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.

Motions in Amendment

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs]

Madam Speaker, if I understood the hon. member, he is questioning the competency of the Government of Manitoba by saying that it did not know the full results, that it did not get this thing.

I cannot believe a member in this House would get up and say that the Government of Manitoba does not have the full facts and that it made a decision sitting in the darkness. Amazingly, it is the same concept that his leader, the leader of the official opposition, used when he talked about Dutch disease. It is pitting one province against another, which damages the whole economy of Canada. If the whole economy of Canada is damaged, how does he expect to help Canadians?

It is amazing to hear the NDP members say that they do not like and now they are talking about how other Canadians do not have the expertise or do not have what they believe in. What an amazing—

[The Deputy Speaker, Denise Savoie]

The hon. member for Western Arctic.

[Dennis Bevington, NDP, Western Arctic, NT]

Madam Speaker, I am incredulous at the member across who, after having heard the debate over the F-35 fiasco, is telling me that somehow the government has given the facts on anything correctly to any other group in this country.

The government has a record of totally obfuscating financing issues and of presenting things in such a fashion. I refer back to the budget implementation bill, when the Minister of Aboriginal Affairs and Northern Development said that the bill would raise the borrowing limit for the Government of Northwest Territories when it was doing no such thing.

How can we believe anything the government says? How can we understand anything it presented to the provinces six months or a year ago?

[Jinny Sims, NDP, Newton—North Delta, BC]

Madam Speaker, many of my constituents would love to have a pension plan, but they are struggling to make ends meet from week to week. How would this particular scheme help those who are struggling from week to week?

[Dennis Bevington, NDP, Western Arctic, NT]

Madam Speaker, as I outlined, compared to other pooled pension plans across the world, this plan is very much remiss in this regard. Even with those plans, many people found that their contribution was left in an account and was turned into nothing.

This is something that has not been addressed in this bill. This bill is inadequate and flawed, and does not need to be passed.

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

Madam Speaker, we are discussing retirement security. Our people are getting older and living longer. What does this mean to our retirement system and what should we do about it?

I will start with some incredible facts.

In 1951, when the old age security system was put in place, life expectancy was age 69 and the age of eligibility was 70, meaning that the average person would not live long enough to collect old age security at all.

Today, the average life expectancy is 82 and eligibility starts at 65, meaning that people, on average, will collect OAS for 17 years.

Back in 1975, there were seven taxpayers for every one senior. Right now, there are four taxpayers for every senior. In two decades, there will only be two taxpayers for every senior.

As we move forward, life expectancy is growing by 47 days per year. That means that in two decades the average person will live until he or she turns 84, which means that under the existing rules of old age security he or she will collect for almost two decades.

Put together, these facts mean that in two decades the number of people collecting OAS will double, the cost of the program will triple and the number of taxpayers supporting each retiree will fall by half. By consequence, OAS will rise from 15¢ on every dollar the federal government spends to 25¢ on every dollar the federal government spends.

According to the Macdonald-Laurier Institute, on the current trajectory of demographics and program spending, the government will have a shortfall of $67 billion annually in today's dollars by the year 2040.

We should think of OAS as a glass of water. Retirees can only drink out of the glass in benefits what workers pay in taxes. If retirees are drinking out faster than taxpayers are paying in somebody goes thirsty. We have seen the costs of drinking from the glass of profligacy in places like Greece and Portugal. In order to avoid that kind of financial drought, we have put in a plan to make the system affordable and sustainable by gradually raising the age of eligibility from 65 to 67 starting in the year 2023. People over the age of 54 will not be affected in any way, shape or form by these changes. Those under the age of 54 have a lot of time to plan for these changes.

That addresses some of the cost problems with old age security but there is another problem with our retirement system, that being that 60% of Canadians do not have a workplace pension. That is because many of their employers are too small to afford the cost of assembling their own defined benefit or defined contribution system.

I will use the example of a couple named Joe and Martha. One is a manager at a restaurant and the other works at a corner store. Both of them would love to have the ability to save for the future in an employer-based pension plan but neither of their employers are large enough to manage such a plan on their behalf. As a result, they only have RRSPs to supplement the government income programs that exist. However, because they find investing on their own to be too intimidating and the markets too mercurial for their risk profile, they do not save for the future.

Imagine if thousands of workers like Joe and Martha could pool their risks and share the management costs of an employer-based pension plan through a pooled system. That is exactly what we are proposing.

