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

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, as soon as we have the book ready, I will ensure she gets the first copy.

The government is expected to talk about a variety of different issues and how it can better help Canadians. That is what Canadians expect us to do. They do not expect us to be partisan all of the time. We are supposed to do what is in the best interests of Canadians throughout the country. I do not want to see seniors continuing to live in poverty. We know that at least 300,000 seniors live in poverty.

Let me remind everyone that it was Mackenzie King, Lester Pearson and Pierre Trudeau who brought in everything from OAS to GIS to the spouses allowance. None of those programs were ever brought in by the Conservatives. All of them were brought in by Liberal governments because we saw how many people were living in poverty. The Conservative government is clearly going in the opposite direction.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I always appreciate my colleague's passion and caring attitude when it comes to dealing with seniors in Canada. I appreciate her comments with respect to why the House should deal with the issue of pensions, whether it is the GIS, OAS or CPP. These are good solid programs that are the cornerstone of our pensions going forward.

With regard to the budget, the member knows that the government has increased the age of retirement from 65 to 67. She has spoken a great deal on this issue. Maybe she could provide comment on what responses she has received. Many of our colleagues in the House, particularly those on the opposition benches, have stood up on virtually a daily basis to bring forward petitions on this issue. Canadians are quite upset with this element of pensions. This bill is all about that.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I want to repeat an issue. I was at a meeting in rural Ontario last night. Of the 50 to 60 people who were in that room, probably 40% of them were in their sixties or maybe in their seventies and the rest were much younger.

When I asked them whether they supported or rejected the idea of moving the age for old age security from 65 to 67, every person in that room was opposed to that issue. I think they all recognized that if the average age of retirement today was 62, we would be moving backward to increase it to age 67. At one time, we did have it at age 67. That is when a previous Liberal prime minister, recognizing there was a severe amount of poverty among seniors, moved the eligibility from 67 years of age to 65 years of age and started to introduce other programs in addition to the OAS.

The current government is going in the exact opposite direction, back to where we were years ago, with seniors having to suffer in poverty, alone.

[Jason Kenney, Conservative, Minister of Citizenship]

Mr. Speaker, the member does herself a great discredit and undermines her own arguments and credibility with some of the demagogic and over-the-top rhetoric she uses to characterize the motives of the government, saying that it does not care about low-income people, that it only wants to help those who are wealthy and so forth.

Would the member not agree with the objective, incontrovertible fact, that the Government of Canada is currently spending more on transfers to seniors than it ever has in the history of the Dominion? We are spending more on transfers on CPP, more in transfers on OAS, more in transfers for GIS, more per capita for seniors than ever in our history.

If it is her view that this is inadequate, then what does that say about the government of which she was a member? If this government is too parsimonious with respect to transfers to seniors, then what was her government doing when it was spending less on these programs?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, we have an aging population. Every year we have an increased amount of seniors collecting OAS and GIS. Next year there will be even more money spent on OAS, GIS and so on, because of that aging seniors population. All we have to do is look at the numbers five years ago and look at the numbers today. It is not a difficult thing.

To suggest that some of us are exaggerating things, we are actually taking lessons from those folks across the hall.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I am pleased to have this opportunity to speak to some of the key measures in Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

I will splitting my time with the member for Richmond Hill.

First, I would like to thank the Minister of State for Finance, the member of Parliament from the great riding of Macleod, for bringing forth this great legislation.

Our government understands that working Canadians and seniors want an effective and sustainable retirement income system that will help them achieve their retirement goals. Canadians who have worked hard, saved diligently and are relying on their pension and savings to support them once they retire should have full confidence that the system will serve them well when they need it.

Canadians can rest assured that our government stands with hard-working Canadians who are counting on their pension plan for a stable retirement. As part of this commitment, we continue to take the steps necessary to ensure that Canada's pension framework remains strong. In doing so, we are building on all that has been accomplished so far.

Let me offer a few examples of what we have achieved.

In particular, since 2006, our government has increased the age credit amount by $1,000 in 2006 and by another $1,000 in 2009. We have doubled the maximum amount of income eligible for the pension income credit to $2,000.

We have introduced pension income splitting. This single item was lobbied for very diligently for years by organizations like CARP and other organizations that represented seniors. It was well received when this came in.

We have increased the age limit for maturing pensions and registered retirement savings plans to 71 from 69 years of age.

Despite these advancements, there is always more to be done. That is why in December 2009, our government held a meeting with the provincial and territorial finance ministers in Whitehorse to discuss the retirement income system and, in going forward, how this system could be further improved.

