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.

On the agenda

MPs speaking

Also speaking

Diane Lafleur  General Director, Financial Sector Policy Branch, Department of Finance
John Grace  Specialist, Pension Policy, Office of the Superintendent of Financial Institutions
Lynn Hemmings  Senior Chief, Financial Sector Division, Department of Finance
Leah Anderson  Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance
Carol Taraschuk  Senior Counsel, Legal Services for the Office of the Superintendent of Financial Institutions, Department of Justice

5 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

Diane Lafleur

No, we haven't done one.

5 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Thank you very much.

Let's move on now to the legal aspect. In section 30, you indicate that the employer is not responsible, whereas this same employer, according to sections 24 and 76, could receive certain inducements, certain gifts.

How can you exonerate someone for his or her participation in a plan, when that same person received an inducement, a personal benefit, for choosing the plan?

5 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

Diane Lafleur

It says that the employer is not entitled to inducements when the employer chooses a plan for the employees.

5 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Except that the regulations related to paragraph 76(1)(i) allow…

5 p.m.

Leah Anderson Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance

That regulation is intended to...or it is under development, but the intention there is that there are some inducements or what we call cross-selling or tied selling that can be beneficial to all. So if an administrator is offering both a health policy as well as a plan, a PRPP, for example, everybody could benefit. It's...would you call that an inducement? It's beneficial.

5 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

You're referring to a regulation that doesn't exist. Section 24 states that a person doesn't have the right, except for what is set out in section 76. Section 76 talks about the nature of the inducement. This poses a problem.

Also, section 30 covers non-liability. Vincent Lacroix would be pleased.

5 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

Diane Lafleur

The context of section 30 is that the administrator is liable for funds management, not the employer. The purpose of this is to clarify that the administrator is liable.

5 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Yes, but there's a cause and effect relationship between the administrator and the employer if the employer chooses the administrator based on the inducements offered.

5 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

5 p.m.

NDP

Alain Giguère NDP Marc-Aurèle-Fortin, QC

Do you see the problem?

Section 21 basically states that the superintendent has the ability to order a transfer in the event of improper management. We understand immediately that it is urgent to protect contributors. But subsection 34(4) indicates that there is a 15-day waiting period. If it is really necessary to take urgent action and if you think the individual is insolvent, dangerous and dishonest, why give that person 15 days? Why not put the person under supervision immediately? This is exactly what happened to Vincent Lacroix in Quebec. There was a one-month period and during that month…

5 p.m.

Conservative

The Chair Conservative James Rajotte

Can we get a response on the 15-day waiting period?

Ms. Taraschuk.

5 p.m.

Carol Taraschuk Senior Counsel, Legal Services for the Office of the Superintendent of Financial Institutions, Department of Justice

Yes, I can answer that question.

5 p.m.

Conservative

The Chair Conservative James Rajotte

Please do.

5 p.m.

Senior Counsel, Legal Services for the Office of the Superintendent of Financial Institutions, Department of Justice

Carol Taraschuk

It's similar to the provisions in the Pension Benefits Standards Act. Clause 21 allows the superintendent to act quickly and name a replacement. They're not subject to the 15-day waiting period.

The 15-day waiting period deals with directions of compliance. For example, if an employer is not making the necessary payments to the administrator, the superintendent will give 15 days' notice that she intends to issue a direction. They can make representation to the superintendent, so this is the process of fairness to the person being issued the direction. Any representation will be considered by the superintendent before a formal direction is issued.

5 p.m.

Conservative

The Chair Conservative James Rajotte

Okay. Thank you.

Merci, M. Giguère.

We'll go to Mr. Jean now, please.

5 p.m.

Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Thank you, Mr. Chair.

I'm a little interested in the Australian situation with the super funds. In particular, I understand that one of the major criticisms of the Australian super funds is that the returns quoted in the Australian Prudential Regulatory Authority are based on the total assets of the super fund rather than different investment options.

Is anybody familiar with that? Okay. Well, I understand, just from spending some time in Australia and also doing research on the subject—and being interested, because I was an investor there for a period of time—that the largest problem with the super funds in Australia is that the reporting functions take the total fund, the return on investment for the total fund, rather than the individual investment options that the funds offer. In fact, if you look at even the total funds before the economic global crisis in Australia, you see that over 35% of those funds had over a 9% return, and 10% of the super funds had double-digit returns.

So on the point that was raised earlier by the NDP, you have to look at it in a different context. If just the entire fund were looked at instead of specific performance options in the funds, obviously you would have a different return on investment, and since the global economic downturn, we've all had some sort of hit on our stock markets and investments generally.

Now, I did have the opportunity of doing an MBA in finance. During that period of time I discovered that there were four sentences that were used a lot. One was “competitive marketplace” and another was “economy of supply”. The third was “spread the risk”, and the fourth was “wake up, dummy”, which I heard a lot.

5 p.m.

Voices

Oh, oh!

5 p.m.

Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Those three terms were all used by the NDP, and what that indicated to me was that they certainly knew what it was to have financial options. But in all of those cases, those things speak to good investment options. In particular, spreading the risk means that with this PRPP, we are actually enabling a competitive marketplace that will spread the risk to many, many different options, which will make it not just cheaper but a better risk beta for everybody. Is that fair to say?

5:05 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

Diane Lafleur

That's the intent.

5:05 p.m.

Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Now, I also want to say that as a small business owner in Fort McMurray—I owned about 10 businesses over a 20-year period, and I can assure you that my biggest problem was retaining employees. That still is a problem for me up there.

What I like the best about this is that it gives me an option to compete against the large oil sands plants, which offer great pensions. After 15 or 20 years of service, they pay out about $2,500 per employee, and it's almost impossible.... I've tried time and time again with the chamber of commerce. I've tried a pension plan with different groups. With insurance companies, I've tried some sort of pension plan.

This certainly gives me, as a small business owner with between five and 100 employees, a tremendous opportunity to be on a level playing field or to at least offer that option. Is that what you're hearing in the marketplace?

5:05 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

Diane Lafleur

Well, we're certainly hearing a positive reaction to the possibility of essentially improving the benefits package that small and medium-sized businesses can offer their employees, for very little in terms of administrative and other burdens. So yes, what we're hearing is that it's an attractive option.

5:05 p.m.

Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Thank you very much.

Those were my questions. Thank you, Mr. Chair.

5:05 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you, Mr. Jean.

We'll go to Mr. Mai, s'il vous plaît.

5:05 p.m.

NDP

Hoang Mai NDP Brossard—La Prairie, QC

Thank you, Mr. Chair.

A little earlier, the minister spoke about Old Age Security, which heard isn't viable. Kevin Page said that it was viable and that there were no long-term problems, which was also confirmed by the OECD. Where do you stand on this?

5:05 p.m.

General Director, Financial Sector Policy Branch, Department of Finance

Diane Lafleur

I don't have a position on this because, honestly, it's not my field. We are responsible for private pension funds, but we aren't responsible for Old Age Security.