Madam Speaker, I rise today to speak in favour of the pooled registered pension plans bill. I rise to speak for small business owners in my riding of Kitchener--Conestoga who want to provide for their own retirements and the retirement of their employees.
I will take a moment to put this into perspective because this improvement to Canada's retirement system cannot be viewed in isolation. Our government has provided tax relief for seniors by doubling the amount of income eligible for the pension income credit and through increases to the age credit. Even more significant, we have instituted pension income splitting for seniors, creating a more fair tax system for those who built this great country. As well, we have increased payments available to low income seniors by way of the guaranteed income supplement. In fact, budget 2011 announced a new guaranteed income supplement top up benefit for most vulnerable seniors. Seniors with little or no income other than old age security and the GIS will receive additional annual benefits of up to $600 for single seniors and $840 for couples.
Before that, budget 2008 increased the amount they can earn before the GIS is reduced so that recipients will be able to keep more of their hard-earned money without suffering clawbacks. Also in budget 2008, we introduced a tax free savings account, which is particularly beneficial to seniors as it helps them to meet their ongoing savings needs on a tax efficient basis after they are no longer able to contribute to an RRSP. We built a framework for federally regulated pension plans that ensures retired workers will continue to receive benefits should their plan be terminated.
We have also worked with the provinces to bring new flexibility to the Canada pension plan that makes it easier for Canadians to transition in and out of the workforce to better reflect the reality of how Canadians live, work and retire.
Despite all this progress, though, and despite the work we have done to help seniors have an easier time living through retirement, we still face challenges. More than six out of every ten Canadians do not have access to a pension plan at their place of work. On average, each Canadian has over $18,000 of unused room to contribute to an RRSP. One reason that many employers do not offer a pension plan is simple: they are too costly to administer and they impose a number of legal burdens. One reason that many Canadians do not take full advantage of their RRSPs is also simple: properly balancing the combination of risk and cost is beyond their ability.
These challenges are not new but they are growing in urgency. Clearly, a new approach is needed and pooled registered pension plans offer Canadians that new approach, that new hope.
PRPPs would offer a simpler enrolment and withdrawal process than traditional retirement plans. This would allow small and medium size enterprises, struggling to balance their books while keeping valued talent, offer a valuable incentive to their employees while keeping their own administrative burden down.
Canadians want to plan for their retirement. They want to plan for their golden years. It is not the job of government, as some hon. members would have us believe, to take away that ability. Our job as government is to facilitate their plans, not to dictate those plans. Our job is to make it easier for employers to offer retirement plans.
All employers are eager to hire highly skilled workers but there is always a challenge for those with smaller businesses. How can they compete with larger corporations who are able to not only offer attractive wages and career growth plans but also have the administrative support and the buying power to offer good pension and retirement benefits. Many Canadians can only access a pension plan if their employers offer one and many employers do not want the legal or administrative burden of offering a pension plan. The end result, as I mentioned, is that over 60% of Canadians have no workplace pension in place.
PRPPs are designed to address Canada's lack of low cost, large scale retirement savings options for the majority of Canadians. The innovative design features of the PRPP would remove many of the barriers that traditionally kept employers from offering pension plans to their employees.
A straightforward design leads to simple enrolment and management. Whereas now employers much choose hiring an expensive outside party, taking on the cost themselves, or forgoing any pension plan for their employees at all. A third party administrator would now take on the legal and administrative duties associated with running a pension plan. These costs would be spread across participating employers, allowing for an economy of scale that would keep costs down. When the costs of investment drop due to the economy of scale, the net return will increase. That is basic economics. By building a design that will function across provinces, administrative costs will be reduced even lower and an even larger economy of scale can be achieved.
Offering pooled registered pension plans would make it easier for Canadians to fund their retirement but no one on this side of the House believes that PRPPs are the last step this government will take to ensure Canadians are able to enjoy their golden years.
I think all parties could agree that improving Canadians' financial literacy would be a big step forward. I do not mean training every Canadian to be a stockbroker, but things like the bottom line benefits of selecting the best credit card, the responsible use of credit and the power of compounded returns and the damage to compounding caused by taxation. A better understanding of these issues and how they interconnect can only lead to a more prosperous Canada and better retirement living for all Canadians. That is why launching the task force on financial literacy was the right thing for our government to do.
It has often been said that there are two kinds of people: those who spend first and save what is left over and those who save first and spend what is left over. Improved financial literacy will encourage Canadians to save first and PRPPs would make it easier for them to do so.
As the Canadian Chamber of Commerce noted on November 17 of last year:
—PRPPs--with simple and straightforward rules and processes--would give many businesses the flexibility and tools they need to help their employees save for retirement.
The chamber also noted that employers want to offer their employees retirement benefits, such as a pension plan. It went on to say, “(PRPPs) would be a great option to attract new talent to our business”.
The Canadian Federation of Independent Business, the voice of small business in Canada, made the case for PRPPs even more strongly. The Canadian Federation of Independent Business noted that while a 1% increase in CPP would destroy 220,000 person years of employment and drive wages down, PRPPs would expand the retirement savings options for thousands of Canadian small businesses and their employees. Currently, it is worth noting, less than one in five small businesses that belong to the CFIB offer their employees a pension plan.
In conclusion, PRPPs present an innovative solution for Canadians to finance their retirements. PRPPs make it affordable for employers to offer retirement plans and make it possible for employees to participate. Canadians want to save for their retirements and employers desire a low cost, low administration path to helping them. I encourage all members of the House to join me in supporting Bill C-25.