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

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, the government sure spent a lot of time tooting its own horn in that speech, but I am not sure why it is so proud of itself. I believe I heard a couple of points about Bill C-25 that I would like to address quickly.

They say this program would not cost much. The first thing I would like to know is how they can be so sure that this kind of program will minimize costs. After 10 years in effect, the management fees of a similar program in Australia were about the same as other stock investment programs, such as mutual funds. To my knowledge, there is not a single scientific study or argument that clearly proves this will be the case.

Let us not forget that Canada pension plan management fees are less than 0.5%. Retirement plans that invest mainly in the stock market tend to have management fees in excess of 2%. Management fees for pooled registered pension plans will probably be pretty close to that.

The second thing I want to say is that we already have a lot of optional programs: TFSAs, RRSPs, group RRSPs. This is an optional program like the one proposed by the Liberals.

I would like to know how this program can meet the needs of the 70% of Canadians not currently contributing to an RRSP despite its attendant tax advantages.

[Shelly Glover, Conservative, Saint Boniface, MB]

Mr. Speaker, I want to thank the hon. member for his questions and I want to welcome him back to the House of Commons. I am quite pleased at his interest in our proposal for this pension plan.

When we talk about low cost it is important to remember one thing: when businesses can co-operate on pooling their purchasing power to reduce costs, it helps them to offer such a pension to all those who want to take advantage of the low cost. This purchasing power will help us tremendously in every province and territory, thanks to the program we are proposing today.

As far as the administrative costs the hon. member referred to are concerned, when provincial and territorial representatives spoke with our Minister of Finance, they strongly believed that the administrative costs would be quite low as a result of co-operation between the provinces and territories and the administrators. Purchasing power is a reason for that, as well.

I would like to reiterate that, through automatic enrollment, the people who will collect this pension will certainly be receiving benefits and advantages.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I listened closely to the parliamentary secretary's remarks on the bill, but she failed to talk about the Prime Minister's latest bombshell, which is the government's plan to increase the age that seniors can draw OAS and GIS.

She knows that Bill C-25 only addresses a small part of the problem when it comes to pension concerns. She admitted that for Bill C-25 to work, it needs to be harmonized by the provinces. We know how that is working. Provinces are angered at the downloading of crime costs onto the provinces and the unilateral action of the government in terms of health care costs, so how does the government expect to get co-operation on this?

My question relates to what the parliamentary secretary signed onto in the latest finance committee report, which is that the federal government would not raise taxes or cut transfers to persons, including those for seniors and children. Will she admit that the Prime Minister's current proposal goes against that commitment she signed onto in the report? Will she admit that the Prime Minister's current proposal on increasing the number of years before people can draw those funds will cost families $25,900 per year?

[Shelly Glover, Conservative, Saint Boniface, MB]

Mr. Speaker, I want to welcome my colleague from Malpeque back to the House. I am surprised he was able to hear anything I had to say because he continued to heckle the whole time I was trying to talk. I am surprised he was able to take anything from this.

[Frank Valeriote, Liberal, Guelph, ON]

That's not true.

[Shelly Glover, Conservative, Saint Boniface, MB]

Here we go again, Mr. Speaker. If those members would give me a moment to finish what I am saying, it would be a much easier way to answer the member's questions.

First and foremost, the comments made by the member with regard to our Prime Minister are false. Frankly, I am quite shocked that he continues to perpetuate this kind of thing. Our Prime Minister has said very clearly that he intends to protect the income security of seniors. He intends to look at a long-term prosperity issue that is creeping up. He intends to make sure that we sustain these programs that are so vitally important to our seniors for generations to come. That is outside the scope of the PRPP.

The PRPP is what we are talking about today. It is a necessity to help the people who do not have pension plans through their employers to do something to save for their future. This is why the provinces are on board.

That member is insulting the provinces by suggesting they cannot harmonize things, that they cannot get along, that they cannot have discussions that are prudent and which lead to better things for our country. I am surprised that he would do that. It is important that we all work together. I would suggest he start doing so here in the House.

