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.

Third Reading

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, it should come as no surprise that I disagree profoundly with my colleague from Brandon—Souris, as I disagree with his party on the policy direction they are taking. I even disagree with just about everything the Parliamentary Secretary to the Minister of Finance said. I think those guys are going down the wrong road and are doing the dirty work for corporate Canada once again.

Here are the origins of the bill. Thomas d'Aquino, when he was the head of the Business Council on National Issues, and then John Manley, when he became the president of the chief executive officers, or whatever they call themselves—the Grand High Poobahs of, really, the unelected Prime Minister of Canada, which is essentially what he is--declared that what was really holding back Canadian productivity was “legacy costs”. That is a nice way of saying those dirty pensions that our predecessors got into in the 1930s, 1940s, 1950s, 1960s and 1970s. That was back when we used to negotiate fair wages for working people, back when working people and their employers would sit down and put together a sensible benefit package with a real benefit plan for their retirement years. All of a sudden, the corporate world has declared that unaffordable and it does not like having the burden of legacy costs.

We can even look at what happened in 2008 with the economic downturn. As soon as the auto industry got into trouble, what did the executives of the auto industry say? It had nothing to do with the cars they were producing or their management skills or the way that they had dropped the ball and made products that nobody wanted to buy anymore. Right away they said that the reason they were not productive was because of the legacy costs. They said that it was the pension plans that were dragging them down. They said that something needed to be done about the pension plans so they trooped down here to their friends, the guys who they bought and paid for and put into power, and complained to them that they had to do something about these pensions.

Mr. Speaker, I forgot to say that I will be splitting my time with the member for Châteauguay—Saint-Constant.

The Conservatives put it in fine print so the world can see. They put in place this disingenuous bill with a title that actually uses the words “registered pension plan” in the title. This is another example of the creative writing class that takes place somewhere down in the bowels of the Conservative Party's black operations department. They develop these names that have nothing to do with the bill. In fact, they are 180 degrees opposite to the true intent.

There is nothing about this that is a pension plan. It does not bear any resemblance to a pension plan. It is a savings scheme that, frankly, is no different from what ordinary workers could do today if they were lucky enough to make enough to set money aside in an RRSP. They could put a little more money aside in an RRSP and have the same net effect as this, except that they would be gouged even further by the financial sector that also stands in the wings waiting to benefit from this huge shift of money that should normally be going into a pension vehicle such as a proper registered retirement pension plan or, the best retirement vehicle that we have, the Canada pension plan.

And you wonder, Mr. Speaker, why I have strongly held views on this issue?

I represent the riding of Winnipeg Centre and that, frankly, has been the home of two of the greatest champions of social justice that our country has ever known. In 1919, the Government of Canada wanted to send J.S. Woodsworth to prison for his role as a leader of the 1919 general strike. The good people of Winnipeg Centre sent him to Parliament instead where he became the founder and first leader of the CCF. He served there until 1942 when he died. Then the good people of Winnipeg Centre elected the person who came to be known as the father of the Canada pension plan, Stanley Knowles.

J.S. Woodsworth, while he was here, managed to wrestle old age security out of the Liberal government of the day. William Lyon Mackenzie King had a minority government. J.S. Woodsworth had two members, A.A. Heaps and J.S. Woodsworth were called the Ginger group. They were the Independent Labour Party, predating the CCF. They went to Mackenzie King and told him that they would support his government and prop it up if he would introduce old age security.

We have a letter on file at the NDP headquarters today that is signed by William Lyon Mackenzie King agreeing to that. It took him seven years to do it. It was 1926 by the time he actually fulfilled that promise. However, William Lyon Mackenzie King yielded to the pressure of the ginger group. The member of Parliament for Winnipeg Centre managed to negotiate some semblance of pension.

