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

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

Madam Speaker, in the previous speech, we were told that it was possible to educate people with the famous financial literacy bill. In fact, half of all Canadians do not file their own tax return, something that is an unavoidable annual event, a civic duty. This is so because those people feel incapable of doing it themselves. They ask their loved ones or a professional to handle it for them. Unfortunately, they have to pay for a basic task that they should not have to pay for because the tax system is far too complicated.

As far as I understand it, Bill C-25 will create the equivalent of hedge funds for the retirement of future workers because they will live with uncertainty. What does the hon. member think of the uncertainty and stress this will create for the future of the country? With their growing numbers, retirees represent a significant contribution to our economy.

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

Madam Speaker, we hear the same thing every day in the news: the Americans have just announced that they are keeping their interest rates ridiculously low for the next three or four years. The Bank of Canada is saying more or less the same thing. The global economy is stagnating and the crisis in Europe is far from over. This is going to have negative consequences. Betting on financial markets is just about the last thing to do these days.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Madam Speaker, I rise today to speak in favour of the pooled registered pension plans bill. I rise to speak for small business owners in my riding of Kitchener--Conestoga who want to provide for their own retirements and the retirement of their employees.

I will take a moment to put this into perspective because this improvement to Canada's retirement system cannot be viewed in isolation. Our government has provided tax relief for seniors by doubling the amount of income eligible for the pension income credit and through increases to the age credit. Even more significant, we have instituted pension income splitting for seniors, creating a more fair tax system for those who built this great country. As well, we have increased payments available to low income seniors by way of the guaranteed income supplement. In fact, budget 2011 announced a new guaranteed income supplement top up benefit for most vulnerable seniors. Seniors with little or no income other than old age security and the GIS will receive additional annual benefits of up to $600 for single seniors and $840 for couples.

Before that, budget 2008 increased the amount they can earn before the GIS is reduced so that recipients will be able to keep more of their hard-earned money without suffering clawbacks. Also in budget 2008, we introduced a tax free savings account, which is particularly beneficial to seniors as it helps them to meet their ongoing savings needs on a tax efficient basis after they are no longer able to contribute to an RRSP. We built a framework for federally regulated pension plans that ensures retired workers will continue to receive benefits should their plan be terminated.

We have also worked with the provinces to bring new flexibility to the Canada pension plan that makes it easier for Canadians to transition in and out of the workforce to better reflect the reality of how Canadians live, work and retire.

Despite all this progress, though, and despite the work we have done to help seniors have an easier time living through retirement, we still face challenges. More than six out of every ten Canadians do not have access to a pension plan at their place of work. On average, each Canadian has over $18,000 of unused room to contribute to an RRSP. One reason that many employers do not offer a pension plan is simple: they are too costly to administer and they impose a number of legal burdens. One reason that many Canadians do not take full advantage of their RRSPs is also simple: properly balancing the combination of risk and cost is beyond their ability.

These challenges are not new but they are growing in urgency. Clearly, a new approach is needed and pooled registered pension plans offer Canadians that new approach, that new hope.

PRPPs would offer a simpler enrolment and withdrawal process than traditional retirement plans. This would allow small and medium size enterprises, struggling to balance their books while keeping valued talent, offer a valuable incentive to their employees while keeping their own administrative burden down.

Canadians want to plan for their retirement. They want to plan for their golden years. It is not the job of government, as some hon. members would have us believe, to take away that ability. Our job as government is to facilitate their plans, not to dictate those plans. Our job is to make it easier for employers to offer retirement plans.

All employers are eager to hire highly skilled workers but there is always a challenge for those with smaller businesses. How can they compete with larger corporations who are able to not only offer attractive wages and career growth plans but also have the administrative support and the buying power to offer good pension and retirement benefits. Many Canadians can only access a pension plan if their employers offer one and many employers do not want the legal or administrative burden of offering a pension plan. The end result, as I mentioned, is that over 60% of Canadians have no workplace pension in place.

PRPPs are designed to address Canada's lack of low cost, large scale retirement savings options for the majority of Canadians. The innovative design features of the PRPP would remove many of the barriers that traditionally kept employers from offering pension plans to their employees.

A straightforward design leads to simple enrolment and management. Whereas now employers much choose hiring an expensive outside party, taking on the cost themselves, or forgoing any pension plan for their employees at all. A third party administrator would now take on the legal and administrative duties associated with running a pension plan. These costs would be spread across participating employers, allowing for an economy of scale that would keep costs down. When the costs of investment drop due to the economy of scale, the net return will increase. That is basic economics. By building a design that will function across provinces, administrative costs will be reduced even lower and an even larger economy of scale can be achieved.