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

Mr. Speaker, it is a great pleasure to be back in the House after our hiatus over the new year.

It is always a great pleasure to hear my colleague from Saint Boniface, Manitoba so clearly articulate our government's plan for jobs and growth.

The contrast between this side of the House and the other side could not be more stark. The parliamentary secretary spoke at length about the need to create wealth and all we hear from the other side is to spend, spend, spend. Creating wealth is vital to our country.

Could the Parliamentary Secretary to the Minister of Finance tell us what she heard during the consultations regarding pooled registered pension plans?

[Shelly Glover, Conservative, Saint Boniface, MB]

Mr. Speaker, as chair of the Manitoba caucus on Parliament Hill, my colleague is a wealth of information and a joy to work with. I want to thank him for his dedication to this wonderful place and to his constituents. I want to take a moment to read a couple of quotes from stakeholders.

This is what Dan Kelly, the vice-president of the Canadian Federation of Independent Business, had to say:

A new voluntary, low-cost and administratively simple retirement savings mechanism will allow more employers, employees, and the self-employed to participate in a pension plan. CFIB is particularly pleased that firms will be given a choice as to whether to register for or contribute to a PRPP.

This quote is from Yves-Thomas Dorval from the Conseil du patronat du Québec:

The flexibility of the PRPPs will allow federally regulated businesses (especially small and medium-sized businesses) that do not already have a pension plan to offer one to their employees in order to ensure their financial security at retirement.

I repeat that this is exactly what our Prime Minister has been focusing on, to provide income security to folks for their retirement. We are looking at all aspects. The PRPP would be a tremendous advantage to those 60% of employees who presently do not have an employee pension. We are going to continue to fight for these folks along with the provinces and territories which are unanimous in their support for this.

I just do not understand why we cannot get support from members of the opposition parties. They know clearly that this is the will of the provinces, the will of the territories, the will of the people of Canada, and yet they intend to stand in their way and put up barriers. I just do not understand why they continue to act in this manner.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I will be sharing my time with the hon. member for Vancouver East.

I am pleased to announce that in 2012, LaSalle is celebrating its centennial. This 100th anniversary is an opportunity to acknowledge the effort, determination and entrepreneurial spirit of our predecessors, both those who are retired and those who have passed on, who built this city in the southwestern part of the Island of Montreal. This is my opportunity to acknowledge the seniors who chose to live there, work there and raise children there, those who contributed to the success of the businesses and neighbourhoods of LaSalle and who gave their names to streets and neighbourhoods. We could not celebrate the 100th anniversary of LaSalle this year without honouring its elders. The debt we owe to the seniors and retirees of LaSalle is also owed to those of Ville-Émard, the rest of southwestern Montreal and all of Canada.

It is in acknowledging the debt we owe to previous generations that I feel morally obliged to defend the accomplishments of our elders. The right to a comfortable and secure retirement is the cornerstone of the contract that ties younger generations to previous generations. It is that contract that I want to defend today by opposing Bill C-25 on pooled registered pension plans and by speaking out against the government's abandonment of our seniors who have contributed so much to our society.

Pooled registered pension plans will create retirement savings plans for self-employed workers and people working for companies that do not offer their employees a retirement savings plan. This bill has the support of the private sector because it will save businesses money. I recognize that businesspeople, companies and self-employed workers face financial dilemmas, but this plan will do very little to address the crisis hanging over Canada's retirement system. Similar plans in place in Australia for the past 10 years have produced disappointing results. The Canada pension plan is based on stable investments, while the stock market has plummeted 10%. A group of pension experts has asked the Minister of Finance and his provincial counterparts to enhance the Canada pension plan, as recommended by the NDP.

Clearly, the government's current solution is not the right one. The crisis, however, is real. People are living longer and longer, and that is a good thing, but it means that the savings we build up during our working lives have to last much longer. In 2007, only one Canadian in three could count on the stability of a supplemental pension plan. Only two Canadians in five have RRSPs. According to the former chief statistician, Michael Wolfson, half of all middle-class baby boomers will see their quality of life decline in retirement.

