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

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Mr. Speaker, I listened intently to my friend across the way. One of the things he said was that they would “continue to fight for” things.

Will he continue to fight for an increase in the age limit for seniors before they pay income tax? Will he be ready to fight for and support anyone who raises the guaranteed income supplement, the largest increase in the last 20 years? Will he stand up for senior Canadians who will be able to split their pension? Will he stand up for the fact that this government has taken well over 100,000 seniors off the income tax roll? Over a million Canadians no longer pay any federal income tax. We did more than that: For those who do not pay federal income tax, we reduced the only tax they do pay, the GST, by 2%. Therefore, not only did we remove them from the federal tax rolls but we even reduced the consumption tax they pay.

He sits there and looks at the Speaker and looks into the camera and says his party will “fight for” things, yet they voted against all of those things. He just said they wanted an increase in the next budget for the guaranteed income supplement. We just raised the guaranteed income supplement the most it has been raised in the last two decades, and they voted against it. Surely the member must remember there is a difference between action and rhetoric.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, that is right: there is a difference between action and rhetoric. When a government presents a bill that spends billions and billions of tax dollars, some of that money is actually being spent well. It is a question of priorities.

This is where we really are out of tune with the Conservatives. The Conservatives say, “We need more politicians”, and they are going to spend tens of millions of more dollars on more politicians inside the House of Commons. That is their priority. The NDP members happen to agree with that one. We disagree with them. However, that is a priority for them. If we supported the budget, using the logic the member is using, that would mean we would be supporting the billions of dollars toward the F-35.

We cannot have it both ways. The Liberal party is telling the House what we support in terms of social programming and pensions for our seniors, stating that we support the OAS, the GIS, the CPP. We want to see the GIS increased so that we can take more seniors out of poverty. That is what is important to Canadians. This is not just something that Liberals sitting in the House want, but Canadians as a whole, from coast to coast. They want fewer seniors living in poverty.

[The Acting Speaker, Conservative, Bruce Stanton]

Order, please. I am sure that other hon. members may wish to put a question to the hon. member for Winnipeg North.

The hon. member for St. John's East.

[Jack Harris, NDP, St. John's East, NL]

Mr. Speaker, I know the Liberals want to reduce, for example, the number of seats in the House of Commons for Newfoundland and Labrador, but the debate today is about the pooled registered pension plan.

I want to ask the member what makes the pooled registered pension plan different from the RRSPs we currently have? I ask him because group RRSPs are an available option that has not really been used. In fact, the take-up rate of RRSPs by people eligible for them is around 24%, and the amount they contribute is 6% of what they are allowed. How are PRPPs going to be different? The PRPP seems to have been put forth as a great panacea, yet it does not really solve any of the problems of people who, even now, cannot contribute to an RRSP. We obviously need a plan where there is a contribution from the employer and employee to actually make it work and provide a decent retirement income.

Would he care to comment on that? Why would we bother with this if RRSPs are already there?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

One of the reasons we have to bother with it is that we have to recognize that, yes, there are some mistakes within the legislation that if amended would make it even better. We also need to acknowledge that we live in a federal state with provinces that have also requested it. When members of the New Democratic Party stand up and speak about the bill, they have already made their determination about it, even if the people of Quebec say, yes, they want to have this option.

That is really what this is: it is an option. How we define that option so that people would be able to maximize the benefit of this option is something that we have some difficulty with in terms of the way in which this government is approaching it, especially when we have provinces across Canada that appear to want to see the legislation.

The best I can tell is that the New Democratic Party is alone inside the House, not necessarily in other provinces. The NDP in provincial jurisdictions seem to be timidly supporting the principle of it.

[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 Halifax, Natural Resources; the hon. member for Etobicoke North, the Environment; and the hon. member for Cape Breton—Canso, Service Canada.

Resuming debate, the hon. Parliamentary Secretary to the Minister of Transport, Infrastructure and Communities.

[Pierre Poilievre, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, over 60% of Canadians have no workplace pension. That is because many employers do not want the legal or administrative burden of offering them. These costs can be prohibitively high and the benefits inordinately low for a small business with a limited budget and only five or ten employees.

Let us consider or create an example. Joe and Martha Stephens are a married couple without a pension plan. He owns a corner store and she works as a restaurant manager. Neither the restaurant nor the corner store has enough employees to justify the cost of running a pension plan for its people. It is true that RRSPs help as an option, but some people find them too intimidating or time consuming to establish. On average, each Canadian has about $18,000 in unused RRSP room.

