The House resumed from January 31 consideration of the motion that Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts, be read the second time and referred to a committee.
Mr. Ted Opitz (Etobicoke Centre, CPC):
Mr. Speaker, I am honoured to rise in this chamber today to speak to Bill C-25, an act relating to pooled registered pension plans.
Innovative measures like pooled registered pension plans demonstrate our Conservative government's focus on the issues that matter most to Canadians: economic growth and financial security. This focus has continually achieved results. Under the leadership of our Conservative government, the Canadian economy has maintained the strongest job record in the G7. I'm very proud to say that over 600,000 net new jobs have been created since July 2009. We have also ensured a higher standard of living for Canadian seniors and our government has provided an additional $2.3 billion in annual targeted tax relief for seniors and pensioners, with measures like increases in the age credit amount and the introduction of pension income splitting.
While these are all very positive and necessary developments, there remains much to be done. Unlike the members opposite, who continue to promote job-killing tax hikes that threaten the growth of wealth and prosperity in Canada, our government has been working hard at crafting prudent, responsible and creative plans to move Canadians forward in these very fragile economic times.
I have just recently spent some time in Europe and seen first hand the difficulty that the EU is in and I am thankful that this government has ensured that we have stayed ahead of all the G7 nations. However, this requires continual improvement, vigilance, innovation and flexibility in how we manage our economy and the long-term financial prosperity and security of all Canadians well into their golden years. We must encourage all Canadians to save for their retirement and to plan for it early. To help the many Canadians who presently have no plan, the pooled registered pension plan is a vehicle that would help address that very need.
While some of the provinces raised serious concerns about expanding the CPP, there was unanimity among the provinces about pursuing the PRPP framework. Continued consultations with our provincial partners have revealed that a key area to help the Canadian economy move forward is the retirement income system. How else can we explain the fact that there are still Canadians who face a serious risk of not saving enough for retirement? This is especially true for the self-employed and Canadians working in companies that presently do not offer a pension plan. Pension reform is a key priority considering that over 60% of Canadians have no workplace pension.
Existing retirement income structures, while good vehicles, are not the key to addressing this problem. Instead, programs like RRSPs continue to be underutilized. On average, each Canadian has approximately $18,000 in unused RRSP room. Shortcomings and holes in our pension options pose a real threat as our population ages and more people reach retirement age. With this in mind, our government is proposing new low-cost and accessible pooled registered pension plans. Their introduction would widen the range of retirement savings options for Canadians and allow a greater percentage of our citizens to reach their retirement goals.
Employers would be drawn to the pooled registered plans because these would allow them the opportunity to forego the prohibitive burdens that traditional pension plans generally carry. Instead, a third-party administrator would take on most of the legal and administrative duties associated with the maintenance of the plan. Plan members would rest at ease, knowing that this third-party administration would come from regulated financial institutions that have already demonstrated a capacity to fill fiduciary roles and to act in the best interests of potential plan members.
Canadians joining PRPPs would also gain greater purchasing power, as they would essentially buy into a pool of investments. This would allow members to benefit from greater economies of scale and lower management costs, which would be an improvement over the existing smaller RRSPs. The fact that the regulatory framework of PRPPs would be harmonized between the provinces would also reduce the cost of these measures and remove administrative burdens. PRPPs would also be flexible enough to allow members to easily transfer between plans. This feature would undoubtedly also increase the attractiveness of the plan to small business owners who may find the locking-in provisions of other plans too much of a barrier.
The innovative design and new features of PRPPs have garnered universal praise. All of our provincial partners are enthusiastic about the positive effect of PRPPs on small and medium business. The Canadian Chamber of Commerce, the Canadian Federation of Independent Business, the Association of Canadian Pension Management and the Canadian Taxpayers Federation have all declared their support for PRPPs.
In my riding of Etobicoke Centre, PRPPs would be a very effective means to help many of my constituents start a pension where many do not have one today. I have a huge number of small and medium-sized businesses that this will apply to perfectly. I know that the people of Etobicoke Centre working in those businesses will benefit from this tremendously.
The introduction of the pooled registered pension plans does not preclude us from continuing on our work on other retirement savings vehicles. However, our government understands that in these economic trying times Canadians cannot afford further increases in CPP contributions. Because of this, the provinces have stalled their debate on reforms to CPP.
