House of Commons Hansard #136 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was panama.


Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:20 a.m.


John Rafferty NDP Thunder Bay—Rainy River, ON

Mr. Speaker, I am pleased to stand today to speak on this bill. Members will remember Bill C-501 in the last Parliament, my bill to protect workers' pensions in case of bankruptcy. Although it was not successful and the parliamentary session ended before there was a chance to pass it into law, I was very pleased to see a number of Conservatives stand to support Bill C-501. As they did, it was very clear to the government in the last Parliament that something needed to be done about pensions.

This is the government's answer to protecting pensions for all Canadians. As this bill does not guarantee an actual pension, it is best to refer to this as a savings scheme. That would be a better term for it. I will not go into detail about how it is set up, but there are some problems with it and I would like to outline some of those today.

This pooled pension or savings plan would be managed at a profit by financial institutions, banks, insurance companies and trust companies, and by the very nature of it, there will be an administrative cost on the money everybody puts into the plan. There is no regulation in this bill to regulate the costs that could be charged, and I guess the government's reasoning is that, by doing that, the costs will remain low because there will be competition among the institutions.

By the way, I will be sharing my time with the member for Brossard—La Prairie.

Unlike other pension plans we have seen in the past, workplace plans and the like, this particular pooled plan would not require matching contributions from employers. That is problematic in itself. I suppose there would be some provincial regulations put in place when the plan is set up on whether employers would have to be part of it, but in the bill right now there is nothing like that.

The first big problem with the pooled savings scheme is that it is not indexed to any kind of inflation. Workers would be putting their money aside for their retirement, which is a good thing, money would be deducted for administrative costs over the course of 20 or 30 years or however long they are putting money into this plan, and they would not have an opportunity to take advantage of inflation.

In addition to that, the other problem is that they are not really protected. Because it is not indexed, people will not be protected from the vagaries of the marketplace. As we have seen in the last couple of years, people who have been saving for most of their working lives and had RRSPs, which are not unlike this particular plan because they are privately managed by institutions, in many cases saw the value of their RRSPs drop by 25% or 30%. People have come to my office in Thunder Bay and talked about a 35% drop in the value of their RRSPs. Therefore, there is no real protection.

I would suggest to the government that there is another much simpler way to help Canadians save for their retirement, with fewer fees, indexed to inflation, and the money will be guaranteed to be there when they retire. In fact, they will have a pretty good idea of how much they will be receiving when they do retire. That is using the best pension plan we have in this country, which is the CPP. We put money into the CPP now and most Canadians are happy to do that. I see the benefits of that every day when people come to my office and ask me to help them apply for their CPP or CPP disability, OAS, GIS and these sorts of things. It is wonderful that we have this in the country.

However, what we could have done, and what we still can do, instead of a savings scheme like this, is we could open up the CPP. We could open up the CPP so that people could contribute to the CPP over the course of their working life, at a higher rate for example, or people who are self-employed could pay into it, or people could pay on behalf of a spouse who might be a stay-at-home mom or dad. They could pay into this scheme over the next 20 or 30 years.

Let us just say for example that people were allowed to pay double the contributions they are making now. If they did that, they would of course reap the benefits of CPP because right now they get out of CPP what they put into it, so it would still work.

What happens is that we reduce all those fees. I understand that the government is interested in having private business involved in pension plans. I understand where it is coming from that on that. What I am suggesting is that is not the best way to go about doing this.

If someone were to double their contributions to CPP, if they were allowed to do that over the course of their working life, and that kind of change is not going to help people like me who are nearing retirement, but let us just think about the people who are in their 20s and working. Not many people in their 20s think about retirement.

CPP would be a wonderful vehicle for them to start planning for their retirement. If they did that now, then 10 years down the road the benefit would be somewhere in the neighbourhood of about $1,900 a month when they retire. If it were a gradual shift, a gradual increase in contribution, let us say doubling over the next 10 years, that is what is would be worth. I think it is actually $1,920.

Imagine younger workers being able, over the next 10 years, to double their contributions. There can be an assumption, I suppose, that people who are working will have their wages increase over that time. They are not going to take a disposable income hit to make that investment.

If people did that, we would not be caught in a situation, as the government seems to think we would be, where OAS would have to be raised to 67 from 65. It thinks a big crisis is coming. We can avoid all of that kind of talk. We can avoid that situation by simply doubling the CPP over the next 10 years and allowing a wider contribution pool for people to get into it.

It is safe. It is secure. The market does not affect it at all to the same extent as private savings plans, RRSPs for example. We would have a very secure fund.

The other reason I like the CPP, and I am talking about that as the alternative to these pooled savings plans, is of course that the government cannot get its hands on it. I think that is critical. It is an important part of the CPP and how it is managed today.

There is a protected pension fund that is guaranteed to be there. People know what they are going to have. It is a defined benefit plan. We have seen what has happened in the past with defined benefit plans. We have seen what happens when organizations like Nortel go bankrupt and people are left out in the cold.

In the pooled plan, I wonder what is going to happen. First of all employers are not required to put any portion into it. It is simply a savings plan, an RRSP-related kind of savings plan, for people to have for their retirement. My understanding from the bill is that it is portable.

If employers are not required to match or make contributions, and I suppose some will, perhaps with some kind of collective agreement, but what happens if that company goes bankrupt? What happens to that employer's contributions? Are they safe and secure? There are some very serious concerns about this.