What if thousands of Canadian workers from these kinds of businesses could pool their benefits together to achieve the bulk-buy savings that come with a pooled plan? That would spread the risks and costs among a larger number of people. That is exactly what the pooled registered pension plan offers. Canadians would be able to buy in bulk and get better purchasing power. All of a sudden, the Joes and Marthas and millions of people like them who are on their own could join forces and secure affordable pensions. The design of these plans will be straightforward with simple enrolment and management. A third-party administrator, normally a bank, insurance company or existing pension plan, would be responsible for the administrative and legal duties.

What a relief for a small business owner. These plans would also be subject to the standard pension rules that exist for plans across the sector right now, unlike group RRSPs, which have no similar standard of regulatory practice.

The opposition parties oppose this idea because it is a private sector solution. They believe that government should run and operate everything. They particularly oppose the fact that these pooled pension plans would invest in the stock market. What they fail to realize is that the entire pension system, public and private, relies heavily on the stock market already. Consider the Canada pension plan, 49.6% of which is invested in equities or stocks. These stocks can only pay income into the CPP out of their after-tax profits. Liberals and the NDP want to raise taxes on the very businesses that the CPP invests in. The result would be increased pressures on our public pension system.

For example, the CPP owns $59 million in Bank of Nova Scotia shares. When that company profits, so does the CPP and, ultimately, so do the millions of Canadians who rely upon it. The CPP also owns $13 million in TransCanada shares. Does TransCanada ring bells in this place? I ask because TransCanada is the same company that is attempting to build the Keystone pipeline, which, admittedly, would profit that company but would, by definition, also profit its owners of whom $13 million is represented by the Canada pension plan and the 17 million Canadians who are invested in that plan. The opposition, which opposes this pipeline, is attacking a company that is literally paying its profits into the CPP fund.

The opposition parties are also attacking workplace pension plans, even though they do not realize they are doing so. Take the Canada Post pension plan. During the debate over the postal strike, members of the New Democratic Party simultaneously demanded that the existing pension plan for mail workers be bolstered and that business taxes go up. These concurrent demands are painfully ironic.

The top five holdings of the Canada Post pension plan are the Toronto Dominion Bank, the Royal Bank of Canada, Bank of Nova Scotia, Suncor and Canadian Natural Resources. The banks and oil companies, the twin villains in every left-wing storyline, paid dividends into the pension fund of these unionized workers. These dividends come exclusively from after-tax profits. That means that if we tax these profits more, pensioners will ultimately get less.

On January 1, 2012 the final instalment of our business tax cuts took effect, dropping the rate from 15% to 22%. That is a one-third reduction. By contrast, the NDP election platform proposed increasing the business tax rate from 15% to 19.5%, a one-third hike. That would be a $9 billion tax increase on job creators, the companies in which pension funds are invested. Liberals propose a similar hike on these job creators. That would drastically reduce the after-tax earnings left to the pension funds that own these shares.

We should celebrate the fact that workers are invested in capital markets. It is good for everyone involved. People grow their retirement savings while their money provides investment capital to companies that create jobs.

However, the benefit is not just economic but also societal. Politicians always like to divide people along socio-economic class lines, the workers versus capitalists. However, the two are increasingly becoming one and the same due to direct or indirect share ownership by workers. The old utopian socialist dream was for workers to become owners of the means of production through a process of forced collectivization, nationalization and expropriation.

In an ironic twist of fate, it was the capitalistic stock market and not the state that made workers into business owners. Pooled pension plans, tax free savings accounts, lower taxes on businesses and workers give Canadians ownership over their own destinies. Herein lies the sharp difference between this side of the House and that side. Members on that side want to turn workers against business owners; we want to turn workers into business owners. That is the hopeful, uplifting message that our government offers Canadians who aspire to a brighter, more secure and prosperous future.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, I listened with some interest to my colleague's speech.

Once again he has reiterated the Conservative Party's second story about tax cuts for businesses, that the tax cuts for businesses have resulted in greater profits.

His colleague, the Minister of Finance, would suggest that is not the case, that the tax cuts for businesses were to create jobs. One cannot suck and blow at the same time: Either there are profits to be made in otherwise profitable corporations by lowering their tax burden, or they will create jobs. We cannot do both. Which is it?