When Stanley Knowles was elected, he not only brought in the Canada pension plan, the second initiative was the indexing of the Canada pension plan. Now, at a 1% operating cost, the Canada pension plan with a small amount of contribution yields a guaranteed benefit to Canadians in the neighbourhood of $900 or $1,000 a month. That is a good return. That is in the best interests of Canadians.

I am worried that as the government puts in phony bills like this and phony diversions like this, it will siphon off attention to, contributions in and participation in vehicles that work, like the Canada pension plan. It is as if it is throttling down the emphasis on the Canada pension plan.

We, when we form government in 2015, intend to undertake a comprehensive overhaul of the Canada pension plan, which will be meaningful support in old age security for Canadians. It has been charted out and it is part of our platform. It will be the most effective investment vehicle ever. Even if the Canadian pension plan as we know it were doubled, as being proposed by the NDP, the total old age security coming from that would still be less than social security in the United States. Social security in the United States has a maximum benefit of about $30,000 a year. If we take the CPP as it is today, even adding on the old age security of under $7,000 a year, that still only comes up to about $19,000 a year. We are well behind other countries, even the United States, in our social security benefits for seniors.

It frustrates me how disingenuous the Conservatives are when they introduce a bill that purports to be a pension plan for ordinary Canadians. I just heard the member for Don Valley West saying that his employees could never have a pension plan if it were not for this. He said that he had worked for years and all his employees never had any benefits. Maybe if he had given them a raise in pay they would have been able to buy some old age security. Why did the member not put a pension plan in his company? That is what we used to do in the old days, we had corporate social responsibility. We had capitalists with a social conscience. That seems to be gone.

Capital has no conscience. If it were not for the NDP here to impose some conscience into that party, it would just be following loyally and faithfully behind the Business Council on National Issues, the Canadian Taxpayers Federation and all the other dummy outfits that undermine the basic needs of Canadians for their own selfish self-interest.

We can look at the handout this is to the financial sector. We can look at the dough they will make by managing all this dough again. It is appalling, frankly, how they gouge, and the percentages they take for moving money around. The best bargain is the Canada pension plan with an operating cost of less than 1%.

This bill diminishes and undermines the systems that work and would put in place a system that will not be effective and will be no better than issuing a piggy bank. The Conservatives might as well give every Canadian a piggy bank and say, “I know you have not had a raise for seven or eight years but here is a piggy bank. Put more money into it and you will have more money to spend when you retire.”

That is not creative. There are no financial geniuses over there. That is like pulling a sedated rabbit out of a tattered old top hat and trying to convince people it is magic. It is not magic.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Mr. Speaker, one does not know where to begin except to correct my hon. friend across the way.

The Parliamentary Secretary to the Minister of Finance is the female member from Saint Boniface, an MP we are all very proud of.

I would also remind the member of that great saying, “Socialism works until you run out of other people’s money to spend”. Many countries in Europe are finding out that other people simply do not have any money.

Given the member's evident disdain for corporations and the corporate world, when will the member be making the recommendation to all of his union friends and the unions he knows and purports to represent that they should divest all of their pension funds from the nasty corporations, especially the energy and financial corporations?

Will the member have the courage to recommend that kind of divesture?

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am very proud of the years that I have spent negotiating on behalf of ordinary working people as a trade unionist. We believe that fair wages and benefits benefit the whole community.

I was in the United States recently and saw a bumper sticker that read, “At the least the war on the middle class is going well”. That is about the size of it. There is a war on the middle-class. For some reason, the government is trying to lower our expectations so we will accept globalization unquestioningly, that we have to expect less and that there is no way we can afford a living wage, fair wages or to live as well as our parents did.

On this side of the House, we have dedicated our lives to elevating the standard of wages and working conditions for working people. That side of the House seems determined to undermine and diminish the wages and standard of living of Canadians. Why would anyone elect a government that would cut his or her wages? We had this debate yesterday on the Fair Wages and Hours of Labour Act. It seems it is one thing after another. It is this war on labour on the left.

