Mr. Speaker, it is my great pleasure to rise in the House today to speak in favour of Bill C-25. Ensuring that Canadians are able to retire with financial security is of paramount importance to our government. Therefore, we are helping millions of Canadians save for retirement more easily by introducing the pooled registered retirement pension plans. This new low cost and accessible option will help more Canadians meet their retirement goals. This is especially important for those working in small business and the self-employed.
PRPPs will improve the range of retirement saving options by providing a new accessible, straightforward administratively low cost retirement option for employers to offer their employees. It will allow individuals who currently may not participate in a pension plan, such as the self-employed and employees of companies that do not currently offer a pension plan, to make use of this new type of retirement vehicle. It will enable more Canadians to benefit from the lower investment management costs that will result from membership in a large pooled plan. It will allow accumulated benefits to move with each individual as he or she moved from job to job. It will ensure that funds are invested in the best interests of the plan members.
What has led to the development of PRPPs? Canada's aging population and the global financial crisis have highlighted the need for retirement income security. In this context, a joint federal-provincial working group was established in May 2009 to undertake an in-depth examination of retirement income. The working group concluded that overall the Canadian retirement income system was performing well and provided Canadians with an adequate standard of living upon retirement.
However, some Canadian households, especially modest and middle-income households, are at risk of not saving enough for retirement. There are a number of factors that may be contributing to this risk, including declining participation in employer-sponsored registered pension plans. The proportion of working Canadians with such plans has declined from 41% in 1991 to 34% in 2007.
Some Canadians may also be failing to take advantage of the discretionary savings opportunities offered to them through individual structures like RRSPs. Participation in RRSPs reached a peak of 45% of the labour force in 1997, before levelling off to 39% in 2008.
After careful consideration, the ministers of finance agreed to pursue a framework to establish pooled registered retirement pension plans as an effective and appropriate way to help bridge existing gaps in the retirement system.
There are many benefits to PRPPs.
First, PRPPs are an innovative new pension plan designed to address the lack of low cost, large scale retirement savings options available to many Canadians.
Second, some Canadians may be failing to take advantage of the savings opportunities offered to them through individual structures like RRSPs. For an example, on average, each Canadian has over $18,000 in unused RRSP room.
Third, many Canadians can only access a workplace pension plan if their employers offer one. Many employers do not want the legal or administrative burden of offering a pension plan. As a result, over 60% of Canadians do not have a workplace pension. Recent data suggests that 97.8% of total business establishments are small firms, those that employ 15 people or less, and at this time these firms are unable to efficiently provide a pension plan for their employees due to the costs presented by such plans. As a former business owner, I understand the difficulties associated with the costs and burden of administering a workplace pension plan.
Fourth, the designed features of the PRPP will remove a lot of the traditional barriers that might have kept some employers in the past from offering pension plans to their employees.
Fifth, the design of these plans will also be straightforward to allow for simple enrolment and management. A third party PRPP administrator will take on most of the responsibilities that employers bear in existing pension plans, including the administrative and legal duties associated with administering such a plan.
Sixth, by pooling pension savings, PRPPs will offer Canadians greater purchasing power. They will be able to buy in bulk. Achieving lower prices than would otherwise be available, means they will get greater returns on their savings and more money will be left in their pockets when they retired.
Finally, PRPPs are intended to largely harmonize from province to province, which also allows for lower administrative costs.
Bill C-25 is of great importance to Canadians. We must give Canadians the confidence that when they finally do retire, they will be financially secure. In order to achieve this goal, our government has put forward a strong proposal to provide Canadians with the ability to save for their retirement on their own terms. Our government is working tirelessly to ensure financial stability for all Canadians. Providing proper pension opportunities is one of the ways we can ensure we stay firmly focused on what matters most to Canadians, jobs and a strong economy.
Pooled registered pension plans are a smart and effective way for our people to save for tomorrow today. Therefore, I urge all those present today to join me in supporting Bill C-25.