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Speaker, in fact the hon. member is wrong. That is the core difference between us and them. We believe that the amount of wealth in a society can actually grow, and that by investment there is more to go around for everyone. They believe there is a finite, static amount of wealth in existence and that the only way to give more to one is by taking away from another, that the only way for one person to move up the ladder is by pulling someone else down.

The answer is that when we cut business taxes, we increase the return on investment for the investors, and that means they invest more because it is a more lucrative proposition.

Who are these investors? They are pension funds. They are people who are retiring and using mutual funds as income for their families, their kids and grandkids. How does this create jobs? It allows more capital so that businesses can hire, purchase new equipment and create more economic activity, all of which put people to work.

The answer is that when we lower business taxes, yes, we increase the return on investment to the pension funds, the mutual funds and the savings that our seniors have invested, and in the process we make it possible for businesses to grow, hire more people and expand opportunity.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Mr. Speaker, I now know why Newt Gingrich likes to give a shout out to Canada. After hearing something like that, he must really like us now.

The member talked about the beauty of having the private sector involved in all of our pensions, most notably, the one which I am particularly fond of, the CPP. The Canada pension plan and its activities with the investment board does this country a good service. The private sector, no doubt, plays a major role, far more major than we even know. The member says that we should celebrate pensions involved in the private sector.

Since the member has been here six years, how come his pension is not involved in the private sector?

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Speaker, I personally do not run the pension system around here but I am interested to learn that the hon. member has all of a sudden taken an interest in it. I have never once heard Liberals say that they wanted to cut their own entitlements. In fact, entitlement has been the driving force behind the Liberal Party for approximately a generation. It is the uniting principle of the Liberal Party.

Today we are talking about the pensions of Canadians and the fact that we need a strong, robust business sector in order, not only to employ people today but to pay out the dividends that form the income of our pension plans. That requires a strong, free enterprise economy, and that is what we are providing.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Speaker, I would ask the parliamentary secretary to perhaps amend his remarks. I think he mistakenly referred to a postal strike. I think he meant the postal lockout.

My question is on other urgent pension matters that I do not know that the government is dealing with. I wish we were able to look at pension issues and not be merely focused on this quite inadequate private sector pooled registered pension plan. Instead, I wish we were able to look at the urgent issue that pensions that were not protected in the private sector be protected as secured creditors in bankruptcy, such that the workers at Nortel would not be wiped out by what happened to them. This is a continual problem in our economy.

Why are we not acting to protect the pensions of people under the superannuation scheme, of retired RCMP, military and civil servants who lose pension benefits to their surviving spouse if they remarry after age 60.

Those are urgent issues and I do not see the government addressing them.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Mr. Speaker, the hon. member has raised good questions.

I would simply add that in order for any of our pensions, public or private, to function, we need a strong business sector generating the wealth to pay into those funds.

We have created a vibrant business sector by signing nine new free trade agreements, by lowering business taxes by one-third, by cutting red tape and by moving forward with a budget that is coming this spring that will reduce the cost and the burden of government so that we can unleash the strength of free enterprise so that people can aspire to provide for themselves, their families and, eventually, for their retirements.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, I would first like to thank my NDP colleagues for their various interventions on the government bill before us here today. I think this is a very important subject, one that Canadians are really concerned about. A number of people from my riding have contacted me to share their concerns about their retirement. That is why I wanted to speak here today.

In a democratic country like Canada, the right to retire in dignity after working hard one's entire life is absolutely fundamental. What I mean by “in dignity” is having enough money to pay for groceries, to pay the rent and to pay for health care. The current economic situation, economic projections for the future and our aging population are all crucial factors in determining how we, as a society, should manage our retirement programs.

In that regard, I must commend the government for recognizing the issues that will affect how and when Canadians retire and for trying to come up with solutions to ensure a decent retirement for everyone. Where I disagree with the Conservatives—and where I agree more with the NDP's opinion—has to do with how the government is going about solving the growing problem of access to a decent income when the time comes to retire. Bill C-25, introduced by the government, has many flaws that really need to be examined and understood by Canadians, because, I would remind the House, it is their money on the line.

According to the main points of the bill, the new pooled registered pension plans, PRPPs, a retirement savings vehicle very similar to RRSPs, would enable plan members to pool their funds to reduce costs associated with managing the plan's investments. The bill notes that the benefits of PRPPs are transferable, but that they are not indexed to inflation. These plans are intended for self-employed workers and small and medium-sized businesses that do not have the means to manage a private sector pension plan.