Retirees depend on the old age security programs to complement their personal savings. The government says that the costs associated with OAS will be astronomical by 2030. The crisis is real, and we need a solution now. The point I want to make today is that the current crisis has nothing to do with federal revenue, as the Prime Minister suggested recently in Davos.

Canada is near the bottom of the list of OECD countries in terms of the percentage of GDP it spends on public pensions.

As Tommy Douglas said so eloquently, for a country as rich as ours, that there are seniors living in poverty is an absolute disgrace.

The true roots of this crisis can be found in the growing inequality within Canadian society over the past few decades. This crisis was caused by the stagnation of wages among Canada's middle class, while the salaries of the wealthiest Canadians continued to rise during the same period.

Now middle class families are being asked to save even more, but with salaries that have not increased for decades and have definitely not kept pace with the cost of living.

Canadian families would all like to put some money aside for their retirement, but how can they with a debt rate of nearly 160%? Families are going into debt for the same reason that they cannot save: because they simply have less money.

The retirement crisis is also a moral crisis, because the Conservatives' ideology rejects the contract that ties young generations to older generations. That is the real crisis—a moral crisis.

There are 70,000 seniors living in my riding and thousands more are approaching the age of retirement. According to Statistics Canada, more than 14% of senior women on their own are living in poverty according to the standard measure.

The sensible NDP proposal to increase the guaranteed income supplement is enough to eliminate poverty among seniors. The people of LaSalle—Émard demand to know, will the Prime Minister augment the age of retirement and ask Canadians in difficulty to wait still longer to get the income supplement they were promised a lifetime ago?

Friday morning one of my constituents wrote to my office. She agreed that I could read her letter. She told me that changing the minimum age from 65 to 67 would be unwise, because it would actually cost Canadians more since the change to the old age security would actually affect the poor rather than the rich. She said that the poor would not be able to take care of themselves properly, would cost more to the health system, would eat into their meagre investments, would get into welfare, and so on. She went on to say, “In the real world, not politics, have you tried to find a job at age 65, age 60, age 55, age 50? Are you aware of the reality of many people's situation as they get older? Take my case. At the age of 58 I have been struggling more than two years trying to find permanent employment, drifting from one job to another, training to improve my chances, and now I am stricken with cancer. If it was not for my 65-year-old husband to help out financially and emotionally, where would I be?”

That is what a constituent wrote to me. How is that for a dose of reality? I thank this fellow citizen for having the courage to speak out and for allowing me to share her concerns with Canadians.

The debate on retirement reform conceals another much more profound debate: the one between Conservative ideology and a New Democratic vision of a society in which young people honour their debt to their parents.

In Davos, the Prime Minister shared his vision of Canada for future generations. Canadians will have to tighten their belts further and continue making sacrifices. That is the Conservative vision of a competitive yet anorexic Canada, the vision of a population that is impoverished by stagnating salaries and debt, the vision of a society in which everyone is left behind, in which seniors and sick people are regarded as a burden, the vision of a country that believes that wealth is created by making other people poor and by cutting essential services. This is the Conservative Party vision: a middle class that must constantly adjust to the market economy, that must say goodbye to any hopes and dreams that the Conservatives consider unrealistic or too costly.

In contrast, the NDP is proposing a Canada in which younger generations acknowledge everything that the older generations have done for them—the sacrifices that have been made for them and the education and love that they have been given. The NDP believes in a Canada in which everyone has equal opportunities, in which we reach out to help those who have fallen, a society that shares the wealth. That is the Canada that was built by previous generations. That is the Canada that we in the NDP want to pass on to our children. Together, let us build such a future.

The House resumed 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.

[The Speaker, Andrew Scheer]

Five minutes remain for questions and comments following the speech by the hon. member for LaSalle—Émard.

Are there any questions or comments?

