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

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Mr. Speaker, it is interesting that members opposite, including her, continue to speak about the fact that this is supposed to help millions of Canadians, yet nobody seems to be able to address the experience with RRSPs. I have some numbers. Only 31% of the eligible Canadians contributed to their RRSP last year and unused RRSP room now exceeds $500 billion.

Would the member talk about why she thinks people would suddenly invest in this proposed plan when the RRSP experience has not reflected that?

The second piece of that is we know that people who have invested in RRSPs have taken a significant hit over the last couple of years during the economic downturn. How does she feel Canadians would be served by a plan that would continue to require people to invest this way and face the potential of losing significant amounts of money?

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Mr. Speaker, I would like to let opposition members know there is a lot of confusion regarding this plan. I will make it very clear once again, as did the members who spoke before me on the Conservative side. This plan would help millions of Canadians save for retirement more easily by introducing pooled registered pension plans. This new, low cost and accessible option would help more Canadians meet their goals.

This is especially important for those working for smaller businesses and the self-employed. The PRPPs are a new kind of defined contribution pension plan that would be available to employers, employees and the self-employed. The PRPPs would improve the range of retirement savings options for Canadians. They would provide an accessible, straightforward and administratively low cost retirement option for employers to offer their employees, allowing individuals who currently may not participate in a pension plan, such as—

[The Acting Speaker, Conservative, Bruce Stanton]

Order. I will have to stop the member for Fleetwood—Port Kells there. I am sure there are other members who would like to ask questions.

Questions and comments, the hon. member for Westmount—Ville-Marie.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Mr. Speaker, I will ask a question that I asked of the member's colleague a little while ago but did not get an answer.

If we make the assumption that the PRPP is made into law along with the other federal programs, CPP, OAS and GIS, does the member feel that the needs of Canadians with respect to their pensions for the foreseeable future, meaning in the next few decades, will have been entirely addressed or is there more to come?

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Mr. Speaker, I would like to talk about this plan in answering the member's question. This is a good plan. We are standing up for Canadian families, businesses, employers, employees and small businesses. They will really benefit from this plan. As I have said before, this is a good plan.

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

Mr. Speaker, yesterday, on my train ride to Ottawa, I was reading a columnist in Les Affaires who was saying that unfortunately, in light of the low interest rates, it is already a nightmare for private pension fund managers to invest future retirees' money and hope for a return.

Between pirates who invest recklessly in speculative markets, imbeciles and white collar criminals, not to mention life's challenges, how does my colleague justify causing our future retirees and our seniors so much stress?

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Mr. Speaker, the member should know that about eight million low- and middle-income Canadians have no workplace pension plans. This includes nearly 2.7 million self-employed workers, one-third of whom are women. Pooled registered pension plans are geared at small businesses and entrepreneurs who have had no access to affordable pension plans. This is a good plan and he should understand that.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Mr. Speaker, I am pleased to discuss the very important measures that are contained in Bill C-25, an act that is key to implementing the federal framework for the PRPP, the pooled registered pension plan. I can ensure personally that Canada's seniors will have the retirement that they deserve with the implementation of this kind of plan.

It is innovative. It is new. It is privately administered. It is low cost. It is an accessible pension option, and I highlight the word “option”, to help Canadians meet their retirement goals.

This is particularly significant for small and medium-size businesses like mine. I was in business for 35 years. I only wish there had been something like this for me to offer, not only to my family, but also to my employees. Certainly many of us would not be sitting in challenging situations today without options. The legislation would enable many owners and employees to have access to a large-scale, low cost private pension plan for the very first time.

By pooling the pension savings, PRPPs would offer Canadians greater purchasing power. Basically, Canadians would be able to buy in bulk, then they would have the opportunity to get a better bang for their buck. Achieving lower prices than would otherwise be available means that they would get greater returns on their savings. More money would be left in their pockets when they retired.

The design of these plans would also be straightforward, to allow for simple enrolment and management. Simplicity is always best.

Finally, they are intended to be largely harmonized from province to province, which would further lower administrative costs.

Automatic enrolment would encourage regular savings in PRPPs by making participation the default choice of employees who do not actively make a decision to opt out. In other words, a reverse onus would encourage more people to participate.

Canada's finance ministers, both provincial and federal, decided to proceed with this PRPP framework precisely because it was considered the most effective and the most appropriate way to target those modest- and middle-income families and individuals who may not be saving for retirement. It is an option available to people who have not been served before, in particular, those who currently do not have access to an employer-sponsored registered pension plan.

Certainly I never did; neither did my employees and many of the thousands of self-employed people in this country.

With the federal PRPP legislation introduced, provinces could easily and seamlessly use it as a model for their respective frameworks so that the system could get up and running. Really, it is not necessary to go into a full duplication of a bureaucratic maze to administer this. Once the provinces put in place their PRPP legislation, the legislative and regulatory frameworks for the PRPPs would be operational, thus allowing PRPP administrators to develop and offer plans to Canadians and their employees. This would be a very competitive process, thus driving the price down even more.

It is crucial that we continue to maintain this momentum for a stronger retirement system. The PRPP would not carry the system entirely on its own, but it certainly would go a long way toward dealing with people who have not been served.