Offering pooled registered pension plans would make it easier for Canadians to fund their retirement but no one on this side of the House believes that PRPPs are the last step this government will take to ensure Canadians are able to enjoy their golden years.

I think all parties could agree that improving Canadians' financial literacy would be a big step forward. I do not mean training every Canadian to be a stockbroker, but things like the bottom line benefits of selecting the best credit card, the responsible use of credit and the power of compounded returns and the damage to compounding caused by taxation. A better understanding of these issues and how they interconnect can only lead to a more prosperous Canada and better retirement living for all Canadians. That is why launching the task force on financial literacy was the right thing for our government to do.

It has often been said that there are two kinds of people: those who spend first and save what is left over and those who save first and spend what is left over. Improved financial literacy will encourage Canadians to save first and PRPPs would make it easier for them to do so.

As the Canadian Chamber of Commerce noted on November 17 of last year:

—PRPPs--with simple and straightforward rules and processes--would give many businesses the flexibility and tools they need to help their employees save for retirement.

The chamber also noted that employers want to offer their employees retirement benefits, such as a pension plan. It went on to say, “(PRPPs) would be a great option to attract new talent to our business”.

The Canadian Federation of Independent Business, the voice of small business in Canada, made the case for PRPPs even more strongly. The Canadian Federation of Independent Business noted that while a 1% increase in CPP would destroy 220,000 person years of employment and drive wages down, PRPPs would expand the retirement savings options for thousands of Canadian small businesses and their employees. Currently, it is worth noting, less than one in five small businesses that belong to the CFIB offer their employees a pension plan.

In conclusion, PRPPs present an innovative solution for Canadians to finance their retirements. PRPPs make it affordable for employers to offer retirement plans and make it possible for employees to participate. Canadians want to save for their retirements and employers desire a low cost, low administration path to helping them. I encourage all members of the House to join me in supporting Bill C-25.

[Malcolm Allen, NDP, Welland, ON]

Madam Speaker, I thank my colleague for his comments on this new savings scheme that the government has decided to allow workers to do with a negative billing option. I thought we did away with that with some of the other folks who used the negative billing option because new workers going into a place of employment gets registered and then they must opt out if they want out.

The idea that somehow this will be a pension at the end of the day for folks, I fail to fathom the logic of that when we know there are literally millions of Canadians across this land who cannot contribute any money to an RRSP, let alone anything else. All of a sudden, this is about to become something magical that will make it happen. It is not magical. It is called, “I don't have enough money to meet my daily needs and get to the end of the month as a worker, let alone invest in what might be my future when I do not even know if I will pay the rent at the end of the month or have to go to a food bank because I am working poor”.

My hon. colleague said that the Canadian Federation of Independent Business said that if we had a 1% increase in CPP it would eliminate all these jobs. It would be nice to know, and I wonder if the member does know, since the Canadian Federation of Independent Business thinks it is such a great deal, is it committed to match any moneys that employees put into that account on a compulsory basis and allow them to sign up as businesses, just like the member does?

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Madam Speaker, it is ironic that we would be here trying to support Canadians in their efforts to save and make it easier for them by having a small amount deducted from their salary into a pension plan and have the employer contribute to it.

As the member indicated, the CFIB does say that even a 1% increase in CPP would destroy 220,000 person years of employment. By making this a low cost option so that employers can pool their resources by buying the administrative and legal support to make it possible for average Canadians to access a retirement plan, this side of the House believes strongly that this is a great option.

It is unfortunate that members of the NDP and many of their colleagues on that side are really not in this to support ordinary Canadians. I am really disappointed to hear that kind of response.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, there is a difference between the Liberals and the Conservatives on this issue. The Liberals believe in social programs, such as the CPP, the OAS and the GIS. It was Liberal prime ministers who brought in those programs because we believe in them.

The present government's response to those programs was that it did not have the support of a majority of the provinces and that is reason it could not do anything in that area. It is unfortunate that we did not see stronger leadership from the Prime Minister to try to improve the CPP. That would have been option one. In this option, in order to make the program work we need to have the provinces onside. If the provinces are not onside, more than half the workforce will not even have the opportunity to participate.

I wonder if the minister, who has implied that he has the provinces onside, could tell us which provinces in Canada are currently onside and are committed to passing legislation that would enable all Canadians to benefit if the bill were to pass.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Madam Speaker, it is important to review what led to where we are today in terms of the development of the PRPPs. A joint federal-provincial working group was established in May 2009 and it undertook this in-depth examination of the retirement income inadequacy in Canada. That research, led by the finance ministers in December 2010, agreed to pursue a framework for a pooled registered pension plan.

As I understand it, the provinces and the finance ministers from the provinces are supportive of this concept, and that point needs to be made very clear. This is not something that we are mandating top-down. This is something the provinces have bought into and is something that small business is buying into. From my experience in my dental practice for 27 years, I wish I could have offered a plan like this to my five or six employees so that at the end of their employment they would have had access to some kind of a retirement pension income.