From 2008, when I introduced—

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:30 a.m.


The Deputy Speaker NDP Denise Savoie

The hon. member's time has elapsed, but he may add some comments in response to questions and comments.

The hon. Parliamentary Secretary to the Minister of Transport, Infrastructure and Communities and for the Federal Economic Development Agency for Southern Ontario.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:30 a.m.

Nepean—Carleton Ontario


Pierre Poilievre ConservativeParliamentary Secretary to the Minister of Transport

Madam Speaker, the hon. member talked a lot about the Canada pension plan.

I think we all agree that this is a very well run national plan that helps Canadians prepare for their future. The board has obtained good returns on its investment.

However, in the same sentence as praising the CPP, he went on to suggest that it is not dependent upon the mercurial nature of the stock market.

If we look at the holdings of the Canada pension plan, we will find that about half of them are invested in the stock market. It is very much dependent, therefore, upon the profitability of the business sector. Of course, a stock in a company is only worth what that stock can pay out in dividends over time. So, the CPP, which the NDP purports to cherish, depends very much upon after-tax corporate profit.

Would he join with me in supporting lower taxes on Canadian business so that after-tax profit would be higher and the benefits to plans like the CPP would be increased?

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:30 a.m.


John Rafferty NDP Thunder Bay—Rainy River, ON

Madam Speaker, I know the member is very concerned about pensions and the future of Canadians and how they retire and so I thank him for that question.

However, in response to that, I have a couple of quotes.

Jon Kesselman, Canada Research Chair in Public Finance at Simon Fraser University, says:

Expanding the CPP is the best option for improving Canadian workers' retirement income security; it can ensure results that none of the many alternative reform proposals for private schemes can provide.

I will not read the whole quote, but in part a Calgary Herald editorial states, at the end of 2010:

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.

So, Madam Speaker—

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:35 a.m.


The Deputy Speaker NDP Denise Savoie

I regret to interrupt the hon. member, but I must allow time for more questions.

Questions and comments.

The hon. member for Winnipeg North.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:35 a.m.


Kevin Lamoureux Liberal Winnipeg North, MB

Madam Speaker, the Liberal Party has talked about this particular fund as a potential small tool that would be able to facilitate a number of individuals who are aging and are thinking in terms of their pension plan.

However, we are very much concerned about the bigger picture, with regard to the CPP.

What we are looking for is stronger leadership coming from the Prime Minister and the government, in terms of sitting down at the table with the different provinces to try to get some sort of an agreement that would enhance CPP benefits for all individual Canadians who are working.

I wonder if the member might want to comment on the importance the federal government has, in terms of demonstrating leadership in negotiating with the provinces.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:35 a.m.


John Rafferty NDP Thunder Bay—Rainy River, ON

Madam Speaker, the problem with this savings scheme, as the government outlines it, is that it misses a whole demographic in Canada that CPP would be able to cover. I am talking about those who are living in poverty.

According to Statistics Canada, more than 14% of senior women on their own are living in poverty. To increase the availability of CPP and GIS, for example, would be enough to eliminate poverty in our lifetime and the next generation's lifetime. More than half, 52.1%, of lone mothers of children under the age of six live in poverty. They would not really have any kind of access at all to the savings plan. Therefore I think what the government should be doing, as the member suggests, is showing leadership, real leadership, to include all Canadians in a retirement scheme in this country.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:35 a.m.


Hoang Mai NDP Brossard—La Prairie, QC

Madam Speaker, I am pleased today to speak to Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

At first glance, this measure seems to be a good one. However, it turns out to be a half measure when we take a closer look. That is exactly what was done by the House of Commons Standing Committee on Finance and even more so by the NDP in the House. This bill really has holes and problems. It has to be studied in its entirety, and we must figure out why the government has introduced this bill.

In Bill C-38 , the Conservatives attack seniors. That is clear. Just look at the provisions concerning the old age security program and the guaranteed income supplement.

The government has decided to increase the retirement age from 65 to 67 without providing any explanation. We posed questions to the Minister of Finance at the Standing Committee on Finance. The opposition was very insistent and, in the end, the government admitted that the savings would amount to $10.8 billion in 2030. The government is therefore balancing its budget at the expense of seniors and future generations, and that is a problem. We must understand where the government is coming from when we study this bill.

One of the first things that is obvious about the RPPP is that this product is very similar to an existing product, the RRSP.

In fact, RPPPs are more comparable to RRSPs—because they are administered by banks and financial institutions that will invest the money in the markets—than to a pension plan for seniors or future retirees.

On the weekend, one of my constituents told me that when he was younger, people talked about retiring at 55. They believed that if they invested as much as their advisor told them to into a retirement plan or their RRSP, they would be able to retire at 55, no problem. Today, that constituent is still working even though he is over 55 because these retirement investment products fluctuate with the market and the market has been turbulent lately. The investor's retirement income depends on the market.

What we are talking about today is exactly the same thing. It seems like the government has learned nothing from past mistakes and is doomed to repeat them. It claims it is introducing a product for the people who need it. Obviously everyone wants to have a stable and guaranteed retirement. However, this product does not offer such guarantees.

I would say it is like an RRSP because the employee is told to invest in this plan, but the employer is in no way forced to contribute to it. Therefore it is the employee who assumes all the risk. Of course, the employer might contribute, but that depends on his goodwill.

