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

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, there was not enough time during my speech to cover that good point, so I thank my colleague for the question.

Small businesses in this country attract great employees and love to keep them. Sometimes, as I said, with small businesses of maybe only three, four, five or ten people, there is always the worry that after they have trained great employees and can only offer them so much, they will be attracted by some other large corporation out there and they will go off and work for them because the benefit plan may be better or the future pensions may be better. This would offer the opportunity to small and medium businesses across this country to retain employees by offering a pension plan like a big business because they are pooled in with many other small businesses.

[The Acting Speaker, Conservative, Bruce Stanton]

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 Nanaimo—Cowichan, Poverty; the hon. member for Ottawa—Vanier, Auditor General; the hon. member for Vancouver Quadra, Justice.

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs]

Mr. Speaker, it is a great pleasure to speak to this pension plan. All I am going to say, for my wife specifically, is that this pension plan came 15 years too late. I will explain why it is 15 years too late.

First and foremost, I will say that my colleague, the Minister of State for Finance, has been working very hard on this file. I personally know that he went across this country and met his provincial counterparts, business leaders and a vast number of Canadians to see how we could close this gap that has been hanging out there for years and years. He, along with the Minister of Finance and the Prime Minister, finally came up with a plan that was very well accepted. It is a very sound plan and I will explain why.

I will also say quite clearly for the opposition and, most important, for the NDP members, as I said in my answer previously, that they should go back and look at what this government has done for seniors, as my colleague stated very loudly when listing all of the things that we have done. He, however, neglected to mention, which I would like to put on the record, that a lot of the new members of Parliament should look at their former colleagues' records in opposing any of the measures that we brought forward to help seniors.

My wife was a business woman. She ran a dry cleaning business for 15 years. During that period of time, she worked very hard for her business. In contrast, I was working for the City of Calgary, the local government, and I was covered by a pension plan through the city. I can say that she worked twice as hard as I did. I am not saying that city and municipal workers do not work hard because they do, but she was a business owner and worked extremely hard to make a success of her business. As all business owners know, business is always up and down. Today she does not have a pension plan. She has nothing to show for her 15 years of hard work, except what she could scrounge and put into RRSPs at the end of each year, which was all based on the profit of her business.

In small businesses, RRSPs are always at the end of the year and the money comes out of their profits. What she really needed and does not have even today is anything to show for her retirement. The good thing in this plan is that it says we should look after ourselves first. I have sat down and talked to my wife. Fortunately enough, she can jointly share in my pension plan. However, that is not the issue. In her case, the issue was one safety net, which is my pension. However, what about her own health and her own efforts and sweat to bring that business up? There was no plan.

My colleagues went right across the country and there was recognition by the provincial governments and everybody else that the gap needed to be filled. Today, following the promise that was made in the election campaign, we are fulfilling that promise.

It does not come as a surprise to me that the NDP and the Liberals are opposed. They will always oppose. They have opposed anything this government has done for seniors. However, this plan is, quite clearly, one of the many plans that could be available to Canadians to allow them to save. As I pointed out, small businesses had no other options in the past and now they will have options. This is not the icing on the pension plan. This addresses an issue for small businesses and people who cannot join other pension plans. They would finally have a pension plan in which they can contribute.

Doubts have been raised here about the cost. When one is opposing an issue, one will raise all kinds of questions, such as questions about the cost of running this kind of a plan and questions about the stock market going down and the plan losing money as people have lost money. Everybody seems to forget about the time when the stock market went up and people made money.

The Canada pension plan is sound because it has made sound investment decisions. Investment decisions need to be made to ensure that there is a future for the plan.

This plan is a very simple plan and it is in co-operation with the provinces, the territories and businesses. There would be a large pool of money. It would not be an expensive proposition for people to put their money away for retirement. For small businesses, this is a key element. We all know small business is one of the strongest economic engines of the country, as well as self-employed people.

I do not understand why the opposition would oppose this plan when we are providing an option. It would be another option for people who have not been covered by a pension plan. to join a pension plan. What is wrong with asking them to join a pension plan?

Of course there is the issue about the Canada pension plan. The Canada pension plan requires the co-operation of all finance ministers. It does not require the co-operation of the NDP.

My colleague, the Minister of State for Finance, went across the country talking to all the provincial finance ministers and a sound decision was made by them taking into account that this was the best, low cost option available to cover those Canadians who were not covered by a pension plan.

What is wrong with that whole picture? There is nothing wrong with this picture. The Canada pension plan, the OAS, the GIS, RRSPs, income-splitting and TFSAs are all there, so why not have something else for retirement? We all need a retirement income. As the population ages, who will carry the burden?

Yesterday, a report came out of Japan where the population is aging very rapidly and where 40% of the population will need to take care of 60% of the population. There needs to be a sound system of pensions.

We should be proud of the fact that the government has created a sound regulatory system in Canada. We did not have to bail out our banks in the 2008 recession because of our sound fiscal calculations.

We now have another issue and we brought in something that was discussed around the country. It was on the table of all finance ministers who said that this was the right option to go with.

The opposition members should listen to their constituents and their provincial governments or to the Ontario Liberal premier. They could ask them why they are supporting this plan. It is because it is something that was needed and, as I said, it is something my wife would have actually benefited from if she had had this option 15 years ago.

I know other colleagues will be speaking but I am very happy to say that I will be fully supporting this based on my experience.