I also want to take time today to discuss other actions our government is taking and has taken to secure Canadians' retirement income needs and to strengthen Canada's retirement income system.

One particular instrument which I think is very important, yet is not given its due consideration, is financial literacy. For example, this is an area where we are working to improve the retirement income outcomes.

A strong system depends upon the ability of its users to make informed decisions that are critical to its success. I was very pleased when the member sitting in front of me, the chair of the finance committee, put forward a private member's bill that strongly promoted financial literacy in this country. I think that bills like that serve Canadians well.

Federal, provincial and territorial governments are also continuing our work by reviewing options to improve the CPP. While the CPP is efficient, effective and well managed, there are serious considerations around imposing mandatory payroll deductions in the context of the fragile state of the global economy that have to be taken into account.

CPP is an option, but due to time constraints and the economic malaise, it is deemed by many, particularly our provinces, to not be the right decision at this time. As a matter of fact, it could even be harmful to our recovery.

As I made clear at the outset, changes to a system that is so interconnected with our economy must be considered with a great deal of care. A lot of thought has been put into this across the country. The minister of state has spent a couple of years travelling across this country literally meeting with every financial authority and provincial representative. Collectively, they have come up with the unanimous mindset that this is the way to move forward.

We must be mindful that any legislation must have a bottom line. Above all else, it must do no harm. I am confident that we are on solid ground there.

Canada's retirement income system has been recognized around the world as a model for reducing poverty among seniors and providing high levels of replacement income to retired workers. Be assured that our government will make the right policy decisions to ensure it stays that way.

We welcome ideas and considerations, particularly those that are not just driven by a parliamentary ideology that we sometimes find ourselves in, in rather disturbing circumstances in this House of Commons, but are driven by some really sharp, well intentioned and capable suggestions.

In recent years, our government has introduced measures to support a system with a proven record of success. This has included, as most people here would know, but I repeat this as I think it is important, a number of steps.

We have provided over $2 billion in additional annual targeted tax relief to seniors and to pensioners through measures such as pension income splitting. That is huge in a riding like mine. I have the second highest concentration of seniors in the province of Ontario, so I recognize the need for programs to allow them to have a disposable income. We increased the age credit amount. There was a doubling of the maximum amount of income eligible for the pension income credit. It included reforming the framework governing federally regulated pensions to better protect pensioners.

It also included working collaboratively with the provinces to modernize the CPP, making it more flexible for those transitioning out of the workforce to better reflect the way that Canadians live, work and retire. Most recently, in our latest budget, we announced a top-up to the guaranteed income supplement for Canada's most vulnerable seniors.

In conclusion, with the introduction of the PRPPs, we would address the remaining gaps in the system by providing an attractive additional pension option. This would not be one size fits all; it would be an additional pension option to both individuals and employers.

Through all of these measures, combined with the government's determined efforts to make PRPPs a reality, I sincerely believe that we are making a retirement system that is good. Can it be better? Yes. Is it strong? Yes. Can it and should it be stronger? Yes, that is our duty and our responsibility as parliamentarians.

This is something of which I think we as Canadians, and certainly the Parliament of Canada, can and should be very proud.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Madam Speaker, I would like to congratulate the member opposite on his speech. He was very sincere in his delivery. If that speech had been made before Davos, it would have been much less awkward to say the government is concerned about the fate of our country's seniors. I have a question for him about the polls that often suggest that three-quarters of Canadians do not contribute to an RRSP because they are unable to. How is this new program any different?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Madam Speaker, let us take a look at human nature. Whether it is a tax-free savings account or RRSPs, come tax time we all want to maximize our capacity and leave more money in our jeans. However, it is sometimes very difficult to come up with that $500, or $1,000 or $5,000 contribution, whatever it might be within the affordability of those individuals, to try to end up with some money after Revenue Canada has not taken its portion of the share back to the Canadian taxpayer. How do we do it when we do not necessarily have it? Canadians and human nature itself makes it a challenge to come up with a larger portion of money.

With the reverse onus, if we are able to take selective small amounts on a consistent basis with the full co-operation and planning mechanisms of the individuals involved, then it can happen literally, certainly not painlessly, with a heck of a lot less pain. In other words, a dollar a day. A penny saved is a penny earned. All of a sudden, at the end of that time period, it is a significant amount. The pooled registered pension plan would work very favourably to address that element of human nature.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Madam Speaker, my colleague has given me hope. He said of the pooled registered pension plan that it is an imperfect tool, but one tool among many. With the Canada pension plan, the Quebec pension plan, old age security and the guaranteed income supplement, all of which provide a safety net for Canadians, I wonder if he truly believes that there is something else that we should be doing. I have already asked the question twice, but I will do so again. Is the status quo enough, or are there other things that should be done to ensure that retired Canadians receive an adequate pension?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Madam Speaker, the member opposite might actually be a little surprised with my response, but I totally agree that it is not enough. Quite frankly, it will never be enough. The day that it is enough is the day that we really cease to have a sense of purpose in this place. There must be a manner in which we always seek to improve ourselves. As the great poet Browning wrote, “Ah, but a man's reach should exceed his grasp, Or what's a heaven for?”