In whose interest is it to undermine the retirement and social security of Canadians by pieces of paper like this that are not worthy of the consideration of the chamber? Legacy costs are not the answer.

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

Mr. Speaker, 74% of Canadians do not contribute to RRSPs, mainly because they cannot afford to.

In my hon. colleague's opinion, why do the Conservatives believe that people could afford this program more than an RRSP?

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I believe the figure is 64% of Canadians made no contributions to RRSPs. They do not have the money. They cannot afford it. This is another instrument that would encourage them to save more. It is like pushing the onus on individuals. I do not mind individuals standing up for themselves in their own best interests, but if they do not have the money to save currently, where will they find the money to contribute to this new savings scheme?

There is nothing that adds to the retirement security of ordinary Canadians in this bill. It is an illusion. As I say, it is not sorcery. It is bad magic. The government is trying to snow Canadians by putting the words “pension plan” in the title of a bill. It has nothing to do with a pension plan. It is a phony piece of work. Canadians should not fall for it. They deserve better.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I always enjoy listening to my friend across the way. I rarely agree with him, but I do enjoy listening to him.

I want to get back to the bill itself and the pooled registered pension plan. He talked about labour. In fact, Mr. Phil Benson with Teamsters Canada made a presentation to the committee on this bill and he put forward some very practical suggestions in terms of dealing with it at the regulatory stage. I will Mr. Benson. He stated:

No single solution will resolve the retirement savings issue. I think the PRPP proposal will move the ball closer to the goal line. Improving savings, reducing risk, and reducing costs is a winning formula. We think our suggestions will make this an even better product.

Would the member opposite, who has a very strong labour background, respond to the endorsement by Mr. Phil Benson with Teamsters Canada of the pooled registered pension plan? This is a very large union in Canada that has endorsed our government's initiative with respect to providing retirement options for people, particularly the 60% of Canadians who do not currently have a retirement option.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, if we are trading quotes, I will read what this guy from the EES Financial Services, a mutual fund fee organization, said. He stated:

In general terms, the PRPP program is no different than an RRSP. Contributions generate tax deductions, enable tax-deferred growth, tax is payable on withdrawals and for the most part, will be invested in mutual funds – pooled investments that according to a 2006 report...are subject to far higher fees in Canada than in any other country. It’s no wonder the investment and insurance industries are applauding the introduction of PRPPs.

It is like handing over a gift to Bay Street. It is like giving it a half a billion dollars worth of management fees per year to manage the investment of this new mutual fund. All this is is a glorified mutual fund. If people did not have enough money to buy an RRSP before, they probably will not have enough money to participate in this PRPP baloney.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I am pleased to speak today to Bill C-25, the Pooled Registered Pension Plans Act. I would like to say from the outset that like my colleagues from the NDP and from all the opposition parties, I am very disappointed in this bill, because contrary to what the title suggests, this can hardly be called a pooled pension plan.

Before getting into the details of the bill, I would like to put into context the situation with pension plans and the Canadians who are depending on them. According to the Conference Board of Canada, 1.6 million seniors in Canada are living below the poverty line, and this bill will do nothing to help them. What is more, according to the Canadian Labour Congress, 12 million Canadians lack a workplace pension plan. Unfortunately, we do not believe that this bill will do much to help those 12 million Canadians gain access to a pension plan either.

By OECD standards, the CPP and QPP systems are relatively inadequate. Other similar countries have guarantees and much more generous public pension plans than ours. In the United States, maximum social security benefits are about $30,000 a year. Here in Canada they are about $12,000 a year and, if we add the $7,000 a year from old age security for the less fortunate, that is still far from what is being done in the United States.

According to the Canadian Centre for Policy Alternatives, most Canadian workers do not have RRSPs. Over the past few years, only roughly 25% of Canadians have contributed to their RRSP, which is far from what it should be. That suggests that, unfortunately, Canadians do not have the means to contribute.