[Marjolaine Boutin-Sweet, NDP, Hochelaga, QC]

Mr. Speaker, we have said a number of times that we think the plan was full of good intentions, but it has one huge problem: it is tied to the stock market. The past few years have been full of fluctuations, losses and the collapse of markets. So this is very risky.

What will the government say to a woman in my riding of Hochelaga who struggles to put aside some savings and then loses up to 10% of her income? That would be enough to determine whether she can afford groceries from one week to the next.

[Deepak Obhrai, Conservative, Calgary East, AB]

Mr. Speaker, indeed stock markets go up and stock markets go down. It all depends on the financial viability up here. If we let an NDP government up here, as there was in Ontario under the interim Liberal leader, it would create uneconomic conditions out there and we all know what would happen to the stock market. If the NDP continued raising payroll taxes, it will create the uneconomic conditions.

There are a lot of investment options in this country. The stock market is one of them. There are high-level stock markets as well as safe stock markets. Stock brokers can advise where there are safe markets.

I will remind the hon. member that the Canada pension plan has an investment board that invests money from the Canada pension pool. The teachers' pension plan is another one that also makes investments. The idea is get management that will invest wisely, and a wise investment will always give a good return. We are not looking at the short term, but the longer term.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I must congratulate the minister of state on his excellent questions, but if the government made the necessary effort with the provinces to improve public pension plans, results would definitely be achieved. However, considering this government's record in that regard, clearly, the war continues. This is obvious with securities authorities.

One of the major problems with the government's bill is that it places all of the risk squarely on the shoulders of Canadian workers. A defined contribution plan makes workers and pensioners vulnerable to all kinds of events, both unintentional and deliberate. This has the potential to turn into something very shameful.

I have an excellent question for the minister of state. How can the minister of state and his colleagues possibly promote pension plans that could jeopardize workers' savings, since workers could be held hostage by incompetent individuals or even crooks?

[Deepak Obhrai, Conservative, Calgary East, AB]

Mr. Speaker, as I just said, the Canada pension plan has an investment board that is investing money, which the member says is dangerous. Does he mean to say that the Canada pension plan investments are wrong? What about the teachers' pension plan? All pension plans invest in the market to ensure a return. There are different kinds of investments. There are very sound investments, conservative investments, and there are high-risk investments. For the member to say that we will be held hostage is just a criticism.

I would say to the member opposite that this is one of the many plans that have been discussed around the country. He said that we should be talking to the financial experts. Of course we are talking to the financial experts, and we will continue to do so. Should there be another need to do something else when the provinces and the Minister of Finance are looking at other options and determining if they want to use the Canada pension plan, nothing stops them from doing that. However, what is important at this time is that everyone agrees that this low-cost pension plan will fill one of the biggest gaps out there.

[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.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, I want to thank the hon. member for her speech.

I agree with her on two things: people who work their entire lives are entitled to their dignity; and it would be a real shame and unimaginable for them to have to rely on food banks because there is not enough money to help them.

Can the hon. member tell me what she thinks about the NDP idea to put more money into the public plans in order to increase the minimum allowable amounts for the people most in need? What does she think about improving the public plans as a primary solution to the problem?

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

Mr. Speaker, I think we are finding ourselves in a situation where we need to do whatever we can to take care of our seniors. Whether that is to look at the public system and what exists today, or whether it is to look at the Liberal supplementary voluntary plan that we have proposed, or whether it is to look at the pooled investment fund, we need to look at a host of opportunities that will, in the end, make it better for our seniors to live with dignity and be able to do the things they need to do after working so hard all of their lives. They should never have to avail themselves of food banks.

If it means more money in the public system, if it means the voluntary supplementary system that we have talked about in the Liberal Party or if it means a combination of things, we need to do something that recognizes that the money seniors invest goes back to the seniors and not to the institutions managing the plans.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Speaker, the remarks of my colleague were impassioned and thoughtful.

Given the likely fate of this legislation, that it is will pass second reading and wind up at committee because of the majority government's position and for no other reason than that, I would ask the member this. Yesterday the member for Toronto Centre, the leader of the Liberal Party, suggested that the Canada pension plan be allowed to compete for these moneys that may be put into pooled pensions, where they would have more stable and secure returns and far less costs, money that would not find its way into the hands of fund managers, as has been the experience in Australia.

Could my hon. colleague comment on that option?

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

Mr. Speaker, I recognize that what has been suggested by our leader is in fact a very credible recommendation and one that should be taken seriously. Unfortunately, we do not see any indication at all that the government is willing to open its mind to other possibilities. That is the problem we are having.

I hear my colleagues across the way applaud when they hear it is very likely this legislation will pass second reading because they have a majority government. They have 39%. Another 60% of the Canadian population did not vote for them.

It is time they listened to what other Canadians have to say, including what both opposition parties have to say.

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, I listened intently to the hon. member present her views of a changing demographic and a pension plan.

I am wonder how she knows all about the dire circumstances of these things happening when today we heard that the pooling operation would benefit people and, at the end of the day, would be as good as what now exists, if not better.

What crystal ball allowed her to make those statements that seem to be far removed from what we heard from this side of the House?

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

Mr. Speaker, my colleague has been listening to the rhetoric that is being put forward by government supporters and by those who they want to believe.

We have heard differently. We have heard so much expert opinion against pooled pension plans that it would make all the sense in the world for us not to go down that path, or at least not to go down that path solely, but look at other options in conjunction with it.

[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.