The government currently has tools such as the Canada pension plan and, in Quebec, the Quebec pension plan. These are solid plans.

No one across the way can deny that the Canada pension plan works, that it is well run and ensures a good retirement for those who are lucky enough to benefit from it: workers, self-employed workers, and people in the public and private sectors.

This plan exists and that is why we are saying that instead of creating a product that is similar to RRSPs or TFSAs, which we already have, the government should be investing in a plan that works. According to witnesses at the Standing Committee on Finance, the cost-benefit ratio for taxpayers is very high. It costs less to administer the CPP than to create a new product.

One problem is that this product is administered by financial institutions that want to generate profits. We know this; it is normal. At whose expense are these financial institutions going to make their profits? At the expense of those who have invested in this product. In this case, there is no guarantee. We talked about the fact that regulations might be brought in to ensure that the fees are not too high. However, there can be no guarantee that those fees will not go up over time. And when those fees go up, who loses? Who will have less money in the end? The people who paid in will lose. In this case, it will mainly be employees.

Rather than helping employees and people who are going to retire, the government is helping financial institutions, which, clearly, are already at an advantage thanks to the choices this government has made with previous budgets and the most recent budget. All the government is doing is continuing to reduce their tax rate so they can generate more profits. However, those profits do not go back to the common people. They do not go to those who want to retire with dignity and prepare for their future. Once again, clearly, this government does not have the best interests of seniors at heart.

My colleague from Thunder Bay—Rainy River introduced a bill to protect pension plans in case of bankruptcy. During the last election campaign, I met people. One person came to see me to say that we had come up with a very good idea, something that would protect them. He had spent a good part of his life working for Nortel, investing, working hard and keeping the economy going. Money was invested in his pension for the future. He was promised that he would be protected when he retired. We all know what happened in the end. Nortel went bankrupt. Because pensions were not protected, he is now living in misery. That is what he told me. This man's plight touched me deeply. He had tears in his eyes when he said that he had worked, he had invested, he had done everything he was expected to do, and yet the government failed to protect him.

What I find so difficult to understand is why the government does not really want to protect seniors, the people who truly helped build this country, who worked very hard. Thanks to these people, Canada has made progress in terms of the economy and quality of life. The government should be thanking them and telling them that they have worked hard, but what is it doing instead? It is giving them the cold shoulder. Not only that, but it is also attacking them. They worked hard and set money aside, but the government does not even want to protect them. What a shame to see that kind of attitude from the government.

As I said, that is what we are seeing in the budget, in Bill C-38. All of that and various changes have resulted in a record gap between rich and poor. That gap has been growing steadily since the Second World War. Of course, former Liberal governments have to take some of the blame, but so does the Conservative government.

The Conservative government is aware of the situation. The Conference Board of Canada and the OECD are saying it. The facts are there. The gap between the rich and poor is growing wider and wider, particularly in Canada, where it is growing more rapidly than in the United States. Imagine that. The United States has always seemed to be the prime example when it comes to this gap. Of the industrialized countries, Canada has surpassed the United States and other countries in how fast this gap is widening. It is because of measures like the budget and this bill that we are seeing these differences. Why? It is because the government is not helping those who need it most.

When we talk about old age security and the guaranteed income supplement, we are talking about people— seniors who are living on the edge of poverty. This government's solution is to tell them to work two years longer—to increase the age of retirement from 65 to 67—and that things might be better for them later. This is a completely ideological way of doing things. As the OECD said, there is no problem; this is purely a government decision.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:45 a.m.


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

Madam Speaker, I would like to thank the hon. member for Brossard—La Prairie for his speech. We know that, of the 75 or so members who could speak, he is one of the few who will be allowed to do so because the government has just imposed a gag order.

The cat is finally out of the bag. We heard it recently from the Conservative member for Nepean—Carleton. The plan is to make entrepreneurs, companies and business leaders pay less while workers pay more. This is a disguised tax. Employers will not be required to contribute to the pension fund and all of the responsibility will fall on workers' shoulders.

I would like the hon. member to explain this aspect in greater detail. Why is the government not asking employers to pay their fair share of their workers' pension funds?

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:45 a.m.


Hoang Mai NDP Brossard—La Prairie, QC

Madam Speaker, I thank my hon. colleague for the very good question. That is really at the core of this bill and it is truly what we oppose.

Generally speaking, the bill looks good. However, upon closer examination something very important stands out. It is not mandatory for the employer to contribute, and therefore the employee is told to set aside some money and maybe the employer will contribute. If the objective is to protect employers rather than employees—the people who will be retiring—it is not mandatory for employers to contribute. In that case, the employee assumes all the risk.

That is why I repeated that it is the same as an RRSP. It is about putting money aside. The employer does not have to contribute.

I would like to read a statement by Michel Lizée, coordinator of UQAM's Service aux collectivités, who sits on the Université du Québec retirement committee:

We should first expand the Quebec pension plan in order to increase universality and income security. An enhanced QPP could reduce employers' current service costs, and consequently their funding risk and administrative burden, while levelling the playing field with respect to competition among businesses.

Clearly, the government is not even going with what makes the most sense.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:50 a.m.