In June 2010, federal, provincial and territorial governments reviewed options to improve Canada's retirement income system after extensive consultations with Canadians. Many of the members of the opposition will be interested to know that among these proposals was a modest expansion to the CPP, the Canada pension plan.

However, many employers, especially small and medium-sized businesses, something my riding has hundreds of, raised serious concerns about increasing the mandatory deductions that would come with an expanded CPP. Simply put, during these times of economic uncertainty and with Canada's economic recovery still fragile, it would have been reckless to impose a job-killing tax on job-creators.

While there were strong objections to expanding the CPP, there was unanimous agreement to moving forward with pooled registered pension plans. This led to priority being given to the PRPP framework, the announcement of the initiative at the subsequent finance ministers' meeting in December 2010 and the legislation that is before us today.

PRPPs mark a significant step forward in advancing our retirement income agenda by improving the range of retirement savings options available to Canadians. They will make well-regulated, low-cost private sector pension plans accessible to millions of Canadians who have up to now not had access to such plans. In fact, many employees of small and medium-sized businesses and self-employed workers will also now have access to a private pension plan for the very first time. This is groundbreaking. This will be a key improvement to Canada's retirement income system.

PRPPs will also complement and support our government's overarching objective of creating and sustaining jobs, growth and long-term prosperity. Quite simply, the PRPP framework is the most effective and targeted way to help these modest and middle-income individuals save for their retirement. These individuals consist of the 60% of Canadians who do not have access to employer-sponsored pension plans.

PRPPs address this gap in the retirement system by first providing a new, accessible, straightforward and administratively low-cost retirement option for employers to offer their employees. It would allow individuals who currently may not participate in a pension plan, such as the self-employed and employees of companies that do not offer a pension plan, to make use of this new option. It would enable more people to benefit from the lower investment management costs that result from membership in a large pooled pension plan. It would allow for the portability of benefits and facilitate an easy transfer between plans, and it would ensure that funds are invested in the best interests of plan members.

These are all important areas where the retirement income system can be improved. However, members need not take my word for it. Let us hear what others have to say.

According to the Canadian Bankers Association:

PRPPs will provide a new, accessible, large-scale and low-cost pension option to employers, employees and the self-employed. PRPPs will give all working Canadians the benefit of professionally-managed pension plans, and will be particularly beneficial to the self-employed and employees of small businesses.

I can speak to that as someone who was a self-employed farmer before I came to this House. My only pension at that time was my land, or whatever I could accumulate over the years. It was the same with my parents. There are hundreds of thousands of Canadians in the same boat, and they are going to get a chance to benefit from this great initiative.

The Canadian Federation of Independent Business says:

PRPPs can give many businesses, individuals and the self-employed additional retirement options, and many millions of Canadians who currently lack adequate retirement savings will benefit.

That is why our government, in coordination with the provincial and territorial governments, is working to implement PRPPs as soon as possible. These plans would help Canadians, including the self-employed, meet their retirement objectives by providing access to a new low-cost accessible pension option.

I am sure that all the provinces will take the advice of the CFIB, the Canadian Chamber of Commerce and the CBA when they jointly said that the longer governments take to establish a system of PRPPs, the less time those employees will have to use this vehicle to save for their retirement. Simply put, we need to act now.

Bringing the federal PRPP framework into force means Canadians can be confident about the long-term viability of their retirement system. We are listening, and we will continue to listen to their views on how we can strengthen the security of pension plan benefits and ensure that the framework is balanced and appropriate for the long term.

Canada's retirement income system is recognized around the world by such experts as the Organisation for Economic Co-operation and Development, or OECD, as a model that succeeds in reducing poverty among Canadian seniors. With Bill C-25, we are making it better by working toward a permanent long-term solution to encourage greater pension coverage among Canadians.

I know that members on this side of the House will support Bill C-25 and vote to establish a pension plan that would help millions of Canadians save for their retirement. I encourage all the members of the opposition to support this very important bill and to vote to help the seniors of tomorrow provide for their retirement today.

I remind all members that a lot of legislation, whether government legislation or private members' bills, comes before this House. Not all of us in this place like every aspect of every bill, but the potential of Bill C-25 to help people plan their retirement is something that is certainly needed and has been wanted for a long time. I think that all members in this House should look at the quality parts of the bill. It is an improvement to what we have today, and I think it will be very well received out there among seniors.

[Sean Casey, Liberal, Charlottetown, PE]

Mr. Speaker, I was interested in my colleague's comments respecting the degree of opposition to the enhancement of the Canada pension plan. I have three questions for him in connection with his characterization of the apparent opposition to the enhancement of the CPP.