Despite the government's claims, pooled registered pension plans will not enable Canadians to achieve their retirement goals. The plans will not improve income security for retired workers. The plan proposed here is a defined contribution plan, not a defined benefit plan. In this kind of plan, employees set aside funds throughout their working lives, and those funds are invested in stocks, bonds, mutual funds and so on. Investment income depends entirely on market fluctuations. That is an extremely important point. The employees absorb all of the financial risk associated with stock market ups and downs.

If the government made an effort to listen to all of the Canadians whose RRSPs melted away like snow in sunshine in 2008, it would understand that more stable and secure savings options should be made available. People who can tolerate significant risk can turn to the stock market and RRSPs. Worse still, depending on the province, employers could potentially be required to offer this plan to their employees without having to contribute. People already have the option of contributing to a savings plan without employer participation. That is called an RRSP. What more does the government have to offer?

Last November, in its press release announcing Bill C-25, the government said:

...over 60% of Canadians do not have a workplace pension plan. Because of this, our government acted by introducing legislation...that implements pooled registered pension plans.... Our Conservative government is delivering PRPPs to offer a new, low-cost and accessible pension option to help Canadians meet their goals.

What low-cost, accessible pension is the Conservative government talking about? Last year, only 31% of eligible Canadians contributed to an RRSP. The rest just could not afford to. Currently, Canadians have $500 billion in unused RRSP contribution room available.

Let us say it again loud and clear: Canadians do not have access to an affordable and accessible retirement because they have absolutely nothing left at the end of the month to put into savings. And the Conservatives are asking them to take what little they have managed to put aside and put it into investment funds administered by banks, the very banks that have nearly wiped out the global economy, with no guaranteed income and no guarantee that the funds available will see the workers all the way through retirement?

And the Conservatives want these funds to be managed by fund management “experts” at the banks and insurance companies without any limits on the cost of their management fees and bonuses that will be paid out of the pockets of our future retirees?

During a radio interview, the Minister of Industry said:

By pooling retirement savings, PRPPs will allow Canadians to benefit from greater purchasing power. We are talking about economies of scale here. Canadians will essentially be able to buy in bulk. Professional administrators will exercise a duty of care to ensure that the funds are invested in the best interests of the plan members.

In my opinion, the advantage of economies of scale is quite questionable. We should learn from the Australian experience, but this government is again turning a deaf ear, as it did to the warnings from the United States about the omnibus Bill C-10.

Ten years ago in Australia, a similar system provided very disappointing results. Their system was mandatory, with the possibility to opt out, a bit like what the government wants to do here. The Australians came to the conclusion that, even though people saved because it was mandatory, the returns on investment did not outpace inflation.

The report commissioned by the Australian government attributes these discouraging results to the high costs and fees, even though it was thought that competition among the banks would, as we just heard, lead to reduced costs and economies of scale. So much for that argument; it does not fly. Let us have the wisdom to learn from our Australian counterparts and avoid making the same mistakes.

What Canadians want is not another incentive to save more money. The average Canadian is already trying to save and can barely manage. First we have to come up with a solution closer to the source of the problem. Canadians want to have a decent income that will allow them to save. The solution is job creation.

The excessive debt of Canadian households has made the headlines again, and 1.6 million Canadian seniors are living in poverty. By OECD standards, the CPP system is relatively miserly since other similar countries have much more generous public pension plans.

In 2010, one in four workers had a low-wage job. Does the government think that a Canadian who earns $13 an hour will be able to meet his needs and the needs of his family and contribute to his PRPP, where his hard-earned money will be at the mercy of the stock market as it operates today?

Canadians must understand that the measures proposed here are superficial and risky. The government has not taken the time to carefully consider the problem.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Mr. Speaker, I listened with great interest to my colleague's speech. I get to do so on regular occasions because we share standing committee duties together.

My question is with regard to the gap between the rich and poor. We have heard countless times in the House, and Statistics Canada releases regular reports, about how the gap between the rich and the poor is widening and how the rich are getting richer and the poor are getting poorer. That is mostly due to things like market investments and the way the tax system is currently structured.

I wonder if my colleague could tell me how this particular bill might contribute to either widening or reducing the gap between the rich and the poor in Canada.