In fact, I am disappointed because this bill will simply create a new type of savings plan enabling the funds from plan members' accounts to be pooled in order to reduce the costs associated with the management of investments and of the plan itself. The program is called a pooled registered pension plan, but it would be more appropriate to call it a savings plan, because this bill cannot guarantee that it will provide any retirement income.

This bill is designed for self-employed individuals and employees of small and medium-sized businesses, which are often unable to manage a private sector pension plan. The system created by the passage of this legislation would be a defined contribution plan. Employees would contribute a portion of their earnings to a retirement fund, and that money would be invested in stocks, bonds, mutual funds, and so on. Some companies might match their employees' contributions, up to a certain percentage.

The account grows through contributions and investment income until retirement. However, with this kind of defined contribution plan, there can be no guarantee about the amount of money that will be available upon retirement. Thus, it is the individual, the employee, who assumes all of the risks associated with the investments. With this kind of system, the amount of money available upon retirement depends on market fluctuations, and markets have not exactly been stable over the past 10 years. I invested in RRSPs and I have less money now than when I invested 10 years ago. These investments are not reliable; they are risky.

Defined contribution plans do not provide the same level of income security as defined benefit plans, such as the CPP and the QPP, which guarantee a certain payout upon retirement. Pooled registered pension plans would be managed by regulated financial institutions, such as banks, insurance companies and investment companies. The latest numbers on CPP investment returns show that the plan has lost hardly any ground over the past few years—less than 1%—while the stock markets, in which the government wants Canadians to invest their savings through pooled registered pension plans, have declined by about 11%.

Pooled registered pension plans will not provide workers with greater retirement income security because they will simply encourage families to gamble their retirement savings on the stock market, which often goes down instead of up.

As I said, anyone who has ever watched his RRSP take a dive knows how risky it is to invest his savings in the stock market. The government is so out of touch with reality that it is encouraging families to double down on what has turned out to be a system that does not work very well. With such an unstable economy, families do not need to take on any more risk. They need the stability of the Canada pension plan and the Quebec pension plan. Many economists and provincial leaders have said as much over the past few years, but the government has turned its back on families and refused to consider this solution.

Bill C-25 does not cap administrative fees or costs and assumes that competition will keep costs low. Once again, the government is dreaming in colour because it is relying on the invisible hand of the market and hoping that that alone will keep administrative costs and fees as low as possible, but as the Australian experience proves, that hope is in vain. More than 10 years ago, Australia created a similar plan. The results were disappointing, to say the least. The plan had been in existence for 12 years when the Australian government-ordered review of it showed that even though people were saving money through mandatory contributions, the returns on their investments were no greater than inflation. In many years, returns were lower than inflation.

The report attributed these disappointing results to the very high costs, despite the fact that it was originally thought that competition among companies would lead to lower costs. That was unfortunately not the case. However, the Conservatives do not want to learn from the Australians' experience, which was essentially a failure. With this bill, the government would rather hide behind its ideological ideas and make decisions without truly examining the issue.

In six years, the government has unfortunately not done much to help provide security for Canadian retirees. This bill appears to have been hastily drafted in response to pressure from union groups, seniors' groups and political parties, particularly the NDP, which, after the last election campaign, proposed an increase in Canada pension plan and Quebec pension plan benefits.

Bill C-25 is a half measure, when what we truly need is some real, concrete action. Canadians deserve and want more than what the government is proposing. Once again, the Prime Minister is putting the interests of Bay Street giants and insurance companies ahead of the interests of Canadians. It is time for the government to take real action to increase the number of Canadians who have access to retirement security and to lower the current number of 12 million Canadians who do not have access to these plans. Bill C-25 will not help achieve that objective.

Canadians do not need new private, voluntary savings plans. They really need concrete measures to ensure that they will be able to retire with dignity.