Kevin Lamoureux Liberal Winnipeg North, MB

Madam Speaker, I know the Liberal Party critic was quite strong on the point of the importance of CPP, but also emphasized that this was something we classified as a relatively small tool that many consumers would be able to utilize. There are other tools.

I recall the Crocus fund, for example, in the province of Manitoba. The NDP provincial government promoted it as a fund for seniors to invest in to get the tax breaks and so forth.

Does the member believe seniors or individuals looking at retirement should have other options outside of CPP? If so, what should those options be?

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:50 a.m.


Hoang Mai NDP Brossard—La Prairie, QC

Madam Speaker, I want to thank the hon. member for his question. In terms of the options to be considered, why look elsewhere when we have a program that works?

The Canada pension plan and the Quebec pension plan work. They help those who are eligible. Accessibility can be changed and expanded, but that is a discussion to be had with the provinces. If a product is working and helping those who benefit from it, then we have to invest in that product. That is why in the NDP, we have said that this program works. It has been shown to have lower costs and higher profits. Who benefits from those profits? People taking their retirement; that is who. The program works.

We have heard the government say that it has to negotiate these things with the provinces. However, when we look at the government's current approach to negotiating with the provinces, we see that it is less about negotiating and more about imposing things. Just look at the health transfers to the provinces. This government makes unilateral decisions. The same goes for employment insurance. The government imposes its decisions, end of discussion. Then it turns around and says it consulted the provinces. When the federal government imposes its way of doing things and tells the provinces what they are going to receive, where is the opportunity to negotiate?

We think this should be discussed with the provinces. There are ways to improve the pension plan and I agree that there are ways to go about it. However, above all, we have to talk to the provinces, which the government is not doing.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

11:50 a.m.


Joyce Bateman Conservative Winnipeg South Centre, MB

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.

Third ReadingPooled Registered Pension Plans ActGovernment Orders



Wayne Marston NDP Hamilton East—Stoney Creek, ON

Mr. Speaker, I want to thank the member for her presentation, but the reality is that 12 million Canadians have no savings and no pensions whatsoever. The PRPP will not address that because it is not mandatory. The biggest problem with the bill is that those same people who are not investing now will not invest unless they are put into a position where they must invest. The other problem with the bill is that the fees are not capped.

When we made the proposition that we should increase the Canada pension plan, it was on the basis that the Canada pension plan was portable and mandatory. The cost to a person who makes $40,000 a year to double the Canada pension plan in 30 years would be $161 a year, roughly $9,000 over their working career. Where can we invest $9,000 today and look forward to having $1,800-plus per month in the future? The reality is that the PRPP fails.

Also, the government has announced that it is going to make seniors work two extra years. People on disability or welfare who looked forward to moving up when they got OAS and GIS will now have to wait two more years to have that money.

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12:05 p.m.


Joyce Bateman Conservative Winnipeg South Centre, MB

Mr. Speaker, it is my pleasure to explain a few more details to my colleague opposite.

First, the reality right now is that more than 60% of Canadians do not have pension coverage. That is a very serious reality. Given that, with this legislation we are enabling Canadians to help themselves, to take charge.

We have just created 750,000 new jobs, but if the average experience in the Canadian workplace applies to those jobs, some of them may not have entitlements. We have created those jobs, and now we are creating an opportunity for those people to save for their future, enabling them to accept that responsibility and to be helped with lower-cost opportunities for that saving.

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12:05 p.m.


Hoang Mai NDP Brossard—La Prairie, QC

Mr. Speaker, I would like to thank my hon. colleague for her speech.

However, I want to make it clear that this product will merely encourage people to save; it will not guarantee anyone's retirement income.

My colleague said that people can invest in these pension plans. But consider TFSAs, which are a similar product to help people save tax-free. Only 41% of Canadians have a TFSA, and nearly half of them earn $100,000 or more per year. Only 24% of those surveyed said they are using their TFSA to save for retirement. The product envisaged in Bill C-25 is the same as an existing retirement product.

Why does my colleague say that people will invest more if they are not required to, even though he knows that people who do not have money do not invest for their retirement?

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12:05 p.m.


Joyce Bateman Conservative Winnipeg South Centre, MB

Mr. Speaker, I thank my colleague from the opposition, but I must clarify some facts so that he better understands our bill.

Our bill will help all Canadians. In fact, it will give Canadians the opportunity to save for their retirement. How? People who are not currently part of a pension plan, such as self-employed workers and business owners without a retirement plan, will be able to use the new PRPPs. When we save money, we set that money aside for retirement.

The hon. member addressed another part of our strategy to help all Canadians.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

June 7th, 2012 / 12:05 p.m.


Kevin Sorenson Conservative Crowfoot, AB

Mr. Speaker, it is an honour to rise in this place and represent the constituents of Crowfoot and speak on their behalf in this House of Commons.

I realize that the introduction to this will not necessarily deal immediately with the pooled registered retirement plan, but over the last couple of days here on Parliament Hill we have had some major announcements about some things that I had never heard about.

Two days ago, the Minister of Health and a couple of other ministers made an announcement about a drug known as “bath salts”, which was a negative part of the drug culture and basic culture around the world, where people, young and old, were using this new drug, and so we banned it. My point is that our government was stepping forward to protect Canadians from something that some of our young people may not have even realized at the time would be such a potent, devastating tragedy just waiting to happen.

Yesterday, we had another announcement about human trafficking where we stepped up and said that we would protect Canadians.