The design of these plans would be straightforward with simple enrolment and management. A third-party administrator, normally a bank, insurance company or pension plan, would be responsible for the administrative and legal duties. What a relief for the small business owners. These plans would also be subject to the standard pension rules that exist for plans across the sector right now, unlike RRSPs which have no similar standard regulatory practice.

The opposition opposes giving small businesses the ability to join together and pool their resources to provide their employees with a pension for their retirement. Instead, it proposes massive new government entitlements. Not only do opposition members fail to deal with the existing $67 billion shortfall that will result based on existing demographics and policies, they propose to stack billions of dollars in new promises.

For example, the deputy leader of the NDP and the leader of the Liberal Party have both moved and seconded bills that would make people who have lived in this country for only three years eligible for OAS when the rest of Canadians have to pay their whole lives in taxes in order to afford that benefit. That would raise the cost of OAS and exacerbate the shortfall that exists in the current system.

How would they pay for it all? Well, they say they will tax big business. What businesses are they referring to? Maybe they mean Canadian Natural Resources Limited, the country's largest independent oil and gas producer with over 100,000 barrels out of the oil sands each day; a perfect target for the NDP and Liberals.

The NDP proposes to raise taxes on that company's profits, but where do those profits go right now? Right now, they go to the shareholders, one of the largest being the Quebec pension plan, which is Quebec's equivalent of the CPP. The dividends that Canadian Natural Resources Limited pays to the Quebec pension plan today are enough to cover the full pension requirements of 1,100 Quebeckers every single year. If we raised taxes on Canadian Natural Resources Limited, we would reduce the dividends it pays out to its shareholders, one of the largest being Quebec pensioners. Here we have the NDP proposing to raise taxes on a public pension plan. One wonders where its priorities lie.

CPP is the same way. Over half of its assets are invested in companies like the Canadian Oil Sands, Suncor Energy, Imperial Oil and Athabasca Oil Sands. The Canada Post pension plan's top five holdings are the Toronto-Dominion Bank, the Royal Bank of Canada, the Bank of Nova Scotia, Suncor and Canadian Natural Resources Limited. Banks and oil companies, the twin villains in every left-wing storyline, are the ones that are paying the dividends into the Canada Post pension plan. To increase taxes on those companies, dividends would be reduced to the postal workers' pension fund.

What happened to solidarity forever? The truth is, there can be no solidarity when one's entire narrative is based on dividing us and them and believe that the only way for one person to prosper is for another person to fail.

In this country, the mail man relies on the profitability of the energy companies in order to have his pension cheque. We are all in this together. Through a symbiotic system of free market economics, the success of one is the success of all. We have a shared destiny, a common future, a united Canada. That is how we succeed, by sticking together and standing for what is right. That is the formula for this government.

[Jinny Sims, NDP, Newton—North Delta, BC]

Madam Speaker, sometimes it is hard to sit here and listen to the rhetoric. There is an implication here, in my hon. colleague's presentation, that seniors in this country do not pay taxes. I can tell members that many seniors, in my generation and others, are paying their share of taxes. Just because they retire does not mean they stop paying taxes, and we have to remember that whenever we start expounding numbers.

My question for my colleague is very straightforward. For families who are struggling to make ends meet, families who, because of the policies of the government, are now working two or three jobs at $10 to $12 an hour and each month their only intention is to get to the end of the month and put food on the table, how does the member think this plan is going to put pension security on the table?

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

Madam Speaker, the member says seniors are paying too much tax and she is right. A recent study showed that Canadians spend more on taxes than they do on food, clothing and shelter combined.

Let us look at the cup. The NDP wants to drink out of the cup of profligacy again and again. It wants a government-run daycare program, $15 billion. It wants to give OAS to people who have only lived in Canada for three years, $700 million. It wants a 45 day work year, so a person only has to go to work for 45 days and then collect EI for the rest of the year, another $6 billion. I could stand here all day and talk about the ways the NDP would drink out of the cup of profligacy with the spending promises it makes.

However, what the NDP members forget is that somebody has to pour back into the cup in order for it to be replenished and that somebody inevitably is seniors, through higher taxes. She is the one who has to explain why she would raise taxes on seniors to pay for all of this irresponsible spending.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I always find it interesting when the member provides all these factual numbers. The question I have is one of credibility. The parliamentary secretary says that today we spend 15¢ on every Canadian tax dollar. Then he says that if we do not make these changes we are going to be spending 25¢ of every tax dollar on the OAS program. I do not buy it. I just do not believe the numbers that the member is telling Canadians. In fact, I would suggest that the government has created this crisis situation.

