Thank you, Mr. Chair and members of the committee.
I'm very pleased to have the opportunity to be here today on behalf of the Canadian Life and Health Insurance Association and to share our views as the Standing Committee on Finance considers Bill C-25, the Pooled Registered Pension Plans Act.
The CLHIA is a voluntary association whose member companies account for 99% of our country's life and health insurance business. The industry provides a wide range of financial security products, such as life insurance, annuities, and supplementary health insurance, to about 26 million Canadians. Also, over two-thirds of Canada's pension plans, primarily defined contribution plans for small and mid-sized businesses, are administered by our life insurance companies.
We commend the government for introducing Bill C-25.
It targets the gap in Canada's retirement savings system that was identified in Jack Mintz's 2009 research for the joint working group of finance ministers, that gap being modest and middle-income Canadian households that may not be saving enough for retirement. It builds on the consensus among all federal, provincial, and territorial finance ministers, and it does so by seeking to build on the strengths of the third element of our three-pillar retirement saving system, namely, private sector savings.
The goal of the first two pillars, the public part, through OAS/GIS and CPP/QPP, is to provide a minimum income to meet basic needs. Canada is recognized internationally as doing a very good job at that.
It's the third pillar, private sector savings through workplace plans and individual savings, that's intended to provide income beyond the basic needs. This is where the shortfall exists, particularly with those who don't have access to a workplace retirement plan.
We believe PRPPs can be a vehicle to make a fundamental difference to the retirement savings landscape in Canada. The keys to their success are several.
One is their low cost: pooling will help to enhance scale and efficiencies. Another is simple designs that help keep those costs down. Also, professional administrators will relieve small and mid-sized businesses from the administrative and legal burdens that prevent so many businesses from offering retirement plans today. Next is harmonization across the country, which will be important in gaining the scale and efficiencies and which, again, are so important to getting at those low costs. Also, there are automatic features that provide behavioural nudges to encourage people to start saving, with appropriate opt-out provisions, of course.
We're hearing that small businesses are keenly interested in PRPPs. We've provided the clerk with the results of a survey of small and mid-sized businesses that we commissioned before Christmas. I'd just like to highlight a few points.
First, and hardly surprising, the smaller the company, the less likely they are to have a workplace retirement plan. Second, two-thirds of respondents said they would be interested in offering PRPPs. Third, over 70% of that group said they would be interested in contributing to a PRPP, even though they realize they wouldn't be required to do so. Finally, over 70% of all respondents thought that all employees should have access to some form of retirement savings plan at the workplace.
Clearly, there is still work to be done. Bill C-25 sets out the framework, but much of the detail will of course be spelled out in the regulations. As well, to ensure that PRPPs can be effective national plans, we'll also need provincial legislation. We look forward to working with governments and policy-makers on these next steps.
Thank you again, Mr. Chair, for the chance to appear here today. I'd be pleased to provide any further input.