Already entrepreneurs are making plans to enrol their employees in new PRPPs.
The Ontario Medical Association recognizes the tremendous positive potential PRPPs will have on essential professions, like doctors, and praises the government for creating savings opportunities that have hereto been unavailable to them.
At this point, the introduction of a new alternative pension plan like PRPPs has been far better received than have other reforms.
Pooled registered pension plans have an enormous potential to improve the retirement security of all Canadians, particularly the 60% of Canadians who do not have the luxury of a workplace pension. This program has already drawn the interest of small business employers and relevant stakeholders, including all of our provincial partners.
In these fragile economic times, sound and innovative policy like that behind the pooled registered pension plans is essential for Canadian competitiveness and for the welfare of our citizens.
Mr. Ryan Cleary (St. John's South—Mount Pearl, NDP):
Mr. Speaker, the image that haunts me from the May 2011 federal election, from campaigning in my riding of St. John's South—Mount Pearl in the great province of Newfoundland and Labrador, is that of the seniors I met at their doors, in the middle of the afternoon, in their winter coats. They wore their winter coats inside their homes, decent homes in the suburbs of St. John's and Mount Pearl, because they could not afford to turn up the heat.
The number one issue in my riding is seniors, people living on fixed incomes, people trying to make ends meet.
According to the Conference Board of Canada, 1.6 million seniors across the country live in poverty, and it is slowly and steadily getting worse. The cost of everything is going up, the cost of food, the cost of oil, the cost of gas, except their incomes. Seniors are having a hard time. People are worried about their retirement years. Lately, people are practically panicking about the thought of retirement.
The Conservative government has thrown out the idea of raising the age of eligibility of old age security to 67 from 65. I have to stop myself there and offer an apology to the man in my riding who wrote to me to complain about the term “old age security”, which he finds, “disgusting”. To quote the man further, he said:
||—it is very obvious that the term is not only outdated and lacking creativity as a program title, but it is insulting and downgrading to individuals reaching age 65, and are very active and independent members of society.
That is a very good point.
However, my speech is not about OAS, although it is what most Canadians are talking about from coast to coast to coast. I am on my feet in this esteemed chamber today to speak about pooled registered pension plans and to speak against them.
Pooled pension plans are not the solution for the retirement security of Canadians. Why? Because they amount to gambling even more of their retirement savings on failing stock markets.
Here is the $64,000 question. Will they have a decent retirement income from a pooled registered pension plan? The answer is, who knows. Roll the dice and see, but do not count on it. Do not take it to the bank, do not dare take it to the bank. Is that how we want to see their retirement, as a big fat question mark, as a gamble, as a crapshoot?
Bill C-25 is designed to appeal to the self-employed, as well as workers in small to medium-sized businesses, companies that often lack the means to administer a private sector pension plan. The plan created would be a defined contribution plan, and Canadians need to understand that. Employees will kick in a portion of their salaries into a retirement account where it could be invested in stocks, or bonds or mutual funds. Companies can contribute or they can decide not to. It is up to the individual company. Canadians have to understand there is no guarantee how much of their money will be left when they retire. Their pension will depend upon how well their money is invested. This is not a defined benefit plan. Again, it is a defined contribution plan.
Anyone who has watched their RRSPs nosedive in recent times knows how incredibly risky it is to tie savings to the stock market. Most people have taken losses in recent years, and that is most people who can afford to put money into RRSPs.
When people think about retirement, they want stability. They want to know that their retirement years will be comfortable years. Forget that with the pooled registered pension plan.
Here is what the New Democrat position comes down. The NDP will not support pooled registered pension plans. Although this is not a pension plan so much as a savings scheme. Canadians need to understand that as well.
The NDP will not support this savings scheme because the Conservatives are offering this up instead of taking real action to protect both existing pensions and enhance pension retirement security for those who lack a workplace pension plan.
An estimated 12 million Canadians do not have a workplace pension plan. That is more than one in three Canadians. Bill C-25, an act relating to pooled registered pension plans, or pooled registered savings schemes, would not give them one.