We have heard from professionals, statisticians and actuaries. They have made it very clear that Canada as a government can afford to keep providing seniors the option to retire at 65, that the age of eligibility does not have to go to 67 and is not going to be this huge burden. Why should Canadians believe that if it does not change, that it is going to go from 15¢ on every dollar to 25¢ on every dollar, when the member himself likely knows that—

[The Deputy Speaker, Denise Savoie]

Order, please. The hon. parliamentary secretary.

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

Madam Speaker, why should they believe it? Because the number of retirees collecting OAS will double, the cost of the program will triple and the number of taxpayers supporting each retiree will fall by half. These are unavoidable statistics that members can access by going to Statistics Canada's website.

The average person now lives 47 days longer than the average person last year. That will continue into the future, meaning longer lifespans and more collection of OAS. The reality is that we cannot have a situation where we have two people carrying one person on their shoulders, in addition to all the other social obligations that our tax dollars fund. These are inescapable mathematical realities.

We have seen the member's vision. It is called Greece. We choose here Conservative economics, not Liberal Greekonomics.

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

Madam Speaker, I am very glad to rise today on behalf of the residents of York South—Weston, who sent me here to look after them and to try to make sense of what the government is doing.

One of those residents, a young fellow named Scott Jackson, finished in the top 12 in the Canada's Got Talent show last week. We want to congratulate him for being such a great self-employed musician. I say self-employed musician because those are the kinds of people who are going to suffer most from the kinds of policies and practices the government is putting forward to try to deal with the future of the retirement scheme in Canada.

First and foremost, people like Scott are going to work until they are 67, make no doubt about it. The minister may say people have time to prepare for that, which means they are going to save more money, but that is not unless they can earn more money. They cannot earn more money in the systems we have today, when the government is telling employers they can now bring people from other countries and ask them to work for 15% less than the people who are currently working in Canada.

It makes no sense. The government is driving down wages as quickly as it can. It is working hard to prevent organized labour from getting any further in the wage battles in this country. Its friends, the CEOs and captains of industry, are doing quite well. I do not see any 15% regulation for CEOs of big corporations, or calls for them to be replaced by temporary foreign workers. That is the reality the Conservatives put forward.

I am going to call this a scheme, because that is really what it is. The suggestion that this scheme of pooled registered retirement plans will somehow be the solution is just looking at the world through such rose-coloured glasses as to be laughable. If one wants to be generous to the government, it is perhaps an addition to an arsenal of possible retirement schemes, but it is really fundamentally no different from what is already there, except in the ability to pool. There is already a registered retirement savings plan scheme and a tax-free savings account scheme, which most Canadians cannot afford to contribute to. In fact, 74% of Canadians do not put money into RRSPs, and yet 60% of Canadians, as the minister opposite already stated, do not have a workplace pension plan.

The number of workplace pension plans is actually going down, and they are being converted, as we speak, from defined benefit plans to defined contribution plans in record numbers. Employers across the land are discovering they can no longer afford to continue the good, solid, defined benefit plans that are similar to the Canada pension plan and were supposed to work in tandem with it.

The systems that current and previous governments have put in place make it impossible for employers to deal with the huge deficits these plans rolled up. These deficits are not caused by some kind of structural problem with the defined benefits system. They are caused by the abnormally low interest rates that we have in this country, which are forcing employers to put huge amounts of money into pension plans for a potential windup of those plans. It is not likely to happen. If a company continues to exist and is profitable, it will continue to contribute into that defined benefit plan.

The windup costs become enormous. As soon as one tries to buy annuities, with the windup of a pension plan, one has to come up with enormous sums of money, so employers all over this country are dropping them like hot potatoes. The government has not provided them any relief. There has been no discussion by the government to find a way around this, to make it possible to preserve the system of a combination of the Canada pension plan, OAS and a defined benefit plan in an employer setting. Those are the three pillars of what we have now. Two of them are under attack and the third is being left stagnant.

The NDP has a plan. The NDP plan is to suggest that the Canada pension plan is so successful that it should be doubled. It is clearly the cheapest, the most reliable and the most sustainable form of pension in our country. The Canada pension plan, which is a type of defined benefit plan that is a recognition of years of service times wages, which is how most good pension plans in our country are calculated, provides a portion of what is intended to be the pension regime for Canadians when they retire.