The NDP is proposing doubling the benefits provided by the Canada pension plan and the Quebec pension plan to a maximum of close to $2,000 a month. The NDP wants to work with the provinces to make it easier for workers and employers who want to make voluntary contributions to individual public pension accounts. The NDP also wants to amend federal bankruptcy legislation to move pensioners and long-term disability recipients to the front of the line of creditors when their employers file for bankruptcy protection. The NDP also wants to increase the annual guaranteed income supplement in order to lift every senior in Canada out of poverty immediately.

The NDP understands that Canadians want more than what the government is proposing with the pooled registered pension plan. The NDP will obviously not support this bill because it merely offers a new type of savings plan and does not even come close to solving the problem of making pension plans accessible.

In closing, the NDP urges the government to abandon Bill C-25 at third reading and to come up with a real plan that will help the 12 million Canadians who do not have a pension plan and the 16 million seniors who are living below the poverty line.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, I would first like to congratulate my colleague on his speech. I would like him to say a little more about how we can protect pensions. He gave the example of an individual who invests in RRSPs for 10 years and loses money when the value of the RRSPs then falls. So we lose money we invest for our retirement. He also said the measures proposed in the bill do nothing to provide better protection.

In addition, we might think of examples like Nortel, where the corporation came ahead of the employees. My colleague is certainly aware of that case. When we talk about retirement security for people who have worked hard all their lives and who invested their money, it is extremely important to protect their retirement pension. I would like to let my colleague talk some more about how we can better protect that, so it is better than what is proposed in this bill.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I thank my colleague for his question. The example of Nortel is in fact a good example, to show how unprotected pensions are. Last year, a number of people in my riding saw their pensions cut in half as a result of the liquidation of Nortel’s assets. That is simply scandalous.

We should bring back the bill that was introduced by the NDP, which proposed putting employee pension plans ahead of creditors. That would be a very good solution to protect Canadians from bankruptcies, when cases like Nortel occur. It would be an ideal solution to protect Canadians’ pension funds. However, the government bill before us simply adds another savings plan. Apart from people who are already contributing to an RRSP, there are really no more Canadians who will be contributing to it. In our opinion, it is a waste of effort.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, I am confused as to why the hon. member would not take up this opportunity.

The demographic we are talking about in the pooled pension system being offered is usually a demographic that is not covered by normal pension systems. I am a little confuse as to why he would not be supportive of a measure like this since it would help people. I am curious to know what his alternative is and why he is opposed to it.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I thank my colleague for his question. There are a range of registered savings plans available. Unfortunately, companies do not use them very much. This will essentially be an additional plan being made available, but there are already numerous plans and they do not help Canadians to contribute to a pension plan.

We think the solution is to increase Canada pension plan and Quebec pension plan benefits. That would cover all Canadians, who could contribute more and benefit more from it. These plans already exist; they are defined benefit or defined contribution plans. People know what they will be getting when they retire and so that tool, which already exists, makes it is easier to plan for retirement.

[Ted Menzies, Conservative, Minister of State (Finance)]

Mr. Speaker, it is a pleasure to stand and take us through to the beginning of question period.

I have listened to many of the debate today, or the false information, I would suggest to you, Mr. Speaker, and I am sure you have been able to recognize this, having listened to many of these debates. We have certainly given this fulsome debate in the House as well as in committee. We have brought in witnesses who talked about the benefits of the pooled registered pension plan.

It has been said many times, but not enough and it deserves repeating, that this will be a low-cost option to those Canadians, 60% of those in the workforce, who do not now have available to them a workforce pension plan that their employer can choose to contribute on their behalf. That is the option of the employer.

We, on this side of the House, think that option is exactly what our businesses want. They have asked us for an opportunity so they can choose to offer this pension option, this retirement option, this savings option to their employees and, if so, they can choose to contribute as well on their behalf.

We see it as accessible, which has been mentioned many times, by any Canadian. In many forums I have been asked if this is this only for small businesses. Absolutely not. It is available to any business that chooses to offer it.

For the first time in history, this is available to self-employed Canadians who can contribute to their retirement. A lot of self-employed Canadians have not had the option to become part of a larger pool at low cost, where the administration costs are low.