[Andrew Cash, NDP, Davenport, ON]

Madam Speaker, it is an honour to rise today and speak to this bill, because so many Canadians do not have a pension and they are looking to the government for some kind of leadership. This is a hugely important issue and the government is offering a solution that is going to be excellent for the banks and lousy for Canadians who do not have a pension at this point.

In my riding of Davenport there are hairdressers, taxi drivers, carpenters, bricklayers, web designers, women who clean offices overnight. None of these people have a pension. There is nothing in this scheme to help those people or to protect an investment that these people make in a pension. However, there are going to be some excellent returns for the banks, which is why the banks are falling over themselves with glee over this proposal. Regular workers have been left out of the pension scheme and have been abandoned by the government and by many large employers. The government, in the wake of the shedding of massive amounts of retirement savings, is inviting Canadians to roll the dice again with the market. How is this a plan that Canadians can bank on?

Many members opposite talk about their experience running small businesses, and some of them might be running small businesses as we speak. However, none of them talk about the real issues that face working people in this country who do not have a pension, do not have benefits, have no job security and no way of accessing the kind of supports they need to raise a family, pay the rent and plan for the future. This is a narrow focus, and I would venture to say it is not focused at all.

If the government really thought it had an excellent plan it would not have limited debate on this bill. Canadians really want to talk about pensions. Why would we have to limit debate on this? This is certainly an issue in my riding. On Thursday night I will be leading a public forum on pensions, on this very issue. I would be very happy to invite members opposite to come to the meeting so they can meet people who do not have the resources to risk in the market. In 2008 Canadians lost billions of dollars in pension savings. Why would we invite Canadians to roll the dice once again?

This is the very lack of care and focus on the real issues of Canadians and Canadian families. Increasingly, workers in Canada do not have a pension. Increasingly, workers are left out of our employment insurance scheme. Increasingly, workers do not have access to parental leave. Nothing the government is proposing would be an answer to the pressing issues for many Canadians. It is a failure on many levels.

[The Deputy Speaker, NDP, Denise Savoie]

Order, please. I must interrupt the hon. member. He will have five minutes remaining for his comments when this bill returns to the House.

It being 6 p.m., the House will now proceed to the consideration of private members’ business as listed on today’s order paper.

The House resumed from January 31 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 second time and referred to a committee.

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, I am honoured to rise in this chamber today to speak to Bill C-25, an act relating to pooled registered pension plans.

Innovative measures like pooled registered pension plans demonstrate our Conservative government's focus on the issues that matter most to Canadians: economic growth and financial security. This focus has continually achieved results. Under the leadership of our Conservative government, the Canadian economy has maintained the strongest job record in the G7. I'm very proud to say that over 600,000 net new jobs have been created since July 2009. We have also ensured a higher standard of living for Canadian seniors and our government has provided an additional $2.3 billion in annual targeted tax relief for seniors and pensioners, with measures like increases in the age credit amount and the introduction of pension income splitting.

While these are all very positive and necessary developments, there remains much to be done. Unlike the members opposite, who continue to promote job-killing tax hikes that threaten the growth of wealth and prosperity in Canada, our government has been working hard at crafting prudent, responsible and creative plans to move Canadians forward in these very fragile economic times.

I have just recently spent some time in Europe and seen first hand the difficulty that the EU is in and I am thankful that this government has ensured that we have stayed ahead of all the G7 nations. However, this requires continual improvement, vigilance, innovation and flexibility in how we manage our economy and the long-term financial prosperity and security of all Canadians well into their golden years. We must encourage all Canadians to save for their retirement and to plan for it early. To help the many Canadians who presently have no plan, the pooled registered pension plan is a vehicle that would help address that very need.

While some of the provinces raised serious concerns about expanding the CPP, there was unanimity among the provinces about pursuing the PRPP framework. Continued consultations with our provincial partners have revealed that a key area to help the Canadian economy move forward is the retirement income system. How else can we explain the fact that there are still Canadians who face a serious risk of not saving enough for retirement? This is especially true for the self-employed and Canadians working in companies that presently do not offer a pension plan. Pension reform is a key priority considering that over 60% of Canadians have no workplace pension.

Existing retirement income structures, while good vehicles, are not the key to addressing this problem. Instead, programs like RRSPs continue to be underutilized. On average, each Canadian has approximately $18,000 in unused RRSP room. Shortcomings and holes in our pension options pose a real threat as our population ages and more people reach retirement age. With this in mind, our government is proposing new low-cost and accessible pooled registered pension plans. Their introduction would widen the range of retirement savings options for Canadians and allow a greater percentage of our citizens to reach their retirement goals.

