Mr. Speaker, a little more two years ago I asked the government of the day what it planned to do to protect and preserve pensions for all Canadians. The minister responded by saying that pensions were provincial and should be left to provincial legislatures to deal with. He said pensions were not a federal problem no matter how much the opposition cried out.
Canadians rightly found that notion to be wrong, short-sighted and unacceptable. Therefore, what is Bill C-25? It is the government's answer to our calls for pension reform. In simple terms, providing the provinces go along with this, it creates a federal notion of a pooled registered pension plan similar to a group RRSP. Clearly, that is the best thing the government could come up with.
In 1998, when the current Prime Minister was campaigning, he announced that he wanted to privatize the Canada pension plan. The Conservatives proposed the elimination of the public Canada pension plan. Backed by a bit of research, that is clearly there: it is exactly what the current Prime Minister said. He suggested that the Canada pension plan should be replaced by a super savings account that would allow Canadians to put all of their extra money, if they had any, into investments for their retirement. PRPPs are similar to that fundamentally flawed idea. It continues to be just as flawed an idea now as it was then.
What is the problem? While the Prime Minister is the sixth highest paid political leader in the world, earning an annual salary of $296,000 U.S., and telling Canadians to put their extra money into the bank for their retirement, he seems to forget that not everyone has so much extra money. What about those seniors who pay their taxes, raise their families and work hard but still do not have any extra money to invest? How are they going to survive?
The Liberals have long believed that Canadian seniors need and deserve a secure and reliable plan to help keep the “gold” in the golden years. I mean a pension plan, not an investment plan. In an effort to do this, on March 1, 1928, Liberal Prime Minister King officially created a limited old age security pension plan. That plan was expanded in 1952 by another Liberal prime minister, Louis St. Laurent.
Recent statements by the Prime Minister seem to indicate that the Conservatives do not share this view. They voted against all of those previous policies and continue to look at ways to erode the security of Canadian seniors, which seems much more like waging war on seniors and the poor than anything else.
Under old age security, the guaranteed income supplement and the CPP that were established by the Liberals over the past 90 years, Canadian seniors have gradually been lifted out of poverty. We have finally reached a level where there are a lower number of seniors living in poverty than ever before, although that level is still not acceptable.
The Conservatives have opposed each of these measures. Now it seems they want seniors to work even longer. Forcing them to work longer and harder to save for retirement, on top of asking them to pay for $6 billion in giveaways to the largest corporations, $13 billion for prisons and $30 billion for untendered stealth fighter jets, is not a plan for pensions.
The PRPPs will not work for those who need it most, but for those who have lots of money. For many of us who deal with seniors who are struggling every day, this will not be a very good tool. PRPPs are nothing but locked in RRSPs.
Canadians could face a number of problems if this plan proceeds. They will have to become market experts, as their employer will pay no administrative role in the PRPP plan. Members will bear 100% of the investment risk. A single market stumble could spell the end of any retirement home. We know how difficult the investment industry is when one goes to invest, yet that person has to rely on someone who has that expertise. The majority of Canadians do not have that expertise and will again be subjected to the volatility of the market and those making investments for them. Also, there is no ability to move out of an underperforming PRPP into a performing one or one with better services.
If the provinces make PRPPs mandatory, which we do not know yet, employers will be forced to create administrative systems to enrol members. As well, because both employers and members can opt out, costs will be incurred for no reason.
It is unclear whether homemakers can contribute to or belong to a PRPP. We clearly understand that they are not at the top of the list of concerns of the current government. Yet again the so-called Conservative plan excludes those who contribute to society outside of the work force.
Why are we not learning from some of the mistakes of others? The Australian government adopted its version of PRPPs in 1997, over a decade ago. A recent study published in the Rotman International Journal of Pension Management found that the only one who had benefited from the plan was the financial services industry. That is a shame.
PRPPs will be managed by the same people who manage Canada's mutual funds, and Canadians already pay some of the highest management fees in the world. I hear no talk about how the government will control that or put caps on any of those management fees for anyone subject to this. Clearly, those who will make the most money out of it are the banks and financial institutions.
Morningstar recently released a report grading 22 countries on the management expense ratios levied on their mutual funds, and Canada was the only country to receive an F. Shame on everyone.
Reducing government spending is a laudable goal. However, the financial players offering PRPPs will need to offer annuities so that plan members may convert their accumulated balances into a stream of pension payments. Once that occurs, insurers are required by law to price in a profit margin and to keep regulatory capital aside to underwrite the contracts. These two requirements alone are achieved at the expense of the plan members, who will see their pensions reduced as a result. This is a very inefficient way of delivering pensions.
These two requirements are the cornerstones of the PRPP plan. With that in mind, I am left to wonder how PRPPs could possibly yield results for Canadian pensioners. The simple answer is that they will not help the average Canadian prepare for retirement. The PRPP is another tool in the toolbox. It is not necessarily a particularly good tool, but clearly it is the best the government is prepared to go forward with.
Instead of copying the failed work of others, why did the Prime Minister not seek to lift seniors out of poverty? A supplemental Canada pension plan, already proposed by the Liberals, would provide the best of both worlds. It would create a new retirement savings vehicle for Canadians who needed it, while delivering the low overhead cost structure of the Canada pension plan.
A supplementary Canada pension plan would be a simple and cost-effective solution to the looming pension crisis, and is very different from the NDP proposal. This is a defined benefit pension for everyone, including homemakers and farmers. Anyone could contribute, even those who have left the work force during their lives for child rearing, illness and educational advancement. It would use proven and existing resources to give every Canadian man, woman and child a reliable and stable investment vehicle for the future.
Every Canadian has the right to live in dignity, especially during their golden years, and a SCPP would allow them to do that. The very best part of that is that a SCPP would not require the retention of assets to create a profit margin for banks and insurance companies, and it would not require them to keep regulatory capital aside to underwrite those contracts. It would be a win for the average Canadian pensioner.
However, the Conservatives, as I indicated, could not care less. By ignoring calls to improve the CPP and by floating the idea of slashing the old age pension of those aged 65 to 67, the Conservatives have shown their true colours.
Balancing the budget on the backs of seniors is nothing short of waging war on the poor. It is unacceptable and the government should be ashamed for even putting that idea forward, but clearly that is the opinion of the Conservatives. They have never supported old age security, the Canada pension plan and the guaranteed income supplement, which continues to show in their colours. As far as they are concerned, they will support a big corporation, but if a person cannot take care of themself, goodbye Charlie. That is not the Liberal way. That is not the Canadian way.