Finance Committee on Feb. 16th, 2012

[Ted Menzies, Conservative, Macleod, AB]

I'm not that much of a betting man but—

[Scott Brison, Liberal, Kings—Hants, NS]

No, but will you pursue that?

[Ted Menzies, Conservative, Macleod, AB]

We did ask that question.

[Scott Brison, Liberal, Kings—Hants, NS]

So what would the increase be?

[Ted Menzies, Conservative, Macleod, AB]

I don't remember the numbers, but the word “substantial” was there. They said they could do it, but it's a substantial increase to the cost because they're changing the structure of it and—

[Scott Brison, Liberal, Kings—Hants, NS]

If they were to analyze what the delta between their current fee structure or cost structure would be and the option of a supplemental voluntary CPP, and if you found that it was lower than PRPP options, would you consider it in that case?

[Ted Menzies, Conservative, Macleod, AB]

We have the unanimous support of the provinces and territories to move forward with this at this point.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

[Ted Menzies, Conservative, Macleod, AB]

We're moving forward because we have support. We've always said, Mr. Brison, that we continue to look at all options on the Canada Pension Plan.

As I've said, this is an option; this isn't the be-all and end-all. As investments change, as the world changes, we need to make sure that we adapt to make sure we make this system sustainable in whole.

[The Chair, Conservative, James Rajotte]

You have five seconds.

[Scott Brison, Liberal, Kings—Hants, NS]

So you are open to at least looking at the option down the road.

[Ted Menzies, Conservative, Macleod, AB]

With our partners, the provinces and the territories, we're continually looking at the Canada Pension Plan.

[Scott Brison, Liberal, Kings—Hants, NS]

I think you might find they're interested in this.

[The Chair, Conservative, James Rajotte]

I think that's a general “yes”.

Thank you, Mr. Brison.

We'll go to Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Chair, and thank you, Minister, for appearing before us.

I think we have to clarify what was just said across the way. The idea of the PRPP is that they're automatically rolled. Is that not correct? And they can opt out if they so choose.

[Ted Menzies, Conservative, Macleod, AB]

You're right.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

There's some confusion, I think, with CPP too, because we all get the invitations and it always seems so simple; we can fix this with CPP.

What is the contribution from the employer currently with CPP, and what is the contribution from the employee?

[Ted Menzies, Conservative, Macleod, AB]

It's a total of 9.9%, half from the employer and half from the employee. We reflected on what that would be. For a small business, it may not be much, but for a large business it's substantial. The CFIB has crunched the numbers and that's their analysis.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Of course, with the PRPP that can happen or it cannot happen. If the employer doesn't have the means to make that contribution, the employee can still make a contribution, and he doesn't have to limit it to 9%, for instance. He can reach his full...whatever that percentage is.

[Ted Menzies, Conservative, Macleod, AB]

Yes, it all fits within the maximum RRSP level of contribution per individual. Whether it's split between the employer and the employee, it can't go above the overall maximum allowable contribution.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

You also said, in regard to your agreements between the provinces and the feds, that at that point you'd have a look at where you're at, and you'd see where the pool is and how it's been invested and what the returns are. I suppose if you introduced a PRPP and there wasn't a normal sharing, it would be very difficult to know exactly whether or not you have enough money in the pool, because it's obviously going to different people, and going for different rates as well. Do you understand what I'm saying?

[Ted Menzies, Conservative, Macleod, AB]

Yes, but we're getting into technicalities that aren't in the legislation itself. The regulations that will be coming out once this has passed the House of Commons and the Senate...those will be detailed as to the investment. There's a protection mechanism in there that makes it better than an RRSP because it is protected under the same type of legislation as the Pension Benefits Standards Act, so it's protected in that way. It's a safer investment. We're not going to guarantee, and I don't think anybody expects the government to guarantee, what the return on the investment is; that's up to the plan administrators.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

You mentioned RRSPs. Is that the only difference, or are there other differences between the RRSPs and the PRPPs?

[Ted Menzies, Conservative, Macleod, AB]

They fit within the same maximum contribution level, but as we say, people aren't contributing. There's $600 billion of unused room. It makes it safer because it's protected. It's simple. Businesses can offer a group RRSP, but the employer is then administering the group RRSP. This makes it simpler for the employer, and it's safer for the employee. It's a fiduciary responsibility on the plan administrator to make the best return to the plan member. That's the fundamental protection in the PRPPs.

[The Chair, Conservative, James Rajotte]

One minute.