This week, I changed much of the tech behind this site. If you see anything that looks like a bug, please let me know!

House of Commons Hansard #129 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was workers.

Topics

Bill C-31—Time allocation motionProtecting Canada's Immigration System ActGovernment Orders

10:45 a.m.

Some hon. members

Nay.

Bill C-31—Time allocation motionProtecting Canada's Immigration System ActGovernment Orders

10:45 a.m.

NDP

The Deputy Speaker NDP Denise Savoie

In my opinion the yeas have it.

And five or more members having risen:

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Vote #228

Protecting Canada's Immigration System ActGovernment Orders

11:30 a.m.

Conservative

The Speaker Conservative Andrew Scheer

I declare the motion carried.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

May 29th, 2012 / 11:30 a.m.

Conservative

Ted Menzies Conservative Macleod, AB

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:30 a.m.

Conservative

Mike Wallace Conservative Burlington, ON

Mr. Speaker, today it is my pleasure to speak to third reading of the pooled registered pension plans legislation in front of the House. This is not my first time speaking to this bill and I am glad it is moving through the House. It could have gone a little faster than it has, but I appreciate this opportunity.

I want to talk a bit about the pension system in Canada to begin with, about the role this pooled registered pension plans act would play within that system and then about the different aspects of the pooled registered pension plan that are important and why I think everybody in the House should support it.

I will first talk about pension plan retirement savings for Canadians overall. There are a number of vehicles that already exist. There are company pensions and, as many of us know, only about 40% of Canadians have a company pension plan that they can rely on and that they and their company pay into. They vary from company to company to what level they are contributing, but that is part of the pension savings program that many working Canadians have.

Of course there is CPP, which I will come back to later in my dissertation this morning. CPP is a pension plan that—

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:30 a.m.

NDP

The Deputy Speaker NDP Denise Savoie

Order, please.

There is too much noise in the House. I would ask members to take their conversations to their individual lobbies and allow the hon. member for Burlington the opportunity to speak.

The hon. member for Burlington.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:30 a.m.

Conservative

Mike Wallace Conservative Burlington, ON

Madam Speaker, part of the problem is that we have been dealing with this legislation for so long. If things would move faster around here we could get through this. People tend to talk about other issues because there are other things happening here today. However, this is an important piece.

I am going to come back to the CPP, but it is a program where the employer and the employee pay in, and it goes to a Canadian pension program savings board that looks after the savings that go into that program. It does the investments. It invests in the stock market, which for some reason the opposition members in previous speeches indicated they did not realize. It invests in government bonds and in the stock market. It is a relatively safe investment portfolio. There is always risk in everything one invests in and even during the recession the board's numbers went down, but overall it is a very secure, well-managed program. It is part of the savings program. Of course, one has to be an employee; one has to work to qualify for CPP because it is an investment piece.

A third piece is the registered retirement savings plans, which have been around for about 40 years or so, maybe a little longer. I believe they were introduced in the early 1960s. It is a program that is voluntary, which maybe the Liberal Party will want to talk about a bit. It is a voluntary program and does not have full take-up. Even in my own investment plans, I have not used all of the room available in my RRSP. There is still room for me to invest. However, it is a savings tool. I want to come back to that. It is a savings option. It is a savings tool for people to save for their retirement. There are RRSPs that are a lot more aggressive than others. It depends on one's level of tolerance for risk. That is why the vast majority of people have some sort of financial advice, whether through a bank or through an independent organization, on where they should invest their RRSP money, their savings, to help them in their retirement years.

We have made some changes to the RRSP system to allow for people to invest for longer. Then when people come out of the RRSP it turns into an annuity so they can have an income stream, hopefully, for the rest of their life.

We have also introduced a new savings tool, which is very popular. Even my own 21-year-old daughter has invested in it. It is a tax free savings account, which did not exist before our government took office. It is another savings tool where people can save money for retirement, and for other things, but it is also a retirement option where people save their money and hopefully it grows through the investments they choose for their TFSA. That growth is tax free. There is no tax on the money when they take it out. Therefore, if it is needed in the short term it can be used. A lot of people are considering the TFSA option as part of their retirement plan options.

