Thank you.
Evidence of meeting #43 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was prpp.
A recording is available from Parliament.
Evidence of meeting #43 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was prpp.
A recording is available from Parliament.
4:55 p.m.
Conservative
4:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
I'll go very quickly then.
I'm looking at the administrators and the funds and what the funds can or can't do, and I guess my first question is about the administrators. Would they be under the same type of rules in managing these funds as, let's say, other investment funds, like OMERS or the teachers pension plan or anything like that? Would they have to follow the same types of investment rules, and would administrators be limited to just Canadian companies offering these funds or can a foreign bank be an administrator for this case?
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
The criteria essentially are going to be that you need to be able to assume the fiduciary duty to the plan members. There's just a certain number of entities that can, in practice, do that. Financial institutions, large pension funds, credit unions—
4:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
But about the investment, when they take in my money and they go to invest it, what kinds of investment rules are they going to be forced to follow, or will there be any rules in place for that?
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
They're going to be required to offer some choice—that's the key word—to the plan members to invest in different funds. They're going to have three, four, or five different options each—
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
—and then there will be a default option. If individual plan members don't choose one of those funds, they'll automatically be put in the default option. Each of those funds is going to have its own characteristics, mix of risk, return, etc., but people will have a choice as to what—
4:55 p.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
If you go to a financial institution and you're depositing your funds through a financial institution, does that go into their capital requirements for the financial institution, and is there any impact on the depositor's insurance, the $60,000 they have in insurance with the bank? Would that be covered in the depositor's insurance?
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
These are some very different things here. If you make a deposit at your bank, if it's just a standard retail deposit, you're covered by the Canada Deposit Insurance Corporation up to $100,000.
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
Yes. It went up a few years ago.
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
But the PRPP is a trust account essentially, so it's a different account, and...I'm struggling for the right words, but it is protected under pension law essentially, which is separate from CDIC protection. There are protections that are built into the trust laws around that.
4:55 p.m.
Conservative
4:55 p.m.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
Good afternoon.
My question is for Mr. John Grace.
Economist Lucy Aproberts indicated that there is a risk of deterioration in social protection with the PRPP, basically because there's no mutualization of the risk. Have you done actuarial studies to find out whether the PRPP would reduce the problem for future pensioners?
4:55 p.m.
Specialist, Pension Policy, Office of the Superintendent of Financial Institutions
I'm sorry. I was listening to the translation. I really couldn't follow it very well. I don't know if you could re-pose your question.
4:55 p.m.
NDP
Alain Giguère NDP Marc-Aurèle-Fortin, QC
Very well.
Insofar as 60% of people have no pension, have you done an actuarial study to find out how many participants there should be and what the amounts should be for there to be an actuarial change resulting in something other than financial disaster, which is where we are now headed because of a lack of savings?
4:55 p.m.
Conservative
4:55 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
I think we have always tried to be very clear. The proposal before us isn't there to resolve all the problems with the pension system, but to offer choices and other options to the 60% of employees who currently do not have access to a plan through their employer.
5 p.m.
General Director, Financial Sector Policy Branch, Department of Finance
Will it solve everything? I hope so, but perhaps I'm no so ambitious.
5 p.m.
NDP
