Madam Speaker, I will be sharing my time today with the hon. member for Crowfoot.
I am honoured today to add my voice in support of the work our government continues to do for Canadians regarding pensions and retirement income security.
Promoting the retirement income security of Canadians is an important goal of the Government of Canada, and we will continue to ensure that our policies, programs and services meet the evolving needs of Canadians.
In the wake of economic shocks from beyond our borders, Canadians are concerned about the long-term viability of their pension plans. We are listening to their views on how we can leverage Canada's financial sector advantage to strengthen the security of pension plan benefits and ensure the framework is balanced and appropriate. We are working toward a permanent long-term solution to protect the pensions of Canadians.
In our efforts to achieve greater retirement security for Canadians, our government is building on the inroads we have already made to strengthen the framework for federally regulated private pension plans. In 2009, we consulted Canadians from coast to coast to coast on these earlier initiatives and subsequently introduced a number of significant changes based on the advice of individual Canadians.
Why were pooled registered pension plans, or PRPPs, created? Canada's aging population and the global economic crisis brought the issue of retirement security to our attention. It is a very important issue. In this context, a joint federal-provincial working group was established in May 2009 to undertake an in-depth examination of retirement income in Canada.
The working group found that, overall, the Canadian retirement income system was performing well and providing Canadians with an adequate standard of living for retirement. However, some Canadian households, especially middle-income households, were living with the risk of not saving enough for retirement. The ministers worked together to analyze the wide range of ideas put forward in order to address the issues raised by the research report.
This exhaustive research led the Minister of Finance and the provincial ministers to agree on a framework for pooled registered pension plans in December 2010.
Since taking office in 2006, our government has also introduced several improvements to the tax rules for registered pension plans and registered retirement savings plans. If I have a moment I will get back to those important initiatives as well, but the pooled registered pension plans really are the crux of this bill.
Pooled registered pension plans, or PRPPs, will mark a significant step forward in advancing our retirement income agenda and will be a vital improvement to Canada's retirement income system.
What is a pooled registered pension plan? PRPPs are a new kind of defined contribution pension plan that will be available to employers, employees and the self-employed. PRPPs will improve the range of retirement savings options for Canadians. In fact, they will give all Canadians an opportunity to save for their retirement by providing an accessible, straightforward and administratively low-cost retirement option for employers to offer their employees.
They will allow individuals who currently do not participate in a pension plan—over 60% of the population—such as the self-employed and employees of companies that do not offer a pension plan, to make use of this new kind of plan.
More people will benefit from the lower investment management costs that result from the economies of scale of membership in large pooled pension plans, while allowing employees to transfer their accumulated benefits from one system to another and ensuring that funds are invested in the best interests of the plan members.
Some Canadians may also be failing to take full advantage of the discretionary savings opportunities offered to them through individual structures like RRSPs. In fact, the average Canadian has about $18,000 in unused room in their RRSP, unused for possible contributions. Research indicates that a portion of Canadians are not saving enough, and as I said, more than 60% of Canadians do not have a pension plan. We are trying to provide them with a means to save for their future.
PRPPs will address this gap in the retirement income system by providing a new, accessible, large-scale and low-cost defined contribution pension option to employers, to employees and to the self-employed.
We will allow individuals who currently may not participate in an employer-sponsored pension plan the same opportunity to save for the future. This is very, very important.
What are the advantages of pooled registered pension plans? PRPPs are innovative retirement savings plans that will address the lack of large-scale, low-cost retirement options for many Canadians. Some Canadians cannot take advantage of savings opportunities provided by individual structures, such as RRSPs.
For example, the average Canadian has about $18,000 in unused contribution room. Many Canadians have access to a pension plan only if their employer offers one. Many employers refuse to take on the legal and administrative burden related to a pension plan. PRPPs will eliminate most of the usual barriers that may have discouraged some employers from offering a pension plan to their employees in the past.
Since these plans will involve large pooled funds, plan members will benefit from the lower investment management costs associated with the scale of these funds. Essentially, they will be buying in bulk.
The design of these plans will be straightforward. They will remove barriers that might have been in the way of people who want to save for their future and for the future of their families.
We all understand that Canadians want their governments to work in partnership with them to provide and deliver results, and the bill today does exactly that.
Canada's seniors have worked hard to build a better country for future generations, and today's workers should be given every chance to follow in their footsteps.
Our record shows that our government is committed to the financial well-being of Canadian seniors, as well as those Canadians who are currently still working to realize their retirement dreams.