Employers would be drawn to the pooled registered plans because these would allow them the opportunity to forego the prohibitive burdens that traditional pension plans generally carry. Instead, a third-party administrator would take on most of the legal and administrative duties associated with the maintenance of the plan. Plan members would rest at ease, knowing that this third-party administration would come from regulated financial institutions that have already demonstrated a capacity to fill fiduciary roles and to act in the best interests of potential plan members.

Canadians joining PRPPs would also gain greater purchasing power, as they would essentially buy into a pool of investments. This would allow members to benefit from greater economies of scale and lower management costs, which would be an improvement over the existing smaller RRSPs. The fact that the regulatory framework of PRPPs would be harmonized between the provinces would also reduce the cost of these measures and remove administrative burdens. PRPPs would also be flexible enough to allow members to easily transfer between plans. This feature would undoubtedly also increase the attractiveness of the plan to small business owners who may find the locking-in provisions of other plans too much of a barrier.

The innovative design and new features of PRPPs have garnered universal praise. All of our provincial partners are enthusiastic about the positive effect of PRPPs on small and medium business. The Canadian Chamber of Commerce, the Canadian Federation of Independent Business, the Association of Canadian Pension Management and the Canadian Taxpayers Federation have all declared their support for PRPPs.

In my riding of Etobicoke Centre, PRPPs would be a very effective means to help many of my constituents start a pension where many do not have one today. I have a huge number of small and medium-sized businesses that this will apply to perfectly. I know that the people of Etobicoke Centre working in those businesses will benefit from this tremendously.

The introduction of the pooled registered pension plans does not preclude us from continuing on our work on other retirement savings vehicles. However, our government understands that in these economic trying times Canadians cannot afford further increases in CPP contributions. Because of this, the provinces have stalled their debate on reforms to CPP.

Already entrepreneurs are making plans to enrol their employees in new PRPPs.

The Ontario Medical Association recognizes the tremendous positive potential PRPPs will have on essential professions, like doctors, and praises the government for creating savings opportunities that have hereto been unavailable to them.

At this point, the introduction of a new alternative pension plan like PRPPs has been far better received than have other reforms.

Pooled registered pension plans have an enormous potential to improve the retirement security of all Canadians, particularly the 60% of Canadians who do not have the luxury of a workplace pension. This program has already drawn the interest of small business employers and relevant stakeholders, including all of our provincial partners.

In these fragile economic times, sound and innovative policy like that behind the pooled registered pension plans is essential for Canadian competitiveness and for the welfare of our citizens.

[Bruce Hyer, NDP, Thunder Bay—Superior North, ON]

Mr. Speaker, this PRPP proposal reminds me of another debate.

Canadians called for years, and are still calling for, for a national childcare program and the Conservatives gave them $100. Now Canadians are asking for secure pensions and Conservatives are giving them a weak and voluntary program so they can roll the dice in the marketplace.

There are already private pension investment vehicles out there, so can somebody explain to me how yet another voluntary risky program is an improvement?

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, I reject entirely the premise of the hon. member's question.

This is not risky at all. As we said, 60% of Canadians do not have a pension plan of their own, especially those who are self-employed or work in small and medium-sized enterprises. This is an important ability for them to save for their future in the long term and well into their golden years.

This government is a very innovative government in that we provide many tools, vehicles and abilities for our Canadian seniors to benefit and live in dignity in their golden years.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I would ask if the member would try to put himself in a mindset of an individual who has been working 25, 30 years, maybe in a manufacturing industry, or the restaurant or hospitality industries, and who is now in the age range of 55 to 57 years of age. He or she watching the news now sees the Prime Minister and the government talking about increasing CPP up from age 65 to 67.

I am sure the member can appreciate the nervousness those types of individuals would have, when the government of the day is talking about making those types of significant changes. It is all a part of pensions, whether it is this bill or government pensions, something for which we have long advocated.

Those individuals are looking for a very simple answer. We could not get it today during question period. My challenge to this member is this. Is he prepared to say that the Conservative government will not increase the CPP age from 65 to 67? Could he give that simple guarantee that this will not happen?

[Ted Opitz, Conservative, Etobicoke Centre, ON]

Mr. Speaker, I think the hon. member spent too much on his laptop. I was talking about pooled registered pension plans.

I can put myself in the mindset of those individuals. Starting off as a young teen I bussed tables, I cleaned toilets, I was a waiter, I built cars and I delivered furniture. I had so many other jobs that put me through school, but they were very difficult jobs in their time. I understand what Canadians go through.

On the pooled registered pension plans, this is another opportunity for Canadians to save. It is never too late to start planning and saving for retirement, with good prudent tools that the government is providing all Canadians.