Of course, there are other savings vehicles, like straight savings and a number of other options that are available to most people. However, there is something missing for many of those who are working, whose employer does not have a registered retirement savings plan that they are involved with or a pension plan. There is nothing for them. If people are self-employed, there is really nothing for them.

Our Minister of State for Finance has done an excellent job of consulting with the provinces and all Canadians on the pension system over the last number of years. In fact, the government is so concerned about the pension system in our country, and the retirement savings and ability of senior Canadians to have a quality of life after retirement, that we have a minister of state for finance, which did not exist before, to deal almost exclusively with the pension issue and seniors issue. This is a worldwide issue, but in the context of Canada we have taken it very seriously and added a cabinet position. This is a position at the table at cabinet to deal specifically with this issue.

The pooled registered pension plan has a number of components. There is a bit of a gap of course in terms of the retirement piece, even though I have listed out all the options that are available. I want to talk about that gap.

One of the pieces is that it is accessible and straightforward, and it is a low-cost option. I will get into why that is important. It allows for individuals who currently do not participate in a pension plan, whether they are self-employed or employees of companies that do not have pension plans, to get involved in a registered pension plan. The key is that It is an opt-out plan and not an opt-in plan. This is very important, and it is different from what has been suggested by other parties.

More people will benefit from its low-cost investment management, which will result in better returns. Whether it is an RRSP or other investments, part of the cost of the investment goes against what one would have in one's retirement. If we can lower the costs, which the pooled registered plan would do, it would mean more money in the pockets of the retirees.

Another very important component is its portability. A pooled registered pension plan is portable. If a person leaves one company to go to another, that person could take the retirement savings in the plan and either move it to a new plan that the new employer has or just keep it in the existing plan. It would be the employee's decision, but it is portable. I have left jobs before, and the money that was invested in my pension plan had to be either put into a locked-in RRSP or taken in cash.

Let us face it: in today's marketplace, my generation and generations after mine are not staying at the same company for 35 or 40 years. We are changing jobs every four or five years. My university friends have all had four or five careers in the 30 years since we graduated from university. I hate to say it, but it has been approximately 30 years, which is hard to be believe. I was only 12 when I graduated.

However, we have all moved, and the portability of this new program is very important. The investment in the funds would be there for those who have invested in it.

There is a company whose management I know very well. I will use it as an example of why this important, and I will start with the automatic enrolment piece.

This company is in the high-tech medical business. It is very high end. There are about 30 employees in the company, and about half of them have a Ph.D. in chemistry. They are highly intellectual, highly skilled individuals.

This company has a group RRSP program. The employer adds a certain percentage—up to 5% or 6%, I think—of whatever the employee puts in the plan. I talked to the owner and asked how it was going. He said that he had all of these highly skilled, highly educated individuals, but only 30% of the 30 people take advantage of the company's money. They are not investing on their own, even though there is an automatic 5% return in that system.

That is an example of what happens across the country in company after company. Canadians often have an opportunity but do not take advantage of it. However, the advantage of the pooled registered pension plan, in my view, is that there is an automatic enrolment.

That means that when people join a company that has taken advantage of the pooled registered pension plan, they have, I think, three months or six months—off the top of my head, I cannot remember the timeframe—to decide not to be part of the program. Otherwise, they are automatically enrolled, which in my view makes a big difference.

We often hear the opposition asking why we do not just increase the CPP role. There is no doubt that the advantage of the CPP is automatic enrolment, but this plan takes the positive aspect of the CPP and adds to it.

There are two fundamental differences between the CPP and this plan. First, as we all know, we can talk to ourselves until we convince ourselves, but we need two-thirds of the provinces with two-thirds of the population to agree to make changes to the CPP. That is the law. We can see if we can change the law, but that is the law that runs the CPP program.

The Minister of State (Finance) has worked very hard at discussing what options are available that the provinces will buy into in terms of changes. The response has been that some provinces are in favour and some are not, so we cannot proceed with CPP changes.

The official opposition has said that we should just change the CPP and have et the employers and employees pay more. Of course it will take 18 to 20 years before anyone sees the benefit of that, but it is an option, and we have discussed that option with the premiers of the provinces. It is just not feasible, because they are not interested. Maybe we should just stand up for it and say so, but we like to take action on this side of the House. We like to make a difference in people's lives.

