Thank you.
Mr. Chair, honourable members, thank you for the opportunity to appear before this committee.
The Canadian Medical Association represents 76,000 physicians from across the country. Over the past 30 years, we have been very proactive in the area of pensions, and have engaged in a wide range of public consultations. In fact, the CMA was advocating for retirement savings plans even before the creation of the RRSPs in the 1950s.
Like the Canadian population at large, physicians represent an aging demographic; 38% of Canada's physicians are 55 years or older, for whom retirement is an important consideration. In addition, the vast majority of CMA members are self-employed physicians, and as such do not participate in workplace registered pension plans. Physicians, therefore, rely heavily on registered retirement savings plans relative to their retirement savings vehicles.
Our research shows that our membership favours plans that would enable the self-employed to participate in pension plans like the PRPPs. Further, physicians employ an estimated 155,000 Canadians, meaning that in fact they operate small businesses. Their employees would also be eligible for and benefit from the PRPP process.
CMA members believe that PRPPs will begin to address the imbalance between retirement savings opportunities for self-employed Canadians and those with workplace pensions. We are, however, concerned about the proposed structure and limitation of the PRPPs in three particular areas, which I'll bring to your attention, if you'll allow me.
To achieve adequate income replacement in retirement, CMA believes that Canadians should be encouraged to save more for their retirement through tax-deferred vehicles. The current percentage of dollar limits on contributions for vehicles such as the PRPPs and the RRSPs are well below the limits in the United States and the United Kingdom. Maximum dollar limits were essentially frozen 25 years ago, and despite a modest increase in 2004, these limits are easily attainable, and could now be easily improved or increased.
CMA therefore encourages this committee to consider amending Bill C-25 to increase the retirement savings capacity for self-employed individuals by raising the combined limit of the RRSPs and the PRPPs.
As for defined benefit and targeted benefit pension plans, the summary report on retirement income adequacy research highlighted that defined benefit pension funds and annuities enable investors to share longevity risks as well as pool risky investments to diversify risk. By pooling risk, defined benefit and targeted benefit pension plans provide more secure saving vehicles than defined contribution plans. The PRPP proposal should thus not be limited to defined contribution pension plans but also include targeted benefit and defined benefit plans. That should be considered and encouraged.
The CMA also believes that the sponsors of PRPPs should not be limited to financial institutions. Large, well-governed professional associations that represent a particular membership should be able to sponsor PRPPs for their own members, including self-employed members. The CMA recommends that clauses 14 to 26 of Bill C-25 be amended to clarify the type of organizations that can qualify for PRPP sponsorship.
As Canadians age, concerns about long-term care are also on the increase. The CMA encourages the government to consider options for pre-funding long-term care, including private insurance and tax-deferred, or tax-prepaid, savings approaches.
In closing, while the CMA supports the proposed PRPP framework in principle, we strongly ask you to consider our recommendations, as in our view they would improve the proposed legislation before us today by ensuring that PRPPs provide value to all self-employed Canadians, including physicians.
We appreciate this committee's work in seeking retirement solutions for all Canadians. We believe that together we can find innovative ways to provide hard-working Canadians with income security and dignity after retirement.
Thank you very much for listening.