A New Democratic government would double the guaranteed Canada pension plan. The CPP is a universal program for all Canadians, whether self-employed, in small or large businesses, or in the public or private sector.
Why give workers a savings scheme to roll the dice on their retirement when we could simply expand the CPP? Participation in the CPP is mandatory, meaning its expansion would impact everyone. No one would be left behind. Is Canada not all about leaving nobody behind? That is the New Democrat line. That is what New Democrats are about.
However, the Conservative line is about money for prisons. The Conservative line is about money for fighter jets. Prisons and fighter jets have a higher priority than our seniors who are most vulnerable.
The Conservative's safe streets and communities act was debated here last fall. It would make it much safer for seniors to line up outside of soup kitchens. That is what our country is coming to. Our Canada is changing. The safety net that makes our country a great country, one of the best in the world, is under Conservative attack.
At the recent World Economic Forum in Switzerland, the Prime Minister said, “Our demographics also constitute a threat to the social programs and services that Canadians cherish”. Funny, I would say the Conservatives constitute a threat to the social programs and services that Canadians cherish. The Conservatives pose that threat.
The Conservatives have only been a majority government for nine months and already they have attacked or are in the process of dismantling core services across the country and across my province of Newfoundland and Labrador.
Look no further than to the closure of the Maritime Rescue Sub-Centre in St. John's, a service that is vital to our mariners. It is a closure that the regional minister defended by sneaking away in a decoy car.
Look no further than to the defence minister using our search and rescue Cormorant helicopters as a taxi for his holiday on the Gander River.
Look no further than Service Canada and how it is being gutted. Just last week two EI claimants tried to kill themselves because their claims were delayed or rejected.
Look no further than the Canadian seal hunt and how the Conservative government has allowed market after market to ban products from an industry that is central to our heritage and our culture.
Look no further than to our precious seniors. The Conservatives would have it so that the retirement of so many Canadians is a crapshoot.
Again, the Conservatives constitute a threat to the social programs and services that Canadians cherish.
The Prime Minister also said in Switzerland that there would be major transformations coming to Canada's retirement pension system. The only transformative change that Canada needs in terms of retirement security is to lift every senior out of poverty and expand the Canada and Quebec pension plans. However, all the Conservative government proposes is yet another privately administered voluntary savings scheme like several others already on the market. It is the same old, same old. Canadians are not impressed.
I will conclude with this quote from a constituent in my riding, one of about a dozen who have written my office in recent days concerned about retirement and the Conservative agenda that transformed Canada into a warped shadow of itself, “Young people do not stand a chance in this world. Everything we have worked so hard for to make things better for them is slowly being taken away. What a sad message we are sending”.
Mr. Rick Norlock (Northumberland—Quinte West, CPC):
Mr. Speaker, it is a pleasure today to rise in the House on behalf of the constituents of Northumberland--Quinte West and participate in the debate on Bill C-25, the pooled registered pension plans act.
Much like my colleague from Crowfoot mentioned yesterday, the bill is vitally important to the constituents of Northumberland--Quinte West.
As other members have also highlighted since the debate began on the bill, most rural ridings in this country depend on small and medium size businesses as primary employers. These businesses are vital to the economic growth and continued job creation within my riding. We owe a great deal of gratitude to the hard-working people who ensure that our economy continues to grow. However, not all small and medium size businesses can afford to provide their employees with a third-party pension plan. That is, of course, why this government has introduced Bill C-25.
As most members will recall, in December 2010, the federal and provincial governments agreed on a framework for defined contribution pooled registered pension plans, or PRPPs. The PRPPs would provide Canadians with a new, low cost, efficiently managed, portable and accessible savings vehicle that would help them meet their retirement objectives.
PRPPs are the new kind of defined contribution pension plans that would be available to employers and employees, as well as self-employed individuals. As a result of this legislation, millions of Canadians would be able to save more for retirement and their retirement goals.
This legislation would allow individuals who currently may not participate in a pension plan to make use of a new mechanism that encourages retirement savings. Ultimately, this new pension plan would enable more people to benefit from the lower investment management costs that result from membership in a large pooled pension plan that few small or medium size businesses can afford.
