Mr. Speaker, I am pleased to have the opportunity to speak to some key measures in Bill C-25, an act that would implement the federal framework for pooled registered pension plans, or PRPPs.
This Conservative government stands with hard-working Canadians who are counting on their pension plan for a stable retirement. As part of this commitment, we continue to take the steps necessary to ensure that Canada's pension framework remains strong. In doing so, we are building on all that has been accomplished so far.
I will offer a few examples of what we have already achieved.
In 2009, we announced an improved regulatory framework to better protect members of federally-regulated pension plans. This included reducing funding volatility for defined benefit plans, making it easier for participants to negotiate changes to their pension arrangements. We ensured that pension plans were fully funded when they were terminated and we modernized the investment rules.
At the same time, the federal government, along with the provinces, agreed to a number of improvements to the Canada pension plan that would modernize the plan and would better reflect the way Canadians live, work and retire.
The hon. members on the other side should know that pensions share joint jurisdiction with the provinces. Only by continuing to work with the provinces will we make the system better. A stronger national economy must include a stronger personal retirement system built with the provinces. In fact, that is exactly what led to the development of the PRPP.
In December 2009, our government held a meeting with provincial and territorial finance ministers to discuss the retirement income system and, in going forward, how to address the issues of retirement income adequacy for all seniors.
In June 2010, federal, provincial and territorial governments agreed to develop options to improve Canada's retirement income system. One of those options was to expand the CPP. Many of the provinces raised strong objections to the idea of expanding the CPP as this would require increased contributions from employees, employers and the self-employed.
Canada's economic recovery is still fragile, and with the debt crisis in Europe still unresolved, now is simply not the time to impose a payroll tax on small and medium-sized businesses. As a former small business owner, I understand that point very well.
To be clear, it is not only our government that feels this way. According to the Canadian Federation of Independent Business:
For every one percentage point increase in CPP premiums beyond the current 9.9 per cent rate, it would cost 220,000 person-years of employment and force wages down roughly 2.5 per cent in the long run...
Simply put, an expanded CPP would hurt both small and medium-sized business owners and working Canadians. This government wants to create jobs, not destroy them.
Since expanding CPP was not feasible, priority was given to the PRPP framework. That is why at the 2010 meeting of finance ministers there was unanimous agreement on the decision to pursue a framework for pooled registered pension plans.
The PRPP will mark a significant step forward in advancing our retirement income agenda by improving the range of retirement savings options available to Canadians. They will make well-regulated, low cost private sector pension plans accessible to millions of Canadians who, up to now, have not had access to such plans. In fact, many employees of small and medium-sized businesses and self-employed workers will now have access to a private pension plan for the first time.
For many years, I operated a private dental practice in Kitchener and employed up to five people. It would have been impossible for me to enrol in a pension plan on behalf of my employees. However, I would have liked nothing better than to access a pooled program in which, by putting our resources together with a number of employers, we could have accessed a pooled registered pension plan.
We can think of other businesses. My colleague mentioned a shoe store. I can think of small engine repair shops, farm implement dealers and hairdressers. We can go on with the number of small and medium-sized employers that would benefit from a measure like we have proposed. When they look for employees, they compete on the employment market and the ability to offer a good pension plan to an employee, in addition to an attractive salary and benefit plan, would go a long way in competing for the best and brightest people who could help to move their companies ahead.
This is an important part of gaining access to pension options and this access to pension options is a key improvement to Canada's retirement income system.
PRPPs will also complement and support the Government of Canada's overarching objective of creating and sustaining jobs, leveraging business investment, securing our economic recovery and encouraging sustainable private sector driven growth, an objective I wish members opposite would understand and support.
Quite simply, the PRPP framework is the most effective and targeted way to address the prime areas for improvement identified by provincial and federal governments in our recent review of the retirement income system, modest and middle-income individuals who do not have access to employer sponsored pension plans.
PRPPs would address this gap in the retirement system by providing a new, accessible, straightforward and administratively low-cost retirement option for employers to offer their employees. It would also allow individuals who currently may not participate in a pension plan, such as those self-employed and employees of companies that do not offer a pension plan, to make use of this new option. It would enable more people to benefit from the lower investment management costs that would result from membership in a large pooled pension plan, allowing for the portability of benefits that would facilitate an easy transfer between plans and ensure that funds would be invested in the bests interests of plan members.
These are all important areas where our 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, and we are doing it collaboratively. Once again, I remind hon. members that this pooled retirement pension plan approach was agreed to as the best by all of Canada's finance ministers, provincial and territorial. These plans will help Canadians, including the self-employed, to meet their retirement objectives by providing access to a new, low cost accessible pension option.
The bill before us today, the PRPP act, represents the federal portion of the PRPP framework and is a major step forward in implementing pooled registered pension plans.
In addition, the tax rules for pooled registered pension plans have been developed by the Government of Canada and were released in draft form for comment in December of 2011. Comments received during that consultation period, which ended in February, are being reviewed currently. The tax rules for PRPPs will apply to both federally and provincially regulated PRPPs and will be implemented in 2012. By working in concert with the provinces, we can accomplish so much more by working together.
I would urge all the provinces to take the advice of the Canadian Chamber of Commerce, the Canadian Federation of Independent Business and the Canadian Life and Health Insurance Association Inc. when they collectively said, “The longer governments take to establish a system of PRPPs, the less time those employees will have to use this vehicle to save for their retirement”.
It is clear that Canadians want their governments to act on their priorities and deliver results on a timely basis, and the PRPP should be no different.
Many people in my riding work for small and medium-sized businesses and who are self-employed. As a former small business owner myself, I know how greatly they would benefit from the advantages presented by pooled registered pension plans.
It is for this reason that I urge, not only the Government of Ontario, but all provincial governments, to put in place their respective legislation as soon as possible so that all Canadians can start saving for their retirement. Once provinces implement their own legislation, PRPPs will be a key element of the third pillar of Canada's retirement income system. PRPPs will complement and operate alongside registered retirement savings plans and employer sponsored registered pension plans.
With all the measures we have put in place and with Bill C-25 bringing the federal PRPP framework into force, Canadians can be confident about the long-term viability of their retirement system. We are listening, and will continue to listen, to the views on how we can strengthen the security of pension plan benefits and ensure that their framework is balanced and appropriate for the long term.
Canada's retirement income system is recognized around the world by such experts as the Organisation for Economic Co-operation and Development, the OECD, as a model that succeeds in reducing poverty among Canadian seniors and in providing high levels of replacement income to retired workers.
With Bill C-25, we are making it better by working toward a permanent, long-term solution to encourage greater pension coverage among Canadians. At the same time, we will continue to ensure our retirement income remains one of the strongest in the world.
I would encourage all members of the House to support this important bill.