One, is the most vociferous opponent to the enhancement of the plan the Government of Canada? Two, is that a reversal of its earlier position? Three, who are the others?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, when it comes to adding any new restrictions or taxes on small and medium-sized businesses, which are predominant in my riding and I think in most ridings across this country, these are entities that feed families and create jobs and economic activity in this country. This government is the only party in this House that supports them by not adding on those taxes.

The member across the way belongs to a party that has never seen a tax it did not like. This government is philosophically opposed to that idea. We have reduced over 140 taxes in our six years here, and we are not done yet.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

Mr. Speaker, a number of spokespeople came to talk about the Canadian system and about the fact that there are already a number of private savings plans on the market right now. Yet, it is no secret that the government is in the process of creating a new private savings plan when such plans already exist and are underused. Most Canadians do not contribute to such plans.

Why create a new plan instead of investing in providing information to Canadians about the existing systems? Why not improve the existing systems instead of creating another one when we do not even know what effects it will have on Canada's private savings plan market?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, my hon. colleague across the way is basically asking why we would act on something that hundreds of thousands of seniors across this country have been asking for.

This government cares about the seniors of this country, and that is why we are doing this. The territories and provinces realize the importance of it. We sat down with those provinces and territories to come up with a solution; this was a consensus, and here today we have that culminated in Bill C-25.

We listened to them, and I suggest that the member should listen to her seniors as well.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Mr. Speaker, I thank my colleague from Bruce—Grey—Owen Sound. He very articulately explained the benefits.

What I like best about the new pooled registered pension plan, and I would like the member to comment on it, is the flexibility it would have for workers and employers to participate. We know what is happening with the workforce. We know there is fluidity. We know that people are not staying at one job for 30 years any longer, but are moving around. This is one of those pension scheme systems that would allow employees to have a pension that would be portable to wherever they choose to work.

Would the member comment on that and share some anecdotes about how it would specifically help businesses and residents in Owen Sound?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Speaker, I would like to thank the member for Mississauga—Streetsville. The constituents of that riding are very fortunate to have him as their representative here in Ottawa.

In regard to some of the examples that he has about how it would help Owen Sound, it would help the same types of businesses and individuals in his riding of Mississauga—Streetsville. I talked about the self-employed, for example. I was in agriculture, but there are all kinds of small business owners across this country who do not have a pension plan they can contribute to; in the same way that the employees of those small businesses could contribute, those small business owners would also get a chance.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, let me just take a moment to thank the hon. member for Bruce—Grey—Owen Sound for sharing his time with me. The good people of Bruce—Grey—Owen Sound are fortunate to have such a passionate and hard-working member of Parliament speaking here in the House on their behalf.

I am pleased to have this opportunity to highlight some of the key measures in Bill C-25, an act that implements the federal framework for pooled registered pension plans, or PRPPs, as I will refer to them.

Our Conservative government understands that hard-working Canadians want an effective and sustainable retirement income system in place to help them achieve their retirement goals. On this side of the House, we believe that Canadian seniors, after working hard, contributing to society and saving diligently, deserve nothing less. Members can rest assured that our Conservative government stands with these hard-working Canadians and that it will continue to take action to ensure that Canada's retirement income system remains among the strongest in the world. This is where pooled registered pension plans fit in.

The PRPP will mark a significant step forward in advancing our retirement income system by improving the range of retirement savings options available to Canadians. It will make low-cost, broad-based private sector pension plans accessible to the millions of Canadians who up to now have not had access to such plans. In fact, it is important to note that currently 60% of Canadians do not have access to a workplace pension plan. Self-employed individuals do not have access to workplace pension plans at all. Introducing pooled registered pension plans means that many employees of small and medium-sized businesses, as well as self-employed workers, will finally have access to a workplace pension plan for the very first time in their lives.

Let us take a look and see what features of the PRPPs might be found attractive by employees of small and medium-sized businesses and by the self-employed.

A key feature of PRPPs is auto-enrolment. This means that if an employer offers a PRPP, employees will be automatically enrolled in a pension plan. This feature is expected to increase participation in PRPPs by promoting retirement savings specifically targeting those disengaged savers.

Once plan members begin contributing to their PRPP, it is important that they use this money for what it was intended: their retirement. After all, the goal of the pooled registered pension plan is to help Canadians save for their own retirement. Unlike the funds in RRSPs, which can be accessed at any time, the funds in a PRPP would be locked in. This provision will help to ensure that plan members will in fact have savings when they retire.