When the previous leader, who has unfortunately passed away, was at the kitchen table, as he used to say, he was doing things and making things happen for Canadians. This is making things happen for Canadians. Is it the final answer on all the pension requirements for our future generations of seniors? Absolutely not. We are not saying it is the only or the final answer, but it is part of the puzzle and part of the options.

As I listed from the beginning, there are four or five options that exist now. We are adding another one. We are adding an opportunity for Canadians to invest and to save for their future and their retirement. The automatic enrolment is a key element of making sure that in this registered system, Canadians will have to choose not to save for their retirement. In this case, with this plan, we are requiring them to do so. That is why I think there will be a huge take-up on this program.

Even with this program, we can put the legislation into effect for nationally regulated industries, but we need the provinces on board too. We need each province to pass legislation so that they can recognize these pooled registered pension plans for employees at the provincial level, which we have no influence over.

I am hearing that the vast majority of provinces are interested in doing this. They were supportive. Unfortunately, Ontario has now indicated that it is not interested. I do not think it is good for Ontarians if the province takes its ball home because it does not want to play.

I am from Burlington, Ontario, and as a member of the Ontario caucus here, I want to see Ontario take advantage of this plan. It is of no cost to the province. It is an opportunity for the people of Ontario, as it is for every province. I think the province is being very short-sighted by not taking advantage of this plan. Ontario will say that it is not the final solution, and I agree with that. It is not the final solution. It is part of the puzzle of opportunity and options that should be available to all Canadians, regardless of what province they live in.

The portability piece is very key to me. I had asked the minister and his team about that. What if employees are moving around? It is portable. My concern is that if we do not get all of the provinces on board, I do not know what would happen to portability if people move from one province to another. It does not make sense. I want it to be portable, not just within Ontario and not just within federal government-regulated industries, but also through every business, including self-employment businesses.

The self-employed work very hard every day. We all know those individuals in our ridings who are entrepreneurs, who are risk-takers, who are out trying to make a living and trying to better themselves, their livelihood, their family's livelihood and their community. There is nothing more satisfying than when a local entrepreneur is involved in community events.

They have not had the same opportunities in the past to save for their retirement. Often they hope that their business is their retirement plan. Perhaps they own the real estate that their business is on, but they hope to have some value in it so that they can sell it at the end of the day and retire, or else pass it on to their children or whomever they wish to.

Normally there is a cash-flow system that will help them with their retirement, but here is another opportunity for them. It will encourage entrepreneurship and self-employment and encourage people to create jobs and wealth in this country, and they will have an opportunity to save for their retirement. They themselves can sign up as individuals for the pooled registered pension plan.

With the concept of low cost, the issue is that just as in anything else we do, the greater we spread the risk and have economies of scale, in normal circumstances the less the cost will be for individuals to take part. It is a simple concept that works. No matter what it is, it works. It is a simple concept, and that is what these pooled registered plans would do.

There would be regulations about how much whoever is administering the plan would be able to charge, whether a bank or an insurance company. We would have some control over that level, so we would ensure it would be affordable. We have a large variety of people who have said positive things about this plan.

We had an amendment at report stage yesterday that would have gutted the bill. The New Democratic Party, the official opposition, voted against it. I just do not understand.

I can understand the opposition's argument that this is not the final answer—absolutely, we are not denying that—but why is the NDP denying Canadians an opportunity for another tool in the toolbox for their retirement? I can understand that the NDP members would like to see other things happen or that they have other suggestions. However, they had an amendment that would have gutted the bill completely. I do not understand denying the opportunity. The majority of provinces are on board and the majority of businesses are on board. I can go over quotes of different individuals and organizations saying that this is an important piece.

We need to provide the tools for savings. In our view, part of people's retirement planning is their individual responsibility. I do not think the majority of people in this country are interested in having the government completely control their retirement plan. There needs to be opportunity. It looks like I—

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:50 a.m.

NDP

The Deputy Speaker NDP Denise Savoie

Order, please. Questions and comments. The hon. member for La Pointe-de-l'Île.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:50 a.m.

NDP

Ève Péclet NDP La Pointe-de-l'Île, QC

Madam Speaker, as the hon. member knows, a better plan, although similar to the one being discussed here today, has already been tested in Australia. Australian institutions realized that, after 10 years, the plan was producing results that showed that it had very high fees and costs, but gave rather low returns on investments.

