Mr. Speaker, I will share my time with the member for Newton—North Delta.
Today, we are talking about a bill that provides a legal framework for the establishment and administration of pooled registered pension plans that will be accessible to employees and self-employed persons and that will pool the funds in members’ accounts to achieve lower costs in relation to investment management and plan administration.
In short, we are talking about a new savings tool and not a plan that would secure retirement pensions. In fact, rather than addressing pension security, the government is proposing a new savings tool that will depend on the state of the stock market. This is another way the Conservatives have found to gamble with our retirement funds. The government recognized that there is a pensions crisis when it adopted the NDP opposition's motion. Members will no doubt recall that the motion outlined the need for a national pension insurance plan to protect workers' deferred wages or pension plans in the event of employer bankruptcy. At the same time, we initiated a discussion regarding the gradual increase of Canada pension plan contributions in order to increase benefits. Yet, although the government recognized that there is a problem, it is turning its back on seniors who are simply seeking to secure their futures.
Let us talk a little about what these pooled registered pension plans would do.
The measures proposed in Bill C-25 do not even guarantee a pension. This is more of a savings vehicle than a stable, reliable pension plan. While this savings plan would pool funds from participants to reduce the costs associated with managing the plan and investments, this bill does not cap the fees charged by the fund managers. Experiences in other countries show that these costs often chip away at pension savings to the point that the rate of growth in savings does not even match inflation. This bill is supposed to help self-employed workers and employees of small and medium-sized businesses, which often do not have the means to offer a private sector pension plan. A similar system was set up in Australia 12 years ago and has not yet proven worthwhile. Because of high fees and costs, returns on investment have not been much higher than inflation.
There is another big problem with pooled registered pension plans: they do not seem to offer anything new. They look just like a regular RRSP. This option would be just another defined contribution pension plan. Employees would deposit a portion of their salary in the retirement fund, and that money would be invested in stocks, bonds and mutual funds. Well-intentioned companies that care about their employees' well-being can match contributions, but they are not required to do so. However, considering the current climate in the business world, I think that companies will try to cut costs wherever they can.
Even more worrisome, this defined contribution plan in no way guarantees the amount of money that would be available upon retirement. The money employees set aside while working hard their entire lives would not be protected from the risks associated with fluctuating markets. As is the case with registered retirement savings plans, the individual or employee in question would completely and exclusively assume all market risks. Regulated financial institutions like banks, insurance companies and trust companies would manage the PRPPs for a fee. Canadians also need to consider the fact that PRPP benefits would not be indexed to inflation, unlike Canada pension plan benefits. The provinces and territories would determine whether the employers or employees of businesses of a certain size will be required to contribute to a PRPP.
Pooled registered pension plans, as they are defined in Bill C-25, do not provide any retirement security because they encourage families to invest even more of their retirement savings in a declining stock market. When the stock market is rising, savings increase of course, but conversely, savings take a nosedive when the market declines.
Anyone whose RRSPs took a hit last year knows very well how risky it is to invest one's savings in any products linked to the stock market.
By encouraging families to invest in the same system that is already failing them, the Conservatives are showing just how out of touch they are with the reality facing Canadians and Quebeckers.
Over the pas three years, the NDP has suggested a number of proposals to ensure retirement income security. As we have indicated, the NDP first proposed increasing Canada pension plan benefits for a given period. Benefits would increase to $1,920 a month. Of all the possible solutions for pension reform, increasing Canada pension plan benefits is quite simply the most effective and affordable solution.
The NDP believes that retirement income security for seniors cannot be built on just one plan or one option. We believe that pensions need to be discussed in a more general way. We think that Canadians want us to examine all pensions as a whole. Our goal is not to reduce them, but rather to ensure their continued existence in order to protect our seniors for many years to come.
Our plans for retirement security were laid out in our election platform. The New Democrats were clear in last May's election campaign: we want a substantial increase in the guaranteed income supplement to help seniors who qualify for these benefits escape poverty. This measure targets 250,000 Canadians, most of them women.
As for the Conservatives, there was no indication in their election platform that, once elected, they would change the eligibility criteria for old age security and raise the eligibility age from 65 to 67. However, that has been the talk recently.
In recent weeks, in my riding of Montcalm, I have spoken to people who are worried about their future and their retirement. Someone wrote to me this week and told me that he had worked until he was 69 and was forced to get food aid at the age of 70. I find this unacceptable.
A couple from Saint-Roch-de-l'Achigan told me that the population is aging and no one deserves to lose their life savings, especially after working hard all their life.
Michel Janyk, from Mascouche, is also worried about Bill C-25. He believes that we should guarantee and protect our retirement funds.
My constituents are not the only ones who are worried. Jason Heath, a certified financial planner at E.E.S. Financial Services Ltd., has said that pooled registered pension plans are, generally speaking, no different from RRSPs. Contributions are tax deductible and allow tax-deferred growth. Taxes are paid after retirement and the contributions are often invested in mutual funds. According to a 2006 report entitled “Mutual Funds Fees Around the World”, mutual fund fees are higher in Canada than anywhere else. It is not surprising that investment and insurance companies are applauding the arrival of pooled registered pension plans.
You can see how Bill C-25 to establish pooled registered pension plans does nothing to make the pensions of thousands of Canadians more secure.
The Conservatives' pooled registered pension plan does nothing to help the families who are being crushed under debt, and it is bound to fail since it is a voluntary plan—I repeat, “voluntary”—a defined contribution plan administered by wealthy financial institutions that sometimes invest in collapsing markets.
This uncertainty and volatility leave families with no guarantee that their savings will still be there when it comes time to retire.
At a time when the economy is so precarious, families do not need additional risks. They need the stability of the CPP or the Quebec pension plan. Economists and provincial leaders have been saying that for years, but this government, disconnected as it is from reality, is once again turning its back on families.