Moreover, in an age of economic uncertainty, PRPPs would provide the people of Canada with a great deal of flexibility considering the fact that PRPPs would allow for an individual to accumulate benefits and carry those benefits forward as individuals transition from job to job. Additionally, there would be assurances that this fund would be invested in the best interests of plan members.
I have listened to the debate over the past few days and I would like to take a few moments now to address some of the concerns the opposition has raised.
Foremost, with respect to the cost of PRPPs, I can inform my hon. colleagues that this government will ensure low contribution costs of PRPPs through their scale and their design. These plans will result in large pooled funds that will enable plan members to benefit from the lower investment management costs associated with such funds.
Second, I have heard some hon. colleagues question why the government does not simply expand existing CPP benefits. My hon. colleagues ought to know, and I am sure they should know or could know if they wanted to I suppose, that changes to the CPP require the agreement of at least two-thirds of the provinces with at least two-thirds of the population of this country. Federal, provincial and territorial ministers of finance have discussed CPP expansion but there is currently no agreement.
This government understands that a fragile economic recovery is not the right time to increase CPP contributions, which would be required if the CPP were expanded. In other words, it would be an additional payroll tax, counterproductive to the beginning of better times as we exit the great economic downturn that commenced in 2008.
In these uncertain times, Canadians need assurances that their government is working diligently to ensure the very best for their economic security and prosperity. This bill is yet another example of this government's commitment to the financial security of retirees in our dear country.
During my budget consultations in January and throughout my meetings in and around the great riding of Northumberland—Quinte West, I heard from constituents who support the Government of Canada's plans with regard to seniors and the improvements we have made to guaranteed retirement security, such as the guaranteed income supplement, the largest increase in the last 20 years.
However, it is not just this government or those we represent who support this bill. Provincial governments, stakeholders and industry leaders alike have come out in support of Bill C-25. For example, the Ontario finance minister, Dwight Duncan, said that the McGuinty government supports, in principle, the federal Conservative PRPP proposal.
Additionally, in 2011, the Canadian Chamber of Commerce said that the PRPPs had the potential to benefit an estimated 60% of Canadians who had either no or insufficient retirement savings. The chamber also believes that PRPPs, which rely on simple and straightforward rules and processes, would give many businesses the flexibility and tools they need to help their employees save for retirement.
Finally, Dan Kelly, vice-president of the Canadian Federation of Independent Business, said:
|| A new voluntary, low-cost and administratively simple retirement savings mechanism will allow more employers, employees, and the self-employed to participate in a pension plan. CFIB is particularly pleased that firms will be given a choice as to whether to register for or contribute to a PRPP.
Bill C-25 would provide a new, accessible, straightforward and administratively low cost retirement option for employers to offer their employees. This bill would support individuals who currently may not participate in a pension plan, such as the self-employed or employees of companies that do not offer such a plan or any plan whatsoever.
As such, I will be supporting this legislation on behalf of the good people of Northumberland--Quinte West. I would ask that all my hon. colleagues consider seriously supporting this bill given the benefits of PRPPs that I have highlighted in this speech.
Mr. Rick Norlock:
Mr. Speaker, those are two very important questions.
In answer to the first question, to the best of my knowledge all my notes and research indicate that all provinces in Canada have indicated they would opt in to the PRPP so the citizens of each province would have the ability to get involved in this great retirement tool that would be available to over 60% of Canadians who are not enrolled in a pension plan.
In answer to the second question, as the member knows, the Canada pension plan is a plan to which all working Canadians contribute. To the best of my knowledge, that plan is actuarially sound, at least into the foreseeable future and generally that means 15 to maybe 25 years. Those are the numbers I am hearing. To the extent that anyone can guarantee anything, I would say that if it is actuarially sound, that pension plan will be there for Canadians who pay into the plan.
I heard a member on the other side say that the NDP would ensure that every single Canadian would be entitled to the CPP. I want to inform him that some very close relatives of mine who, because they had larger families, chose to stay home to raise their children and never worked in the workplace are not eligible for CPP. They are eligible for CPP survivor benefits, but because they did not pay into the plan, they are not eligible. New Democrats need to be very careful.
New Democrats also say the PRPP is a risky plan because it is invested in the stock market and other things. Where do they think the CPP is invested? The CPP is invested in the stock market, although in very cautious investments. The NDP members need to listen to some of their questions because the answers lie with them to be more knowledgeable before they ask them.