Given that the Australian plan was mandatory and the one before us today would be voluntary, can the government provide any assurances that this will really work?

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:50 a.m.

Conservative

Mike Wallace Conservative Burlington, ON

Madam Speaker, I appreciate the question from the member opposite. What we have done differently from the Australian plan is we have regulations about the administration and the costs that are involved with the plan.

Is it voluntary? It is voluntary for the organization to sign up to start the program, but the voluntary aspect of this plan is that one has to opt out. One does not opt in. When ABC company is started and it has a pooled registered plan, one comes in and is signed up for it. Employees have to tell the company that they are not interested in saving for retirement through this program.

We have looked at other programs around the world, including Australia. The indication was that the member believed the Australian plan was better. If so, why were there no amendments from the NDP to try to improve the plan rather than gut it? I do not understand how that works for Canadians.

In my view, this plan has the safeguards on the administrative side, and the opt-out issue will help Canadians save for retirement.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:50 a.m.

Liberal

Sean Casey Liberal Charlottetown, PE

Madam Speaker, just last week I held a town hall in my riding on the subject of pensions and old age security. When the various options facing the country with respect to pension reform were presented, a lot of people in the room nodded their heads when one person said that this was all well and good, but he did not have money to set aside in this economy. He said that what was happening with old age security was not going to help him much.

The question I have for the member, however, relates to a comment he made with respect to the enhancement of the Canada pension plan. The provincial treasurer in Prince Edward Island has been one of the champions in bringing finance ministers together to enhance the Canada pension plan. What I heard the hon. member say was that the CPP could not be enhanced because of some resistance from the province, which is the exact opposite of what I have been told in my conversations with the finance minister in Prince Edward Island. He says that the reason for not going forward with enhancements to the CPP is a flip-flop on the part of the federal government.

Would the hon. member be able to enlighten me on his version of what is happening with regard to why are not going forward with this enhancement to the CPP, which makes a whole lot more sense than what is being put at the top of the priority list by the government?

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:55 a.m.

Conservative

Mike Wallace Conservative Burlington, ON

Madam Speaker, I am happy to enlighten my colleague from the Liberal Party. What I actually said, and what is the actual truth, which he needs to know, is that we need two-thirds of the provinces with two-thirds of the population. I agree that P.E.I. has been in favour of changes to the CPP. The population of the whole province is the same as that in my riding. P.E.I. is part of a group, a federation. As he should know, we are in a federation of provinces. It is not just P.E.I. and Canada.

What has happened is that other provinces, which I will not name, have been public about it and have told the minister that they are not in favour of changes to the CPP program. Therefore, we have no choice. It is not a flip-flop by the federal government. It has been on the table at the first ministers meetings and at the finance ministers meetings. I am talking about pensions, which have been on the agenda at every one of these meetings. The answer from some of the provinces with huge populations is that they are not interested in changes because they think their business communities will not be supportive of that change.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:55 a.m.

Macleod Alberta

Conservative

Ted Menzies ConservativeMinister of State (Finance)

Madam Speaker, I want to acknowledge the member for Burlington for all his hard work and his in-depth understanding of our retirement system. Indeed, we have focused a lot on it because we know the challenges that Canadians have faced. This has been reiterated in the report recently on the increasing number of seniors and the challenges they face.

To clarify one point, when companies enrol individuals, the employees have 60 days to opt out.

Referring to the previous question, there was unanimous support among all provincial finance ministers to pursue a framework for a pooled registered pension plan. Therefore, the hon. member for Burlington was exactly correct in his answer that there was not unanimous support for expansion of CPP.

The hon. member for Burlington mentioned one business. Could he reflect on some of the other businesses that have looked at this as an opportunity to help their employees?

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

11:55 a.m.

Conservative

Mike Wallace Conservative Burlington, ON

Mr. Speaker, my riding is not all of Burlington. The Minister of Labour also represents a part of my city. In my city the largest employer employs just under 1,000 people. It has a pension plan. The city of Burlington has a pension plan.

