

In addition, in budget 2008, our government introduced the tax free savings account, TFSAs. The TFSA is a general purpose savings vehicle that helps all adult Canadians, including seniors, to meet their ongoing savings needs on a tax preferred basis, including those who are over age 71 and are required to begin drawing down their registered retirement savings.

Of note, the income earned within a TFSA and withdrawals from the account are not subject to income tax and do not affect eligibility for federal income tested benefits or credits, such as old age security, the guaranteed income supplement or the goods and services tax credit. This feature improves savings incentives for low and modest income Canadians who would expect to receive GIS benefits in retirement. In its first five years, it is estimated that over three-quarters of the benefits of saving in a TFSA will go to individuals in the two lowest tax brackets.

Last year, we introduced measures strengthening the GIS, which is a benefit for low income seniors. Budget 2011 included a new GIS top-up benefit targeted to the most vulnerable seniors.

On top of all these efforts, our government provided an additional $10 million over two years to enhance the new horizons for seniors program, funding that will enable more seniors to participate in social activities, pursue an active life and contribute to their community. The program provided funding for projects that will increase awareness of elder abuse and promote volunteering, mentoring and improved social participation of seniors. We are continuing to help seniors.

I have been approached by constituents on this legislation who had two primary concerns: whether the PRPP was portable and whether a worker who does not opt into such a plan initially can opt in later. The answer to the first concern is, yes, the plan is portable. We urge all provincial governments to move quickly with their mirroring legislation. The answer to the second concern is yes. A worker who does not opt in initially can opt in later.

In fact, Dan Kelly, vice-president of the Canadian Federation of Independent Business, said, in November 2011 in media interviews, that the pooled plans are desperately needed because presently only about 15% of small and medium-sized businesses his company represents offer some form of retirement savings plan for their employees. He further stated, “This can't come soon enough from our perspective”.

In conclusion, I will reassure seniors that in carrying out our plan to restore budget balance, this government will not raise taxes. There are employers and employees across the country in all sectors who are anxiously looking forward to seeing this fundamental change in Canada's pension landscape becoming available. I would, therefore, encourage all members of this House to support this very important legislation.

Pooled Registered Pension Plans
Government Orders

12:50 p.m.

Conservative

Jeff Watson Essex, ON

Mr. Speaker, the opposition members have mis-characterized PRPPs as somehow being the silver bullet cure-all for retirement, when it is simply another tool or plugs another gap in the retirement savings system for Canadians.

Would the member care to comment on how necessary that particular tool is, how it does fit a portion of the Canadian public who are without pensions currently, and what the status might be with regard to the fact that Canada pension plan discussions are still ongoing with the provinces?

Pooled Registered Pension Plans
Government Orders

12:50 p.m.

Conservative

Kerry-Lynne Findlay Delta—Richmond East, BC

Mr. Speaker, the point here is that we are trying to broaden the scope of retirement savings options for Canadians. We have some 60% of Canadians who do not have pensions through employment. This is an opportunity for employers and employees to work together to create an option for retirement and a benefit for their senior years, which they do not have now. It is one of several options we have introduced and strengthened.

We continue to stand up for seniors and those working Canadians who need this kind of assistance.

Pooled Registered Pension Plans
Government Orders

12:50 p.m.

NDP

Alain Giguère Marc-Aurèle-Fortin, QC

Mr. Speaker, I note that, in her statement, my distinguished colleague left out something very important.

Every independent commentator has essentially said that this is not the solution and that the old age security program and the guaranteed income supplement are financially viable.

When I say independent commentators I am not talking about those who want to manage the contributors' money, but truly independent experts: the Superintendent of Financial Services, the Parliamentary Budget Officer and Canada's actuaries.

I am not asking the Conservatives to consult their friends, the corporate welfare bums. I am asking them instead to consult the people who are not financially dependent on their friends. All these experts are saying that there is no problem with old age security and the guaranteed income supplement.

What do the Conservatives make of the fact that these people are telling them that they are entirely wrong?