Resuming debate. The hon. member for Vancouver East.

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am pleased to have an opportunity to speak to Bill C-25, which is the pooled registered pension plans.

I will begin by commenting on the remarks made by the Minister of State for Finance during the debate earlier this morning and again in question period in response to one of his own member's questions on this bill. He said that they were doing a great job on pensions and helping seniors. I was surprised to hear the minister of state say that Bill C-25 would be accessible. He kept stressing that it would be accessible.

When we look at the bill and the proposal the Conservatives have, there is absolutely nothing accessible about it. How can something be accessible when one cannot afford it? How can something be accessible when to go ahead with this kind of savings scheme would be to put one's money at risk in very volatile markets? How can it be accessible to the 1.6 million seniors who are considered to be living in poverty, as estimated by the Canadian Labour Congress? I was very surprised to hear the Conservatives describe this proposal as something that is accessible.

I was further surprised when the minister of state remarked that currently in the RRSP plan there is, I think he said, $600 billion room for people to make contributions into RRSPs and that this would be a great opportunity to do that. Surely that begs the question as to why Canadians are not taking up what already exists under RRSPs if there is $600 billion tax room available that they could use individually. The answer is that most Canadians cannot afford to make RRSP contributions or, if they can, they are concerned about the security of their money, whether it is in various kinds of stocks, mutual funds and so on. Therefore, they have not been taking up that so-called room in RRSPs.

Mr. Speaker, getting back to Bill C-25, I want to make it clear that this so-called pooled registered pension plan would not guarantee an actual pension. There is also no guarantee about how much money would be left when people retire if they had been able to afford to put money into such a plan.

As we read through the legislation, it becomes clear that the risks of such a plan are borne entirely by the individual who is making the contribution, as well as the employer, if he or she decided to make a contribution.

We should also be aware that this so-called pension plan that has “accessibility” would be managed by for-profit financial institutions, like banks, insurance companies and trust companies. There would be no caps on administration fees or costs.

This so-called plan, which is no plan at all, from the Conservative government would push people into the marketplace. It is basically saying that if people can afford it they fend for themselves. That is the basis of the government's plan here today.

We should be very clear that this proposal would not require matching contributions from employers. It also encourages hard-working Canadians to basically gamble on failing stock markets.

I find it quite incredible that, on the basis of public policy, a government would come forward with this proposal and say that it is the answer to the severe pension problems we have. It wants to just shuffle everybody off and tell them to go in the marketplace and see if it will fix it for them.

We know that is clearly not the case. For everybody who watched their RRSPs plummet over the past year or so, they know how risky it is to have their savings tied to the stock market and how risky it is for their retirement.

I also want to illuminate the bigger picture. We heard the Prime Minister's speech in Davos, Switzerland, last Thursday about a fix for a generation, which he mentioned several times. I would say that it is more like a rip-off for generations to come.

One of the cores of that speech was his musings about how the Conservatives would tackle something that is very basic to Canadians, which is our old age security system. I find it quite reprehensible that we have a government that could make clear choices about economic performance and about how tax revenue is collected and where tax revenue goes and yet it has made clear choices and had the gall to announce those choices in Switzerland to a bunch of billionaires. The government did not even have the guts to be in Canada to roll out its plans. It did not have the guts to say it in the election.

We have a government, as we learned from the Davos speech, the “fix it for a generation” speech, that now plans to take aim at the old age security system and our pension system. The opening shot is the proposal that we have here today.

By contrast, the NDP has done an enormous amount of work studying, researching and analyzing what does need to be done to ensure pension security for Canadians who are already in retirement or Canadians who are planning to retire and are quickly approaching that age.

I want to pay tribute and thank the member for Hamilton East—Stoney Creek for the amazing work he has done in bringing this issue forward. He has very doggedly, time after time, whether it is in question period, in bills he has proposed for the NDP and brought forward in the House, in the forums he has held across the country or in speaking with seniors organizations, made it clear on our behalf, on something that we all support, that the NDP has brought forward a very comprehensive plan for retirement income security.