We should always be looking for a way to better society and all of the components of that society, be it our youth, seniors, or our working people. That means that we should be vigilant. We should always be looking for means by which we can improve, whether it is a program adjustment, an evaluation of a program, or quite frankly making a new program.

As Bob Dylan said in his song, and I know I am getting a little rhetorical, “the times they are a-changin'”. Well the times perpetually change. We cannot sit in a straitjacket. I personally believe that this plan is the right plan for this time. It is a component of a solution, but not the total solution. I would encourage all members to view it in that manner.

Collectively, as we move forward and embrace suggestions that will take us incrementally towards a better society, I really think we can fulfill our responsibilities here and be proud of our contributions, regardless of which side of the political fence we find ourselves.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Madam Speaker, one thing is clear: it is difficult to govern a country and simultaneously consider each and every citizen of that country. Governments must make choices on behalf of citizens. They must not favour certain groups of citizens over others. It is becoming increasingly clear that, under our government, it is better to be rich and in good health rather than poor and unwell.

The right to live in dignity is not a right that belongs solely to certain age groups or social classes. Attempting to make this a generational issue by using the demographics argument is a little pathetic. Any thinking person understands that everyone grows old and that we all have an expiry date. Unfortunately, some people were born at the wrong time and they will be forced to wait two or three years to receive their old age pension. The Conservatives say that they will not go down this path, however, generally, when they talk about something, they unfortunately usually follow through with it.

If the Prime Minister and his predecessors only just realized that demographics are real and that changes are inevitable, that is unfortunate. The only hope that then remains for certain segments of the public is reincarnation. They believe that, perhaps next time, the chips will fall more favourably.

Bill C-25 is a prime example. The Conservatives call them pooled registered pension plans, when they should be called “swimming pool of champagne for banks and insurance companies”. The plan is surreal. It did not work in Australia, where, after 10 years, it has barely managed to keep up with inflation.

A mandatory public system would ensure a sufficient volume of investments and give Canadians a safety net. Fragmenting the system by creating a new entity will lead us nowhere. The financial sector and banks brought us to the brink of an abyss, and our economy almost slipped in a few years ago. I do not see why things would be any different in the future.

If we are on the brink of the abyss, perhaps the Conservatives are going to give us a little nudge forward. I do not exactly consider that desirable. I have difficulty giving any credibility to a government that tells people that they will have to wait two years to get their old age pension cheque, while at the same time signing a blank cheque over to Lockheed Martin for aircraft that may or may not even get airborne. I find that a tad irresponsible.

I think the government’s priorities committee has a little problem, because the first thing it focused on when Parliament returned was Canadians’ right to hang a flag on their balcony, when many Canadians do not even have a balcony or even have a home. I think that is something to think about.

My constituents are asking me the question much more simply. They are asking me what those people are smoking.

When I hear the government’s promises, I feel like I am listening to the cannibal chief telling me there are no more cannibals because they ate the last one the night before.

I do not see why, after looting the savings of millions of people around the world, the financial industry would suddenly become generous and not gobble up the principal with management fees and annual bonuses of $800,000 or $900,000 or $1 million. I do not see what a bill like this can contribute.

There are already systems that are working, like the Canadian system and the Quebec system. Those systems just need to be improved. But what they are going to do is provide what amounts to an open bar for the big financial corporations that are going to get rich off it. The only thing I see as extremely unfortunate is that in the House, we really do not have to worry about it because our pension fund is indexed and we do not have to be afraid for our future. It will be really unfortunate, however, for the people who have scraped together a little money and gone without basic necessities so they could save, when they see that their money has been invested in projects like Bre-X or outfits like that. They will really be living in poverty.

I think the government is on the wrong track yet again. Dividing people accomplishes nothing. These days, we hear that the baby boomers are wallowing in money and they are all in Florida playing golf and eating bacon and then they come home for their health care, but that is not the reality. I see ordinary people my age or a little older who have worked very hard all their lives. They are looking at having nothing and they are worried. They are not worried about the right to hang a flag on their balcony. They are worried about their future and their children’s future.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Madam Speaker, I would like to commend the hon. member for his speech and ask him a question. Does he really believe that this bill will ensure a secure retirement for more Canadians than today? People will be investing money in unstable financial markets. Will Bill C-25 give these people a secure retirement? After their careers, will they have a stable income for the rest of their lives like they do with the Canada pension plan? Or, does this plan merely fool Canadians into contributing to a pension plan that is not really a pension plan? In my opinion, this is more of a savings plan and it will not ensure that these people enjoy a secure retirement at the end of their careers. I would like the hon. member to comment on this.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Madam Speaker, it seems to me that this plan will provide a secure retirement for the managers of these funds. There are two important criteria involved in ensuring the success of such an undertaking. I listened to all the specialists and heard every analysis imaginable. Such a plan would require immense volume and everyone would have to participate. That is the only way to ensure a stable return in the long term. Once again, this is a voluntary plan. Not all employers will participate. We do not know what will happen with the financial markets in the long term or what type of returns this plan will generate.