Mr. Speaker, I would ask the indulgence of the House to split my time with the member for Hamilton Mountain.
Mr. Speaker, it is important when addressing Bill C-25 that we set it in the context of what is being attempted here by the government and what is needed with regard to pension reform in this country. It is not only important to do that in terms of the historical context but also in the context of relativity to other jurisdictions and other nations.
In that regard, it is important to understand historically where we have come over the last 50 or 60 years with respect to government pensions or pensions partially contributed to by government. We have established a regime in that regard. We could study some of the reports and minutes of meetings issued during that period of time when the CPP was being established. It was quite clear at that time that an understanding was entered into that the CPP and the QPP which came after, would provide roughly 25% to 30% of what was needed to retire in dignity, and the rest would be provided by the private sector. At age 65, old age security would kick in and that would help to offset the balance. That is where it came from.
If we study that historically right up to the present time, another mechanism that was there, other than private pension plans, is the RSP. It has been a substantial failure in providing that level of security because of its lack of ability to attract enough funds and the inability of most Canadians to contribute significantly enough to an RSP in order to retire in dignity, that combined with the CPP and old age security.
That left the pension plans. As we have heard repeatedly this afternoon, and I am sure as this debate goes on we will hear it a number of times, there are too many Canadians who do not have access to private pension plans. We are at a stage in our history where the system is in need of major reform.
I will compare our status in this area with that of other countries. Across the border in the United States, its social security provides roughly $30,000 a year in Canadian dollars. The full amount of our CPP including the full OAS provides maybe $18,000 or $19,000. That is the context in which we are functioning.
Again, the vast majority of Canadians who are not covered by private pension plans have no ability to make that up and have to rely on RSPs.
What does the government do? Rather than looking at other alternatives, which I will come back to in a moment, it wants to continue with this mostly failed plan of RSPs but turn it into a pooled RSP. This is not just us talking. Even conservative think-tanks like the Fraser Institute have basically said this will not work. There is a list of reasons why it will not work. Let us start with the contributions.
There has been a committee functioning in my riding for what will be three years in May. It is looking at the need for pension reforms. Some members are from unions and others are from the private sector. They have been doing an analysis of what is needed in the way of reform. They have looked at this and have said that it will not move any significant additional dollars or people into the category of being able to retire with dignity in terms of their economic status and economic ability to pay their basic costs of living.
The reason for that is if people have the ability to contribute now, they are contributing to an RSP. Thirty-one per cent contribute and depending on the economic conditions in the country at the time, somewhere between 3% and 7% of that 31% contribute the full amount. The doctor or lawyer doing well financially will contribute the full amount. Even most people within the professions do not.
This begs the question, if they are not able to do that with their own RSPs which they control, why would they put it into this pooled plan where they are going to have to pay very substantial fees? This bill does absolutely nothing to control the amount the people accepting this money, anywhere in the financial sector, can charge in fees.
It is important at this point to juxtapose the reality of what we have seen in a number of these types of investments, the stock market, bonds, whatever, where there is a financial adviser controlling those funds. We have seen that the ratios of the fees are five to six times the fees and administrative costs for the Canada pension plan. That is the reality in Canada today.
Quite frankly, this one is so unattractive that the cost will probably be even higher, because it is so unattractive for a major financial agency, a bank or insurance company, to get into this market. The administrative costs are going to be extremely high because of the low participation. We are going to see huge fees, and this bill does nothing to address that issue.
Another point to look at is when it is that small investor who has some ability to put money aside in an RSP, it begs the question why the investor would do that after what we just saw happen in 2008. We can go back to the high-tech bubble of the late 1990s and any number of times I have watched this happen.
Why would people trust their money going into this pool where there are very few regulations when we have seen what has happened in the U.S. with the housing bubble burst and all of what we have found out as to how funds were handled in that regard? Why would people even consider, if they have these funds, putting them into a pooled registered pension plan as opposed to maintaining control and deciding how best their money could work for them?
For those reasons, it is simply not going to be of any use whatsoever. Bill C-25 is a smokescreen. The government wants to try to convince Canadians that the reform which is so badly needed in our pension system, whatever source there is, is being handled by this one plan, and it is not. It is not at all. It is not going to work.
Let us look at the alternatives for a minute. The expansion of the CPP is clearly one of the routes to go. I heard the last speaker for the Conservatives talk about the stability of the CPP and its ability to deliver and that it is not available for the small merchant. That is one of the reforms that is necessary. We could do that. There are very clear proposals that have come from a number of groups over the last two to three years about how to reform the CPP to attract those people, to give them access to the CPP. It is an expansion of it. The administrators of it say it is possible to be done.
That is only one example of what could be done. I see my time is just about up. There are other reforms that need to be made with regard to the CPP. For instance, priority under the bankruptcy legislation needs to be given to pension funds. The OAS needs to be increased as opposed to what we are hearing, that the government is going to take away benefits by increasing the age. The GIS that needs to be addressed as well.
There are plans out there that are obviously better than this bill which is a smokescreen and should be defeated.