Mr. Speaker, this global financial crisis and Canada's aging population have highlighted the important issue of retirement income security. Our government realizes that Canadian seniors deserve not only our respect but also our support to allow them to enjoy their later years after a lifetime of contributing to our society. They have worked hard to build a better country for future generations. Our government's record shows that we are committed to the financial well-being of Canadian seniors, especially those with low incomes.
While the introduction of pooled registered pension plans, or PRPPs, would not help today's seniors, PRPPs are a key component in providing future financial security for Canadians. Our goal is to provide Canadians with another tool to help them prepare for their retirement in an easy and cost-effective way.
From a young age, we have all been told of the importance of saving for the future, particularly for retirement. PRPPs offer another savings tool to Canadians to help them meet their retirement goals. Sixty per cent of Canadians do not have a workplace pension plan. I am one of those. I was self-employed as a farmer. My land accumulated and, like many others, it was my pension plan. Many employers out there do not want the legal or administrative burden of offering a pension plan to their employees. I believe today's PRPP legislation would play a critical role in improving the range of retirement savings options available to Canadians.
This low-cost retirement savings opportunity is ideal for Canadians who do not currently have access to an employer-offered pension plan. PRPPs would make well-regulated, low-cost, private-sector pension plans accessible to millions who up to now have not had access to such plans. This is great news for many Canadians who are employees of small and medium-sized businesses and self-employed workers. They would now have access to a private pension plan for the very first time. PRPPs are designed to remove many of the traditional barriers that have kept some employers from offering pension plans to their employees in the past. PRPPs would be administered by a regulated financial institution, thereby decreasing the cost, complexity and resource demands for small employers.
PRPPs are a lower cost option due to their scale and design. These plans would result in large pooled funds that would enable plan members to benefit from the lower investment management costs associated with such funds. With PRPPs, participation would be encouraged by automatic enrollment of employees into a PRPP where an employer offers one. Automatic enrollment would encourage regular savings into PRPPs by making participation the default choice of employees who do not actively make a decision to opt out. This is a positive attribute of PRPPs. Employees could have their PRPP contributions automatically taken off their paycheque. It would make saving for the future easier.
In addition, PRPPs would allow members to create an appropriate portfolio that is in line with their investment objectives and risk preferences. The PRPP administrator would also provide members with the educational tools and other resources needed to help the members make informed decisions regarding their PRPP investments. This would be a key improvement to Canada's retirement income system.
PRPPs would also complement and support our government's number one priority, strengthening Canada's economy. That means creating jobs and economic growth.
Some of the retirement income system proposals we looked at in our consultations would have significantly raised costs for both employers and employees. That would have been unacceptable at a time of very tentative economic recovery. Canada's finance ministers opted to prioritize a PRPP framework over other options. It was considered the most effective and targeted way to address the prime areas for improvement identified in our working group's research, particularly modest income and middle-income individuals who do not have access to employer-sponsored pension plans.
PRPPs address this gap in the retirement system in a number of ways. A PRPP provides a new accessible, straightforward and administratively low cost retirement option for employers to offer their employees, allowing individuals who currently may not participate in a pension plan, such as the self-employed and employees of companies that do not offer a pension plan, to make use of this new option. It enables more people to benefit from the lower investment management costs that result from membership in a large pooled pension plan. It allows for the portability of benefits that would facilitate an easy transfer between plans, and ensuring that funds are invested in the best interests of plan members.
Those points are all important areas where a retirement income system can and should be improved. That is why federal, provincial and territorial governments are working to implement PRPPs as soon as possible.
Canada's retirement income system has already been recognized around the world as a model that succeeds in reducing poverty among Canadian seniors and in providing high levels of replacement income to retired workers, but we should never rest on our laurels. Anything can and always will be able to be improved, and that is why PRPPs are at the top of that list right now.
Our government will make the right policy decisions to ensure it stays that way. In recent years we have made it even stronger, with a wide range of measures to support those elements of the system with a proven record of success. This includes: providing over $2 billion in additional annual targeted tax relief to seniors and pensioners through measures such as pension income splitting, increases in the age credit amount, and a doubling of the maximum amount of income eligible for the pension income credit; reforming the framework governing federally regulated pensions to better protect pensioners; working with the provinces to modernize the CPP, making it more flexible for those transitioning out of the workforce to better reflect the way Canadians currently live, work and retire; and most recently in our latest budget, announcing a top-up to the guaranteed income supplement, GIS, benefit for Canada's most vulnerable seniors.
With the introduction of PRPPs we will address the remaining gaps in the system by providing an attractive additional pension option to individuals and employers.
In conclusion, the addition of the PRPPs is clearly a step in the right direction to strengthening a retirement income system that has already delivered for Canadians. It offers Canadians another tool to help them meet their retirement goals.
I am sure there are many individuals out there, including my parents, who could have taken advantage of something like this. As I said earlier, while today's retirees will not be able to benefit from this, future ones will. We certainly look forward to that.
I urge all members in the House to support the government in this major step forward in securing Canadians' retirement income needs.