Our government is implementing plans across the country and across a wide scope of areas to protect Canadians. We are implementing plans to create jobs and enable small businesses to provide opportunities for retirement, which is what we are here debating today, because we want Canadians to be secure on our streets, in a job and in retirement. Bill C-25 is part of that plan.

Our Conservative government's efforts to help Canadians save for their retirement do not begin with a pooled registered pension plan. It begins with a vast number of other plans that we want to see stable and secure. We see and have heard that our CPP is stable and strong. In the 75 year projection, CPP will be very strong and it will be there when Canadians need it.

However, not always does one size fit all. Not always can we tell Canadians that only if they wait CPP will take care of them at the end of the day. I think every economist and all individuals who are trying to better their life or pass on some financial instruction to their children would encourage their children to save, not just to go out and get a job and pay into CPP, but that they look at a number of different avenues in which they can protect their retirement and have a strong retirement.

This is a modern-day effort to assist Canadians who are self-employed or who work for small firms or businesses that do not have part of a benefits package that includes a pension plan. Our intent is to help Canadians who work where there is no pension plan. Sometimes the opposition members stand back and say that we should just throw more money into CPP or we should have that wealth transfer so the wealthy can put more money into it and we will all get a bit more. The CPP is strong and maybe we can make it stronger but there needs to be more avenues than just the CPP and more avenues than just this pooled retirement pension plan.

Many constituents in my riding of Crowfoot do not have access to a pension plan. The colleague who just spoke said that 60% of Canadians do not have access to a pension plan. I live in a rural riding and I believe that is true in most rural or remote ridings in Canada.

I spoke to this bill at second reading. When I had town hall meetings, met with constituents and had satellite office days, constituents came to me and asked me about the pooled registered retirement savings plan. I explained to them that we were not trying to incorporate a mandatory plan for all Canadians. I told them that it was not another tax grab, that it was not another opportunity for the government to put more of a premium down on CPP or any one plan. I told them that this was an opportunity, if they so chose to do it, to invest in a pooled registered retirement plan.

Around our place this summer, we will have a different type of summer. My oldest child, my daughter, is getting married. With that has come all the fun things with being involved in wedding planning. For years we have sat down and talked to our children about planning for the future and about some day in the future buying a home. We have told them that even when they come right out of college they should purchase an RRSP, that they should look into all of those different avenues.

Now, as my daughter is preparing to get married, she and her fiancé have asked me to n go with them to look at a house. They are just out of college and yet they want to invest in a home. I have for years told my children that they want to buy a home with 20% to 25% down. Now my daughter is telling that, even though I always told her that it was important to have that 20% to 25% to put down, she does not have 5% to put down, which is why she needed me to look at a home. The point is that some of these lessons are learned. Our children learn that it is important to have equity in a home and that it is important to invest and prepare for the future. As a father, I want to be able to help where I can.

As a government, we also want to be able to help where we can. As a government, we want to be able to say that we will not only be satisfied with the CPP, that we will not only be satisfied with the tax free savings account and that we will not only be satisfied with a pooled pension plan, we want people to pick and choose and perhaps invest but to prepare.

In the rural constituency that I represent there are many farmers and many agricultural based companies who do not have a pooled registered pension plan. This is one of those opportunities. I commend our government for bringing this forward. I encourage the opposition to get off the bandwagon of one-size-fits-all and to recognize that when people have a registered plan they have something to count on.

Not only do we have agriculture in Crowfoot but many people work in the oil patch in Crowfoot. Many people today will be contracted to work for one company but in a year or two will be working for a different company. The thing I like about this plan is that people would be able to take the plan with them because it is a plan in which they invest. When they leave that company, maybe after two years, they would not need to decide whether to pull out that little chunk of money they put away in a pension plan and put it into an RRSP, which is really the only way to protect that money. There is the tax free savings account, but to save some taxes people can invest in an RRSP.

Now, as people switch from one company to another, one job to another or one contract to another, the pooled pension plan would remain constant. Now, when they go to the next place of employment that does not provide a pension plan, they would have this tool in their toolbox. It is something they will appreciate.

I encourage the opposition to recognize that there are many Canadians with many different groups. People cannot always reach into their toolbox and pull out a hammer. We reach in and pull out the tool that best suits our needs for the job that we are doing.

We are fortunate sitting here because we have pension plans. That is the topic of discussion, as well, in my constituency. I think it is time to say that this opportunity needs to avail for all those who want to take advantage of it. Our government is providing that tool and I congratulate it.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

12:15 p.m.


Wayne Marston NDP Hamilton East—Stoney Creek, ON

Mr. Speaker, we in the NDP have said that we should have a comprehensive view of the retirement security plans for all Canadians. That has been our position for a number of years.

The member spoke about town halls and previous speakers spoke about the parliamentary secretary doing town halls in 2009. I did 20 town halls that summer. The next year I did 20 more, and I have done 7 this year so far. Overwhelmingly, people have told me that the type of plan the government talks about in the PRPP is not what suits their needs. We have a difference of view. I am not saying that the government is not making attempts to do things, because it is. In fact, I have had discussions with members regarding the enhancement of the Canada pension plan. I still think that is something we will get to at some point in time.

However, the PRPP has two significant flaws, which I have mentioned before: it is not mandatory and there is no cap on fees. It relies on the goodwill of the provinces involved.