I have heard lots of comments from the other side that are very much ill-informed. Canada has been accused of having very high MER rates, management expense ratios, to put it in layman's terms, and of course the industry will complain that those are required because of the complications of the pensions they offer.

We have simplified it down so the parties that are interested, once they qualify, in offering the pooled registered pension plans. They have told us that they can bring their costs down very low.

We are trying to provide a realistic low-cost option so Canadians can actually participate in a larger pool, the same type of pool that the Canada pension plan and the Quebec pension plan is. That is what makes sense for Canadians.

The NDP continues to harp on the fact that all we should do is double the Canada pension plan. That absolutely negates the position in which many Canadians are. They do not want another mandatory reduction from their paycheque, and it would be mandatory, because that is the makeup of the Canada pension plan. Many people are saving in other ways and they do not want it deducted from their paycheque.

Many businesses have said that they are struggling to hire new people and make their businesses profitable. Now is not the time to add another cost, albeit a tax, on them contributing on behalf of their employees. This gives those businesses an option if they feel comfortable to offer a savings plan for their individual employees. That is very important.

We have a very good system in our country. The NDP loves to talk down our economy, our seniors and what a great country this is in which to live. We should be proud of the fact that we have a great country, a great financial system and a great retirement system for our seniors. It is the envy of the world.

I have spoken at many pension conferences in Canada and around the world, and I have also listened. Many approach us and ask how we have done it in Canada and could they follow our model. Many have asked about the pooled registered pension plan. They think it is a good idea and they would like to adopt it in their countries. Some people recognize that, but obviously not the opposition.

The opposition members stand over there and say that we have done little for seniors. We have done a lot for seniors. We have given the largest increase in the guaranteed income supplement for those low-income seniors. We on this side of the House thought that was a great idea. Apparently, the NDP did not like it because its members voted against it. They stand in here and say that they support seniors, yet they voted to keep them as low-income seniors. That is an incredible position for them to take.

We have the Canada pension plan. As I have said before, it is actuarially sound for 75 years. We co-share the jurisdiction of that with the provinces. It is in good shape. We have discussed whether we can increase that, and that discussion continues among our officials. As well, the Quebec pension plan is there for seniors.

We have the tax-assisted registered pension plans and registered retirement savings plans. Those are good. They have had some struggles, but, over the years, averaged out, they have done well.

However, we think there is an option that is missing, and that is the option for so many of our Canadian workers who do not have that.

In the last few minutes I have, let me just share a bit of the chronology from where we started.

In 2008, when we saw some of the insolvent pension funds in trouble, we realized we needed to look at those that were federally regulated. The Pension Benefits Standards Act had not been changed since 1985. We took a serious look at that, through consultation. We have improved that to protect the federally-regulated ones. We moved from there. We saw the challenges that individual pension funds were facing, so we moved to make improvements to them through a working group.

We did extensive analysis and we found out what segment of the Canadian population was not saving enough for their retirement. This is directed toward the middle section of income earners who need the support to help them save. This process will help them save and they are sharing in the contributions for that. Most Canadians think that is only fair that they help save for their own retirement.

We know the socialists love to share everybody else's money but their own. We would like to suggest that is probably not the way most Canadians think.

We have shared this challenge with our partners, the provinces.

I mentioned earlier how progressive the Quebec government had been on this. In fact, in its last two budgets, it has addressed this. It wants to move forward with it.

It is very unfortunate that the NDP is the sole roadblock in us being able to move forward, the Quebec government being able to move forward and other governments that actually want to put in place mirror legislation to this so we are able to provide pooled registered pension plans to those Canadians who want them and those Canadians who need them.

[The Acting Speaker, Barry Devolin]

Order, please. The time for government orders has expired. The hon. minister of state will have 11 minutes remaining when this matter returns before the House.

The House resumed from June 7 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 third time and passed, and of the motion that this question be now put.