Mr. Speaker, Bill S-3 proposes to update the Pension Benefits Standards Act, a law through which the federal government supervises private pension plans.
Canada's system of retirement income has three pillars. The first pillar is the basic old age security paid to all seniors together with the various supplements paid to low income seniors. The old age security benefit has come under considerable scrutiny lately as Canadians await the finance minister's overhaul of the program.
As recently as last month the finance minister attempted to push through reforms to the program in Bill C-36. Bill C-36 proposed changes to the guaranteed income supplement that 1.5 million low income seniors receive. The changes increased the clawback on benefits to seniors who work part time for extra money. The PC Party proposed amendments at report stage of that bill to protect seniors who would see more of the supplement taken away from them.
The bill also proposed to change how the supplement was calculated thereby costing each senior a further cut of approximately $6 a year. PC Party amendments to protect seniors from these cuts were defeated by the Liberal government. However the finance minister has now agreed to propose further legislation to rescind these changes.
In a press release of May 25 the minister admitted that these changes had unforeseen adverse effects on seniors benefits. If it had not been for our party which brought the government's attention to these cuts, the proposed changes would have passed.
Retirement savings experts are already telling middle income Canadians over the age of 50 to be wary of savings in RRSPs because what they save now will most likely be eaten up in higher taxes later. This creates a directive disincentive for Canadians to do what is right and to save for their own future and their retirement.
The second pillar consists of employment based Canada and Quebec pension plans. Under the government's reform to this pillar Canadians will have to pay more to get less.
The third pillar includes retirement savings such as RRSPs and employer pension plans. The government has moved to restrict access to RRSPs by freezing contribution limits and forcing seniors to mature their RRSPs two years earlier. The legislation deals with other parts of the third pillar such as employer pension plans. Most employer pension plans are governed by provincial law, but 500,000 Canadians belong to the 1,000 plans that fall under federal law.
Ten years ago the Progressive Conservative government overhauled the Pension Benefits Standards Act, the law which governs those plans. Significant changes were made to the minimum standards that plans must meet in areas ranging from survivor benefits to information disclosure. The bill before us updates that act.
The goals of the bill are to improve the way that the plans are governed, to improve Ottawa's ability to step in when plan administrators do not appear to be following sound financial practices to set up rules for the withdrawal of pension surpluses. It will also allow Ottawa to enter into supervisory agreements with provincial regulators through the Canadian Association of Pension Supervisory Authorities.
Unlike other recent changes to our system of retirement savings the only parts of the bill to generate even minor controversy are the provisions that pertain to the withdrawal of pension surpluses. Pension fund managers are concerned that the surplus and the wind-up provisions in the bill are weighed heavily against employers. However the bill is not particularly controversial. There has some controversy over the introduction of some government bills in the Senate, a practice which has fallen into disuse in recent years.
Without getting into debate on Senate reform, if bills are to be introduced in the Senate, Bill S-3 is especially the kind of bill on which the Senate can do solid work before sending it on to the House of Commons. This is particularly the case given the combination of the technical nature of the bill, the expertise of those on the Senate Committee on Banking, Trade and Commerce in area of corporate governance and the non-partisan spirit of co-operation with which members of this committee approach such legislation.
To not optimize the collective skills, wisdom and experience of these senators is an affront to Canadian taxpayers. We have a Senate and the senators on this committee have demonstrated prowess, ability and expertise in these areas.
I remind my colleagues that to not optimize this expertise would be denying Canadian taxpayers another level of deliberation on this type of important legislation. It is an approach that we could use here from time to time when we look at legislation, especially legislation affecting areas of corporate governance where there is a significant amount of institutional knowledge in the Senate.
The Senate banking committee has made six substantive amendments as a result of the testimony it heard from officials and from outside witnesses. The Senate amendments further clarify the rules to be followed when an employer wants to withdraw from the pension surplus. It struck a provision that would have given the Superintendent of Financial Institutions the ability to decide if a particular allocation of a surplus was fair as the issue of fairness should be left to employees and employers to be settled, not public servants.
It also improved the process for allocating a surplus in cases where a company goes bankrupt or winds down. It is very important that we protect individuals when a company is faced with the types of dramatic downsizing and corporate readjustments that have occurred over the past several years. The legislation will help improve that process.
Those amendments were developed by opposition and government members in the Senate working in the spirit of co-operation with the officials. A spirit of co-operation might be something we should try to duplicate in the House periodically when we are working on legislation as important as this.
At the end of this process financial officials conceded that the bill had been improved by the contribution of the Senate.
The PC party prides itself on working constructively to improve legislation that enters this House and the Senate which is why we proposed the amendments we did to this bill and Bill C-36.
I urge all parties to study bills affecting Canadian seniors with the same scrutiny in order to improve legislation and to protect our seniors.