The situation in Australia with the Australia superfund, which was a similar type plan, over a 10 year period it did not even keep pace with inflation because of the fees that were applied to it. That is my concern.

If you cap the fees, then you might have something that has some reasonableness to it, but if you do not do that it will not help Canadians.

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12:20 p.m.


The Acting Speaker Conservative Barry Devolin

Again I would remind all hon. members to direct their comments to the Chair rather than to their colleagues.

The hon. member for Crowfoot.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

12:20 p.m.


Kevin Sorenson Conservative Crowfoot, AB

Mr. Speaker, I know the member has worked on this file. I wish he had been present when the minister gave his speech because he gave the member quite an accolade. I know this is something that is near and dear to the member's heart.

As we heard in the member's question, that is one of the big differences between the New Democratic Party and the Conservative Party. The hon. member said that one of the frustrations he has is that it is not mandatory, but there are other tools that are mandatory.

When people have a job, no matter what the job is, they do pay into the CPP and they do have employment insurance deductions. All of those things are mandatory. RRSPs are not mandatory. Does that make RRSPs wrong? I do not believe that hon. gentleman would suggest that it does. Why, then, would he say that his frustration is that they are not mandatory? This is an option, as we have stated before, an option for people to plan for the future.

Some individuals may have the opportunity to put thousands of dollars into the retired pension savings plan while others may have hundreds of dollars. The beauty of this plan is that it would allow people to make their decisions for their future.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

12:20 p.m.


Mike Wallace Conservative Burlington, ON

Mr. Speaker, my hon. colleague's speech was very similar to the speeches I have made on this particular topic about adding a tool to the toolbox in terms of options and opportunities for Canadians.

We have heard from the other side, particularly on the CPP but even on the RRSP plan, criticism that this would be based on the marketplace of the stock markets and that it was just an investment with no guarantee because it would be invested in the stock market.

I would like the member to comment on the wrong thinking of the opposition that the stock market is the wrong place to have retirement investments. What role does the stock market play in all retirement investments in this country?

Third ReadingPooled Registered Pension Plans ActGovernment Orders

12:20 p.m.


Kevin Sorenson Conservative Crowfoot, AB

Mr. Speaker, if the member is asking for advice on the stock market, he is asking the wrong guy. I know he is not.

A well-diversified portfolio is what is important. There was a very wise man who, a number of days ago, said that it was very important to take a medium to long-range look at one's planning. In an investment portfolio, I would encourage people to have some degree of investment in the stock market, but if we want to have a strong, solid, viable retirement, I would warn against lumping all of our investments into the stock market.

The plan will be well managed. It will there for employees who do not have time to manage their portfolios. This is another avenue for people to take. It will be managed, diversified, secure and registered. The government will be behind it. It is a strong, solid option.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

12:25 p.m.


Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

Mr. Speaker, I rise today to debate Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

I am trying to bring a little balance to the debate today. I have listened to what the members of the NDP and Conservatives have said. I understand the government has realized that Canadians are worried about their retirement or realized, finally, that something has to be done.

I think it was two years ago that my friend, the Minister of State for Finance, travelled across the country, had consultations and came up with something called a pooled registered pension plan, which is an offshoot of the registered retirement savings plan. Now the government is making a big PR event out of it. Again, I agree with the member for Burlington, that it is an extra tool in the toolbox. That is why we support it. However, that is not the answer to the crisis we are having or the retirement savings and their future that people are worried about.

We have had six years of the Conservative government, with increases in hidden taxes. That has been part of the cause. Canadians have less money in their pockets to put toward retirement. We have had a lot of pressure on Canadians, whether they have lost their jobs or have had to take on other responsibilities. We have seen Canadians of all age groups having less money in their pockets, for various reasons. As I have said, most of this had led to some of the policies of the Conservative government.

Even those who do have savings are worried about retirement. We have seen rates of interest that have been the lowest ever in history. Therefore, even people who have money put away in a savings account are barely getting 1%. A lot of times it has been 0.5% or 0.25%. Canada savings bonds used to pay 10%. They are now paying less than 2% and 3%, if people are lucky because they have been holding on to the bonds for six or seven years. We expect these interest rates to continue to be low.

Canadians have taken risks. They may be retiring in a couple of years and need to get their retirement savings up. How do they do that? Maybe they take a gamble on something, but are they not sure what it will be. Some people have put it in the stock market.

We saw what happened a couple of years ago with the tech bubble where people put tons of money in companies like Nortel, which was supposed to be the most secure company around. It was an offshoot of Bell Canada. Some people got their shares for free, like my parents. They decided to keep them. The stock went up to $100 then $200 a share. They decided to buy some more because it was going to go to $400, trading in multiples based on sales never heard before. That was the way these tech stocks were evaluated. All of a sudden, overnight, stock portfolios of millions and millions of dollars went down to zero. We are still seeing lawyers making money from the Nortel bankruptcy. People who have disability plans and pension plans with Nortel cannot get their money out. They cannot get paid because the lawyers are holding up the distribution. The government is not willing to help these people. There is some money stuck out in some tax haven and the only people making money are the professionals, and people see this.