We would not leave people out in the cold. We would not leave people to the vagaries of the marketplace. We would not say to people that they might have to get a bit older before they can collect their old age security. Our plan is based on income retirement security that is fair, equitable and, most important, affordable.

The member outlined earlier this morning the plan that works in our country, and that is the Canada pension plan and the Quebec pension plan. We would increase it to a maximum of $1,920 a month. We would ensure that it would be sustainable and that Canadians would get a fair and decent retirement pension.

We would also amend the bankruptcy legislation to ensure that pensioners and long-term disability recipients would be at the front of the line, not the end of it, of creditors when their employers entered court protection to declare bankruptcy. How many cases have we heard in the House of seniors who have worked hard over the years and paid into their pension plans only to see them go up in smoke because of bankruptcy proceedings? They found out that they were at the very bottom when it came to seeing some justice from the system such as it exists now. We have put forward legislation to correct that situation.

Finally, we have made it very clear that we would increase the guaranteed income supplement, the GIS, to a sufficient level of about $700 million a year to lift every senior out of poverty in Canada immediately. Again, this is something that is affordable, realistic and it is the right kind of public policy decision to make at this time.

In debating the legislation today, we have to be very clear that we have a Conservative government that likes to make announcements in front of its billionaire elite supporters in Davos, Switzerland. It likes to put forward proposals that drive people into a marketplace situation, saying that they should go out there and fend for themselves, but if their savings get wrapped up in some kind of volatile market and they lose it, that it is not its problem.

That is not our approach. We do not want to see income inequality grow in our country. What was announced at Davos was nothing more than a further step to huge corporate interests such as we have seen with the corporate tax cuts. We have to be very clear for Canadians that there is an alternative. We do not have to be driven by this kind of agenda. I hope Bill C-25 is the beginning of a massive campaign to show that Canadians will not allow their pension system to be tampered with.

Other prime ministers have tried to do this. Other Liberal and Conservative prime ministers tried to get in there and make changes and they heard the wrath of Canadian seniors, who are a very organized group. I hope today the bill will be the first opportunity to mount a campaign as to what we see as an attack on public services, on our public pension system and on seniors who are some of the most vulnerable in our society.

We have to say no to the idea that it is just about the marketplace and yes to sound public policy decisions that are fair, equitable and affordable. That is what the NDP has put forward.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Speaker, the member easily criticizes the government in relation to what our proposed plan is, or what she expects it to be. I am curious as to what the NDP plan would be. We have heard the NDP continuously suggest spending and more spending, billions upon billions of dollars.

Where will that money would come from? Sooner or later it has to come from somewhere and somebody has to pay the bill. What is her suggestion relating to the large demographic we have? It looks like by 2030 there will be three times the yearly expense for these program. What proposal is her party coming forward with in this regard? It is spending more money. Sooner or later somebody has to pay for it. Who is going to pay for it?

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am happy to answer that question because it gives me an opportunity to bring forward very solid information about how the NDP has proposed that we pay for something like raising the GIS.

I will begin with January 1. This year alone we will see a corporate tax cut of $3 billion. I forget the exact number, but I think we have had over $60 billion since 2004 in corporate tax cuts. The loss of public revenue that the Conservatives have perpetuated and brought forward is driving their agenda and they are now saying that we have to have cuts. We know that it is about looking at where the revenue comes from and where the expenditures go.

All the proposals that the NDP have made for pension reform that would produce better access, fairness and be more equitable are based on affordability and on an ability to pay. Our tax system should be based on ability to pay. It should be progressive. The idea that we can just shave off the top and say that the bigger one is the less one has to pay is wrong. That is what is robbing our system and driving these cuts. We have to stand up to that, as I think Canadians will, and say that it is completely unacceptable.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, I want to thank the hon. member for Vancouver East. I know her social democratic convictions. She explained quite well in her speech the problem with the program we are currently discussing. I would like her to say a few words about the current situation with women in their golden years.