Other than that, of the small and medium-sized businesses that make up the vast majority of my riding, most do not have pension plans. This is an opportunity for all those entrepreneurs, job-creators and people who are looking for new employees. A pooled registered pension plan would be an employee attraction opportunity so employers could gain and retain good quality employees for future generations.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

Noon

NDP

Denis Blanchette NDP Louis-Hébert, QC

Mr. Speaker, I listened with interest to the speech given by my colleague from Burlington.

This bill is an admission of weakness in the sense that the premise is that since people cannot change their pension plans, the Conservatives are merely falling back on something else, something smaller, for a small group.

It seems to me that a government needs to show some leadership. If it is going to set out on a crusade, it must do so confidently and convincingly. I am sure that if the government had decided to try to convince the provinces that improving public pension plans was the way to go, it would have had the unanimous consent of the House.

So is this bill not an admission of weakness?

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

Noon

Conservative

Mike Wallace Conservative Burlington, ON

Mr. Speaker, absolutely not. The bill is an opportunity for small and medium-sized businesses that do not have the capacity or the level of risk needed to have company pension plans. It is an opportunity for entrepreneurs and small and medium-sized businesses.

We operate under the rule of law in our country. For any changes to CPP, we need an agreement of two-thirds of the provinces with two-thirds of the population. We do not have that agreement. We are looking at other available opportunities and options. This is a good one. All provinces have agreed, initially, that this framework is the right approach to take. This is not an admission of weakness; it is an admission of doing something for Canadians, which the opposition does not seem to want to do.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

Noon

NDP

Irene Mathyssen NDP London—Fanshawe, ON

Mr. Speaker, it is very important to continue in this debate because there is a real divergence of opinion, which has a great deal to do with the fact that the proposed pooled registered pension plan would do nothing to solve Canada's pension crisis.

The pension crisis has been the subject of debate for the past several years. The issue is that more than 11 million Canadian workers do not have a workplace pension plan and the public pension plans, old age security and the Canada pension plan that everyone has, do not provide enough for people to live on in retirement. Even worse, the plan by the current government is to increase the age of retirement for OAS and seriously undermine the ability of workers who live with disabilities, or workers who have very stressful jobs to retire at an age that would allow them to have some quality of life in their senior years.

To make matters worse, most Canadians are not making up for their lack of a pension plan by saving for retirement on their own. Less than one-third of the people entitled to contribute to RRSPs actually do so. There is now more than $600 billion in unused RRSP contribution room, all of that being carried forward. Only about one-third of Canadian households are currently saving at levels that would generate sufficient income to cover their non-discretionary expenses in their retirement.

It also needs to be noted that the market is not a reliable place in which to gamble retirement security. Turmoil in financial markets has had, and will continue to have, a devastating impact on workplace pension plans. People who have saved for retirement through RRSPs have found all too often that the value of their investments has dropped so much that they are now faced with having to postpone their retirement or to struggle to replace retirement savings by attempting to find some kind of work.

The reality is, however, that finding employment at ages 66, 67, 68 is profoundly difficult. The workplace has changed and the skills that retirees once brought to the job are no longer marketable.

There is indeed a pension crisis, but this bill seems to have been simply thrown together hastily, in response to pressure from labour, seniors groups, political parties, notably the NDP, as a result of a national campaign to increase the CPP-QPP. There was no thought, just a knee-jerk response.

According to the Conference Board of Canada, 1.6 million seniors live in poverty in Canada and 12 million Canadians lack a workplace pension plan. Statistics Canada tells us more than 14% of senior women on their own are living in poverty, according to standard LICO measurement.

The sensible NDP proposal to increase the GIS enough to eliminate poverty among seniors would take care of this issue. Unfortunately the government is not interested.

By OECD standards, Canada's CPP-QPP system is relatively miserly. We are not terribly generous at all. Other countries similar to Canada provide much more generous public and guaranteed pensions. For example, social security in the United States has a maximum benefit of about $30,000 a year. The maximum benefit in Canada is less $12,000 a year.

Even if we add old age security to that, and that would be a maximum of just under $7,000 a year, the total is still far below social security and places seniors in that poverty range of which I spoke.

As I indicated, most Canadian workers have no RRSP because they cannot afford it. Last year, only 31% of eligible Canadians contributed to their RRSPs and unused RRSP room is now about $600 billion, according to the Canadian Centre for Policy Alternatives.