Another key feature is portability. Many employees will appreciate the ability to transfer funds between administrators when they change jobs. Not only will portability benefit employees of the plan; it will also increase competition among PRPP administrators, thereby encouraging lower costs.

This leads me to my next point, and it is a very important one. One of the key benefits of PRPPs is that they will be low cost. By achieving lower costs, pooled registered pension plans will leave more money in the pockets of Canadians when they retire.

Members might ask how this will work. Pooling pension savings means that the costs of administering the pension funds will be spread over a larger group of people. This will enable plan members to benefit from the lower investment management costs that are typically associated with an average mutual fund.

Stakeholders across our nation are excited about the pooled registered pension plans and the prospect that millions of Canadians will now have access to a workplace pension for the very first time.

However, let us not just take my word for it. Let us hear what others have to say.

Dan Kelly, Vice-President of the Canadian Federation of Independent Business, stated, “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”.

If we are not satisfied with that, let us hear what the Ontario Medical Association had to say. It stated, “The creation of pooled registered pension plans...levels the playing field by providing the self-employed, including physicians, with better access to additional savings opportunities that have up until now been unavailable”.

The pool registered pension plan is not some patchwork scheme. It is an important program that would benefit millions of Canadians. Whether people work for or own small businesses, the pooled registered pension plan would be available to them.

What are the next steps? The bill before us today, Bill C-25, the pooled registered pension plans act, represents the federal portion of the PRPP framework, which is a major step forward in making these available to Canadians. Our government has been collaborating closely with the provinces to implement pooled registered pension plans across our country. Once the provinces put in place their PRPP legislation, the legislative and regulatory framework for PRPPs would be up and running, allowing pooled registered pension plan administrators to develop and offer plans to Canadians and their employers.

Canadians want their governments to act on their priorities and deliver results on a timely basis. The PRPP should be no exception. For this reason, I urge all of the provinces to follow the wise advice of the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, and the Canadian Life and Health Insurance Association when they collectively said that the longer governments take to establish a system of pooled registered pension plans, the less time those employees will have to use this vehicle to save for their retirements.

Our government is confident that the provincial side of the framework will soon be in place so that millions of Canadians can reach their retirement objectives. We urge our provincial counterparts to take action and follow the lead of our Conservative government. By bringing the PRPP framework into force, Canadians can be confident about the long-term viability of their retirement system. We are listening and we will continue to listen to their views on how we can strengthen the security of pension plan benefits and ensure the framework is balanced and appropriate for the long term.

Canada's retirement income system is recognized around the world by such experts as the Organisation for Economic Co-operation and Development as a model that succeeds in reducing poverty among Canadian seniors. Our system is the envy of the world. With Bill C-25, we would be making it even better by working toward a permanent, long-term solution to encourage greater pension coverage among Canadians.

Let me summarize this new defined pension plan. It would be available to employers, employees and the self-employed. The PRPP would improve the range of retirement savings options to Canadians in a number of ways. It would provide access to a straightforward retirement savings option for employees at administratively low cost and it would provide people who currently do not participate in a pension plan a retirement savings option. More people would benefit from the lower investment management costs that result from the economies of scale of membership in large pooled pension plans, employees would be able to move their accumulated benefits from job to job and the PRPP would ascertain that funds are invested in the best interests of the plan members.

I urge all members of the House to support this very important bill. At this time, I move:

That this question be now put.

[Mylène Freeman, NDP, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, before this debate comes to an end—too quickly in my opinion—I would like to speak a little bit about the fact that, in my riding, retirees from Fraser Papers lost 40% of their pension fund when the parent company declared bankruptcy.

How do the Conservatives think that this will help the Fraser Papers employees who lost 40% of their pension fund after working their entire lives? They had a good retirement fund that belonged to them. Then, all of a sudden, the company declares bankruptcy and all the money vanishes. I spoke to many employees who were about 60 years old and close to retirement.

The NDP is proposing good options that would help to improve Canada's retirement system. For example, the NDP proposed that changes be made to the Bankruptcy and Insolvency Act, a federal law. However, the Conservatives do not understand what is happening on the ground. They are so out of touch that they think their measure will really solve the problem.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, this is a new initiative that would respond to what hundreds of thousands of Canadians across this country have asked. It would assist them along the way.

I would suggest to the hon. member from the New Democratic Party that if she feels as passionately as she spoke about seniors, perhaps she could urge some members in her party to finally vote for something that would benefit seniors rather than vote against every single positive measure that our government has put forward that would benefit seniors in this country from coast to coast to coast.