As recently as the bank crisis a couple of years ago, people thought it was secure to have stocks in the banks. They put their money in the banks thinking it was as secure as ever. Then we saw the bank closures in the states. We were lucky in Canada, but we cannot put all our eggs in one basket, as most personal investment advisers say. They will also advise to diversify. People who took the advice of professional advisers, they would have lost some money a couple of years ago by having their money in bank stocks.

Again, people are worried. People have invested money in resources. People have invested money in the past in metals such as gold. As recently as a few years ago, gold was at a couple of hundred bucks. Now, if one was lucky enough to have invested in gold, it is at $2,000 an ounce practically, but who can forecast those things?

Some people have their money invested in secure investments such as bonds, but countries have gone bankrupt and are unable to pay their bondholders. They are being renegotiated. Who is making the big money? It is the big players. I do not see how individuals who are busy trying to raise a family will make any more money than they can make today.

Again, some people are taking more risks, such as in real estate. We see what is happening in the real estate market across the country if one is fortunate enough to buy a condo. It seems like the condo market is fine. Those who live in a condo may buy another one to rent out to maybe make some money. However, as soon as the condo market collapses, as is predicted, they may have to take some money out of their retirement savings to supplement these real estate deals.

Therefore, I do not see how the government could think that people can easily put some money into a pooled savings plan that is administered by somebody we do not know and all of a sudden, miraculously, their retirement savings will be secure for a 5, 10, 15 or 25-year period.

For years, the Liberal Party has said that we should start with the Canada pension plan. In Quebec, it is the Quebec pension plan. It survived relatively well in comparison to many of the other private pension plans, so we should be working with that.

Elderly Canadians are not the only ones who are beginning to worry. As I have said before, we have young people who are worried about their future. We see Quebeckers who are going to the streets based on the fact that their tuition fees and cost of living are going up. They see a crisis developing in the next while. That all means they know their retirement will be affected because the Conservative government has told them they will not be able to retire until the age of 67.

This is nothing new. We have had crises, whether it be over pensions or other issues. In the 1990s, the Liberal government recognized that the Canada pension plan was not sustainable and action had to be taken. What did we do? We consulted with individuals and stakeholders, not just our friends. We met with the provinces. We looked at how we could secure the CPP in the long term and we did not just issue talking points.

We realized there was a problem, and we did not turn to private institutions to solve it. We negotiated truly, we invoked thought-provoking discussions and, miraculously, we came to an agreement with all of the provinces. It was not self-imposed. It was not dictated to them, as the current government likes to do. We recently saw that with the health accord. The previous Liberal government sat down with all the provinces and discussed the issues and the needs, came to an agreement and signed a 10-year health accord. The Conservative government has said that it does not need to discuss anything with the provinces. It will give them some money and increase it at a certain level. After that, it is their problem, even though it knows that the cost of health care will increase within five to ten years.

Coming back to the bill, the government says that it will secure people's pensions. In actual fact, the only thing we think it will do is make the banks and insurance companies happy by allowing them to offer pooled registered pension plans to employers and the self-employed in federal jurisdictions. It would also provide a framework for provinces to pass similar legislation.

The budget tabled recently in the Quebec National Assembly provides for companies to offer this pooled registered pension plan to their employees, which we have not seen in the other provinces.

I do not believe the province of Ontario passed it in the last budget and there has not been any movement with the other provinces. I am sure somebody on the other side will correct me.

We also think it is great that the administrators of the plans will be regulated. Financial institutions need a special licence from the Superintendent of Financial Institutions, and we have no problem with that.

The only problem is that most individuals already have trouble saving. A lot of them are working in low-paying jobs. Many of them work for small companies, which do not have the time, energy, resources or ability to set up these plans no matter how easy it is. It will be very difficult to see any of these smaller companies implement a registered pension plan. As an accountant by trade, I just do not see it.

A lot of employers would not want to make RRSP contributions, even for employees who want to have them deducted from their pay cheques and put aside. They do not want to take on that responsibility. There would have to be separate accounting, extra cheques would be involved, for example, and administration. They would have to hold the money in an account, ensure there is enough money in that account a month later to make the remittance, and then ensure the amounts are deposited into the correct employees' accounts. I could go on and on. I do not see why we would not use the tool available to us, which would be the CPP or the QPP.

Companies would have the option of rolling into a plan. If it is not made mandatory and companies would have an option, I am not so sure how many companies would take us up on that, unless of course they have a dedicated payroll resource person and they really need to keep these employees and the employees all agree they need to have this plan.

Again, we are not asking the employer to contribute, and we are not asking all the employees of a certain company to opt in. They have the option of opting out. A company may only have 10 or 20 employees. If only 2%, 3%, or less than 50% of them opt in, I do not see why that company would go to the trouble of setting up a pooled registered pension plan.

Also, the troubling part is that this new option is another private registered savings vehicle, which more than likely would help the financial institutions. I think it was a member from the Conservative Party who stated Canadians, on average, have $80,000 of unused RRSP contributions. If there were an urgency because Canadians have totally utilized all their RRSP room, I would understand the purpose of coming up with something like this.

Right now, the only people I am aware of who are using their RRSP to the maximum, again, using my background as an accountant and speaking to my accounting friends and bankers, are people who can afford it. That means it is the higher-income people. I do not see the necessity to start a program just for these people.

The Liberals believe the solution is that we do not need to look any further than working with the Canada pension plan and the QPP to help people save for retirement. The CPP and QPP have proven track records. They have been stable and secure. Even through these economic downturns, they have been quite strong.