Meanwhile, the latest numbers for the return on the CPP investment show that it barely lost ground, less than 1% during this current downturn in the economy, while the stock market, which is where the government wants Canadians to park most of their retirement savings in this pooled private plan, fell by 11%. That is significant.

The Australian experiment has been mentioned. Australia tried about 10 years ago to introduce a similar plan and had less than encouraging results. The Australian plan was mandatory with an opt-out provision. It was called the Australian superfund and it required employers to enrol their workers in one of many defined contribution plans offered by the private sector.

A recent review of the Australian superfund was commissioned by the Australian government after 12 years of experience. The review shows that, while people were saving as a result of the mandatory contributions, the investment returns were no better than inflation. The report attributed the poor results to high fees and costs despite the presumed role that competition was supposed to play in keeping these fees at a reasonable level. I will speak to that again in regard to the pooled registered plan.

There has been for several years a clear consensus among many experts that real pension reform was, and continues to be, critical. However, rather than intelligently and positively engaging in practical reform, the government has instead introduced its pooled registered pension plan, which, according to the federal Minister of Finance, is this incredible panacea. He said that it would make low cost, private sector pension plans accessible to millions of Canadians who have, up to now, not had access to such plans.

The legislation introduced in mid-November would allow employers to offer PRPPs to their employees. The scheme would be run by insurance companies and other financial institutions. According to the minister, they would pool the savings of workers whose employers sign up for the program. The financial institutions would run these programs on behalf of employers and, of course, will charge a fee for doing that. Employers would not need to contribute to the plan and workers' savings would be locked in, although if employees provide notice in writing they. apparently. would be allowed to opt-out.

No pension would be guaranteed by this program. In effect, it is yet another voluntary savings scheme that would do nothing to address the pension crisis since very few people take advantage of existing voluntary retirement savings schemes now. It is not clear why officials are claiming that the proposed PRPPs will prove more attractive than anything that currently exists.

So far, the only advantage being promoted for PRPPs is that management fees would apparently be lower than individual RRSPs because of the pooling. There would be no cap on the management fee and therefore no guarantee of lower fees, nor is there any certainty that this would be a big selling point for the plans.

It is also worth noting that there is no evidence that people are not saving through RRSPs because of high management fees. It is far more likely that they are not saving because individuals are busy raising families, paying bills, trying to manage the cost of housing and trying to educate their kids. There is no money left at the end of the month for an RRSP.

As I said, there are no guarantees for lower fees. The PRPP is not a defined benefit plan. It would not provide a secure retirement income with a set replacement rate of pre-retirement income and it would not be fully transferable. The plan would not be indexed to inflation and it would not increase with the increasing cost of living.

Employers, not employees, would decide the contribution levels. As I indicated, it would not be mandatory for employers to contribute or even match employees' contributions. Without employers' contributions, it is not really a pension plan. In fact, employers who do not help their employees save for retirement could end up with a competitive advantage over employers who do.

Canada does not need yet another voluntary tax-assisted retirement savings program. It needs public pensions that provide all Canadians with a basic guarantee of adequate income that will protect their standard of living in retirement.

Expanding the Canada pension plan would meet this objective. In fact, federal and provincial finance ministers seemed set to take this route when they assembled for their meeting in Alberta in December 2010. Only one province opted out. That gives us our 66%. Despite the fact that only one province opted out, the federal government decided to abandon talks and introduce this pooled registered pension plan scheme instead.

Improving the replacement rate of the CPP retirement benefit would provide much better retirement pensions to virtually all Canadians. A relatively modest increase in contribution rates would be required but that could be phased in over a period of time, as the Canadian Labour Congress and others have proposed. The CPP covers all workers, including those who are self-employed, and its benefits would be guaranteed in relation to earnings and years of service. They would be indexed for inflation and fully portable from one job to another.

This option would address the two key issues in the pension system that are currently causing concern: the lack of coverage of workplace pension plans and the fact that individuals are not saving for their retirement by themselves. As well, an expanded CPP, of course, could reduce federal expenditures on GIS because more people would have adequate retirement incomes. It would also benefit employers because it would be a clear pension plan and they need not be concerned about a private plan. It is a public plan and it has a lot of true and clear benefits.