One portion is the old age security, one portion is the Canada pension plan and the third portion is either personal savings or a workplace defined benefit plan. Because 60% of Canadians do not have a workplace pension plan, and a number of those Canadians are now in workplace pension plans that are precarious and dependent upon the stock markets, and if people happen to retire at the wrong time and the stock markets are down, woe betide them, they will not be able to retire.

We have not come up with an overall scheme. The government has put a band-aid on a scheme that needs something more than a band-aid. The only thing it has proposed is kind of like a bigger group RRSP. It still has the same precarious nature, depending on market forces for its success. It still has the issue of no mandatory provision to it, so people do not have to belong and do not have to contribute. It has no requirement for the employer to contribute.

With those three things missing, with those three things being a problem with this pooled system, it is a bad system. It may suit a very small minority of Canadians and a small minority of Canadian corporations, companies, businesses, owners that have no other alternative. However, if that is going to be the case, the better solution is to double Canada pension, gradually over time.

The Conservatives call it another tax. It is not a tax; it is a pension. It has nothing to do with taxing anybody. It is a way of maintaining a pension. If we are suggesting employers are contributing already to the Canada pension plan and that over time those contributions should double so Canadians who have no other alternatives will at least have something sensible to retire on, a portion of money that comes from a Canada pension, let us think of the downstream benefits to that.

First, it will reduce poverty. Reducing poverty is a good thing. Second, it will reduce the government's reliance on guaranteed income supplement. If Canadians have a doubled Canada pension plan and old age security, fewer and fewer of them would need that government handout.

We are making the future more sustainable through a present that looks forward. That is not what the government is doing. The government is trying to scare Canadians by suggesting that somehow the old age security system we now have is unsustainable and that this in combination with the guaranteed income supplement will bankrupt the country.

That is the absolute furtherest from the truth. Yes, there is a slight bump when the baby boomers retire, but the plan allows those baby boomers to all retire anyway and continue to collect OAS. Therefore, the bump is not being dealt with. This belies the fact that the government considers this to be a problem.

By the time we get around to implementing the government's plan, we will be on the downward slope of the baby boomers and we will end up with a sustainable system again. The plan is crazy. It is not an effective way to create sustainabilty in our pension system.

We in the NDP have determined that the best way to go forward, and the best way for the sustainability of the entire system, is to double the Canada pension plan. The government is not doing that. The government is suggesting that we should put our money into more personally risky investments. As long as that is the case, as long as there is a personal risk, then it is a roll of the dice on which year to retire. If people retire in a bear market, well, too bad, so sad, they will run out of pension.

[Judy Sgro, Liberal, York West, ON]

Madam Speaker, we have had a lot of issues in common when it comes to our desire to improve our pension system. However, when he talks about the NDP plan to double the Canada pension plan, which is very admirable, this would have a huge impact upon Canadians and businesses.

Does he not have consideration for the impact that would have upon our business community if the NDP were to become government and decided that it would double the taxes, which is effectively what it would be?

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

Madam Speaker, with all due respect to my colleague, this is not a tax. This is in fact a pension.

What we are suggesting is that over time, gradually giving people time to prepare, the Canada pension plan should be increased. It is by far the most effective and most consistent form of pension in our country.

The Ontario Liberal government in 2007 reacted exactly the same way when it was suggested that the minimum wage in Ontario should go from $7.00 to over $10.00. It said that businesses would fail, that it would be a huge burden on businesses to raise the minimum wage. That was not the case. It did not happen.

The kind of fear-mongering that goes on when we talk about this as a tax, which it is not, when we talk about this as somehow harmful to business is wrong and has the same illogic as suggesting that the minimum wage in Ontario would kill business, which it did not do, and which eventually the Liberal government adopted.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, I have enjoyed the debate today because it is a very important one, not just for us now, but for future generations of Canadians.

It was an interesting question from my colleague in the Liberal Party. If she looks at CPP and doubling it perhaps over the next 10 years, 12 years or whatever the case might be, it is not a tax; it is an investment. That is where we need to come from.

However, my question is for my friend from Toronto. He talked about risk in a pooled retirement savings plan. We have a real life example? Many people who had RRSPs in 2008 found out they had lost 30%, 35% of the value of their RRSPs. We know they is risky. Would my friend like to make comment further on that?