We see it in Quebec. The QPP has rebounded in the last two years, with rates of return close to 10%. There was a bit of a crisis about three years ago where it lost tons of money in certain investments in the banking sector. It changed its management. It changed its direction. It made recent statements that it is going to change direction again. It will be looking at making investments in infrastructure and other areas that would require a lot of money that individuals do not have in their RRSPs.

Even if we wanted to take the example of these pooled registered pension plans, there would not be enough money in these pooled plans to be able to diversify risk, as the CPP and the QPP are doing today. Supplementary CPPs could allow those who want to investment more in a secure retirement vehicle to do so.

Again, we are not sure about the fees. I know we are very worried about the fees. Even if these registered pooled pension plans start with low management fees, it would be a matter of time before the banks and insurance companies get a hold of people's accounts and hold them hostage. If the funds do a good job and the return is high, we know what would happen. All of a sudden, the fees will go up. If there is no return, the fees will stay the same. I do not see how we are going to win with this.

Again, we would be adding another level of complexity to people's options for savings, such as deciding what to do their money when they change employers: “Do I keep it in this pooled retirement savings plan? Do I keep it with the bank? Do I move it to an insurance company. What point am I at in my life? Am I going to be retiring in five years, ten years, fifteen years?

The administration of what an individual is to do with the money in that pooled registered pension plan would be a headache for unsophisticated investors, and the areas they would want to invest in would add another level of complexity.

We could look at options for opening it up further. One of the options would be for government to look at options to help those who are in the low-paid workforce. These are people who are moving from job to job, and they are the people who need the most help with their retirement savings.

In making these decisions, we need to look at the evidence. Policy decisions, such as retirement savings plans for Canadians, were not made on a whim but rather based on solid evidence.

Somebody also stated that Australia implemented a similar program to the pooled registered pension plans. After 10 years, it was obvious that the only ones making money were the financial institutions. In Australia, $161 billion of investments were made in pooled pension plans versus $105 billion in fees that were taken out of these plans. It is not dollar for dollar, but 80¢ was charged for every dollar that was put into the pooled pension plan.

A recent study by the Rotman International Journal of Pension Management found that despite the presumed role of competition, the investment performance of the system continued to be restrained, again by high fees and costs. We think this could be averted by using the CPP or QPP as the supplementary retirement investment tool.

As parliamentarians, we should also be concerned by all of this and perhaps look at how we could improve the pooled registered pension plan, or look at other options. The other option is easily the CPP, QPP.

However, we have seen that the Conservatives have already made up their minds. Like many other things, they will not listen to anyone else's opinion, or reason. They will not even look at evidence on a lot of issues. They will blindly follow this approach and put their hands over their ears and march on.

As we have seen today, the Conservatives have moved time allocation so we can no longer debate this issue. The very reason each and every one of us is elected to this House is for debate, but they decided they have heard enough, or they have pretended they have heard, and have imposed time allocation on this particular bill. This is one of many bills on which they have imposed time allocation. In Parliament, they have imposed time allocation over 60 times, and if we include committees, we are almost at the 300-point mark.

It is important to talk about how we got to a point where we suddenly have to rush through the bill. The minister of state consulted on this for about two years, and then all of a sudden there seems to be a rush to get the bill through. There have been concerns about retirement security for some time, while the Canada pension plan, and I repeat, the Canada pension plan has been secure for at least 75 years. It is not just the CPP that has been secure, but also QPP.

Canadians also need to save more for retirement to live comfortably. We all agree with that.

It was in 2009 that the Conservatives announced the consultation on pension reform. Now, all of a sudden, as I said, it has been a rush. In December 2010, the Conservatives announced this program, I will not call it a scheme, but a program.

I will wrap it up. I have a lot more notes that I could go through.

Retirement income for Canadians is important. Pensions all of a sudden have become an issue. It has always been an issue, but as we get older it becomes a greater issue.

The government has created a crisis by changing the age of retirement for being able to collect OAS. I am in favour of the flexibility the OAS will provide, but I am not in favour of changing the age from 65 to 67. One of the first people it would affect would be me. The government will be taking about $12,000 out of my pocket, and I have not even got there yet.

I do not see how Canadians could be happy with that. I do not need the money, but imagine how Canadians my age, who are relying on this money, feel about $12,000 being thrown away overnight like that.

Third ReadingPooled Registered Pension Plans ActGovernment Orders

12:40 p.m.


Mike Wallace Conservative Burlington, ON

Mr. Speaker, I thank my hon. colleague, with whom I sat on the finance committee, for his speech. I disagreed with most of it, but I do appreciate his time.

Part of the member's argument is that there should be a voluntary opportunity to contribute to CPP. However, in the same speech the member argued that taxpayers do not have the money to contribute to a pooled registered plan. If they do not have the money for a pooled registered plan, how would they have money for the voluntary aspect of the CPP?

It is a defeatist argument, and it does not make any sense. The member cannot argue in one sense in one area and then argue the opposite in the same speech.

The member talked about how the Liberal Party put the CPP back on its financial feet. However, it was forced to do that after it took all the money out of the plan. They had to get it back on its feet, so they did something in the 1990s.

If this voluntary CPP contribution plan would be effective and the right thing to do, why did they not consider it when they were doing those changes in the 1990s?