While the government says that CPP contribution rates cannot be increased when there is a fragile economy, it is worth noting that when the financing of CPP was changed at the end of the 1990s, combined employer-employee CPP contribution rates nearly doubled, from 5.6% of covered earnings to 9.9% over that five year period, but unemployment fell from 9.6% to 7.6%. So there are other side benefits.

It should also be noted that PRPPs will do nothing to help the baby boom generation now coming up to retirement. It seems that this lost generation will remain lost as far as pension reform is concerned. As I said previously, it has been estimated that roughly one-third of Canadians now in the age group of 45 to 64 are likely to end up with incomes that fall far short of adequate minimum incomes and the kind of income that would allow them to maintain their standard of living in retirement. The adequacy of CPP benefits has been an issue for more than 30 years. It is time now for federal and provincial governments to set aside ideology and work together to solve the problem.

The study by the pension expert for the Canadian Centre for Policy Alternatives, Monica Townson, provides a thorough analysis of the PRPP and argues that expanding the Canada pension plan would provide better retirement pensions for virtually all Canadians. Ms. Townsend found that the expansion of the CPP would provide a mandatory defined benefit pension to virtually all Canadians, giving them a basic retirement income that, for modest and middle-income earners, would preserve their standard of living in retirement.

The government's PRPP proposal does not do this, not at all. It does not guarantee a pension, the benefits would depend on selection of investment and stock market performance and participation would depend on the employer deciding to take part. As I indicated before, the stock market took an 11% hit in the most recent economic downturn. People cannot afford an 11% economic hit.

The pooled registered pension plan is basically a defined contribution pension plan. In defined contribution plans, there are no guarantees as to how much money will be left when people retire. The risks are borne entirely by the individual employees. In these types of plans, the amount of money available at retirement depends on the outcome of investment in the stock market and people cannot rely on it. I have indicated that very clearly. Defined contribution plans lack the security of defined benefit pension plans, like CPP and QPP, which pay guaranteed set amounts on retirement. This is important to remember.

Bill C-25 places no caps on administration fees. It merely assumes lower costs will emerge through competition. Financial institutions, like banks, insurance companies and trust companies, stand to profit substantially from these fees. If we look at all those recommending this pooled registered pension plan, it is those with a vested interest, like financial institutions.

However, expanding the CPP-QPP would not cost the government any more than its proposed PRPP. Most important, expanding CPP-QPP would not entail transferring huge management fees to private financial institutions.

How can I get through to the government that seniors need to be protected? The PRPP would not help families drowning in debt. It fails because it is a voluntary defined contribution plan run by wealthy institutions. With a tenuous economy and high rates of unemployment, families do not need more risk. They need the stability of the CPP and QPP. Economists and provincial leaders have said so for years, but the out of touch government has turned its back on families. We need effective and fair pension reform.

We have validators for this. An editorial in the Calgary Herald of November 2010 stated:

The CPP already covers almost all Canadian workers and thus spreads the risk and management fees. It is fully portable, offers guaranteed income to all retirees, and is the only risk-free investment broadly available to workers. Private RRSPs and employer pension plans have proven much riskier than initially billed. Those who are in company pension plans are likely in a defined contribution scheme, where the amount that goes in is predetermined, but the payout is based on how well the fund is invested and ultimately performs. Nortel workers know only too well how that worked.

We know that Nortel employees in Canada have taken a beating because of the bankruptcy of Nortel. Many of those retirees are receiving a pension that is 40% less than they planned on and believed would be available. Anyone who was a disabled Nortel worker has lost all benefits. It is interesting to note, and the House should note it, that in the United States and Great Britain, when Nortel sold off its assets, there were billions of dollars in liquid assets. The Americans and the British protected their Nortel workers but in Canada there was nothing. Our government did not see fit to protect those pensioners. That is why it is so very important that we come up with a remedy that works.

Seniors have worked hard all their lives and have played by the rules. Now they simply want access to programs and services that their hard-earned tax dollars helped to make. Every senior in Canada has the absolute right to pension and income security. This bill would not provide the pension security that seniors today want and need, nor would it help them in preparing for their retirement.

It is time for real pension reform, not this sham perpetrated by the government. Bill C-25 would not accomplish any kind of security. Canadians do not need any more private voluntary savings schemes. They want real action to ensure they can retire in dignity.

I will say this one last time. Expanding the CPP and QPP would not cost the government any more than its proposed pooled registered pension plan. It would simply mean that there would be real retirement security. People deserve that. They have earned it.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:20 p.m.

Nepean—Carleton Ontario

Conservative

Pierre Poilievre ConservativeParliamentary Secretary to the Minister of Transport

Mr. Speaker, the hon. members says that stock markets are too risky for the retirement savings of Canadian people. She proposes as an alternative the Canada pension plan. How does she square those two statements when the Canada pension plan is overwhelmingly invested in the stock market?

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:20 p.m.

NDP

Irene Mathyssen NDP London—Fanshawe, ON

Mr. Speaker, as everyone in this House knows, the board of CPP is very responsive and responsible. The costs of investing amount to about 4% of fees, whereas the RRSP system is about 40% management fees on money saved over a 40 year period.

As I indicated very clearly in my remarks, the CPP in this very difficult economic time experienced a 1% reduction in monetary assets. The stock market had an 11% decline. When we start to compare, people in this country cannot afford to take a hit of 11% on their savings. It is as simple as that.

The pooled registered pension plan guarantees nothing.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:20 p.m.

Liberal

Judy Sgro Liberal York West, ON

Mr. Speaker, I have been working for some time with my hon. colleague on issues of pensions and seniors. I applaud her comments and her interest in these issues.

In her experience in dealing with the need for pension reform in Canada, what percentage of people across this country does the member think would benefit from this proposed answer from the government as to what pension reform is? We did not hear how it was a failure in Australia. How many people does the member think would take advantage of this plan?

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:20 p.m.

NDP

Irene Mathyssen NDP London—Fanshawe, ON

Mr. Speaker, it is hard to say. Only about 30% of Canadians are able to set aside any money in personal private plans. Only about 30% of Canadians have any kind of workplace pension. My guess is that will not improve. What the government is offering is another private vehicle. It would be optional for employers to make contributions. The employer would have to set it up. If the employer were not interested, nothing would happen.

It makes far more sense to look at the CPP, because it is absolutely solid and it guarantees the workers of this country a substantive and reasonable retirement. We need to improve it, most certainly. I have been very clear about that. We cannot continue to let 70% of Canadians fall by the wayside.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:25 p.m.

NDP

Anne-Marie Day NDP Charlesbourg—Haute-Saint-Charles, QC

Mr. Speaker, I believe that we are at a historic crossroads, particularly with Canadian Pacific, whose retirement funds are back up for negotiation.

These people have worked for a certain number of years for the company and they have many years of experience. Despite that, they are losing their pension fund and have to renegotiate it.

I would like to congratulate the member on her excellent speech and ask her to explain what she would do to ensure a secure retirement fund for these people so that they can retire comfortably after working for a company for 35 years.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:25 p.m.

NDP

Irene Mathyssen NDP London—Fanshawe, ON

Mr. Speaker, my colleague has provided me with an opportunity to talk about legislation that has been proposed by New Democrats over a number of years. Basically it would be pension protection legislation. It would also protect workers in the case of bankruptcy or a company moving. We have seen a lot of companies, particularly in my riding, moving away and causing real disruption to families. This NDP bill would provide three levels of protection. It would provide vacation pay, it would provide pension protection, and it would ensure that if a company moved, there would be something there. We need to have that in place.

In addition, it would be possible to set up an insurance plan where various pension contributors would make a small contribution and provide insurance so that when a plan went bust there would be this savings for Canadians.

POOLED REGISTERED PENSION PLANS ACTGovernment Orders

12:25 p.m.

NDP

Jean Rousseau NDP Compton—Stanstead, QC

Mr. Speaker, I would like to congratulate my colleague on her excellent speech.

She began by talking briefly about poverty among seniors. I would like her to expand on the fact that, for the past 35 years, workers throughout the industrialized world have been fighting for adequate pension plans, not just private pension plans but, most importantly, public ones. The government is dealing with an imaginary problem not with the real ones: poverty and job creation. What the government should be doing is creating a strong social fabric to enable communities to reach their full potential. This is about older people who want to continue contributing to society, but do not have an opportunity to do so. Can my colleague comment on that?