Mr. Kevin Lamoureux (Winnipeg North, Lib.):
Mr. Speaker, I would like to point out something that is very obvious. When I think of pensions, I think of the wide spectrum of pension options, whether it is the RRSPs or even to a certain degree people's private investments as they look forward to their retirement years.
There are three fundamental cornerstones of our pension safety net: the old age security, the guaranteed income supplement, and the Canada pension plan. Those are the cornerstones and I believe the Government of Canada needs to stand by that.
While the Prime Minister was abroad he announced that the government is looking at making some fundamental changes to that program. Then in response to question after question during question period over the last few days the government has been in denial and does not want to share any bad news with the public. Let there be no doubt there is some bad news, but the government is just not bold enough or courageous enough to be transparent on the issue.
Today I asked two different members for a guarantee. The Prime Minister and other ministers were afforded the opportunity earlier today to answer. I asked if the government would guarantee that it would not increase the age from 65 to 67. Not one of them was prepared to give that guarantee.
That is why Canadians should be concerned. We do not know what the intentions of the government are in terms of making the reforms. We have not been privy to the documents in the Prime Minister's office. I suspect that probably the vast majority of the Conservative MPs are not aware of it either.
Let us not be fooled. The Prime Minister does have an agenda, and I do not think it is a healthy agenda for the cornerstones of our pension program.
This is a great issue, because it shows the differences between the Conservatives, the Liberals and the New Democrats. We have long advocated the importance of these programs. In fact it was Liberal prime ministers, King, Laurier and Chrétien, who built those programs, who put them into play.
We recognize the value and importance of pensions for our seniors, so that seniors can afford the necessities and hopefully a little bit more than just the necessities here and there. That is why we believe very passionately that this is something we are going to fight for.
We believe that we will uncover the truth. We will find out the true intentions of the government. We will continue to press the government on the issue indefinitely, up to the next election if need be. We will circulate petitions and cards. We want Canadians to know that this is something the government is looking at. Canadians want leadership. We are prepared to provide leadership in the fight for this issue, because we believe in this issue. I asked the New Democrats what their position is on this bill.
The pooled registered pension plans do have a role, but there are some fundamental problems with this bill. There are some serious issues. We need to create an opportunity where there is more competition, maybe involve the CPP planners or managers to a certain degree, and have access so there is more competition. Management fees under the PRPPs will be of concern. Whether it is in the House of Commons or in the different legislatures across Canada, it will be of concern.
The Liberals have an open mind toward it. We recognize that many of the provinces, although the government says it is all of the provinces, are in agreement. I hope the government is being honest about that. We will find out over the next year or two. We will wait to see which provinces bring in the necessary legislation to give Canadians the opportunity to participate in this program, if in fact they are in a position to participate.
Let there be no doubt that we are going to continue to fight for those fundamental cornerstones, the CPP, GIS and OAS. However, we are not going to put on blinders and ignore other pension issues that are also important to Canadians.
We want to see stronger leadership on this issue. The Prime Minister should meet with the first ministers on this issue.
Member after member stands and says that we cannot do anything about the CPP because constitutionally we are required to get two-thirds of the provinces onside and they would not agree to it. I wonder to what degree the Prime Minister has really tried to push for that.
We know that before he was the leader of the Conservative Party and a member of the Reform Party, he advocated that we might not even need the CPP, that it could be privatized. I am not convinced that the Prime Minister demonstrated any leadership whatsoever in terms of advocating for a healthier CPP.
We appreciate that the provinces have a role to play. However, the provinces have to recognize the reality of what the population as a whole wants. The pension issue is very important. The Prime Minister made it that much more important in terms of some of the announcements the Conservatives have made over the last number of days. That is why there is an obligation on the government to come clean in terms of its actual position. Many, including myself, believe that its intentions are to belittle the importance of those three very important fundamental cornerstones to future pensions.
After making an enquiry I was told that in the province of Manitoba over 7,000 seniors 65 years of age and older have to use a food bank on occasion every month. I suspect many of those are from the riding I represent. However, whether I represent them or whether they live in a different riding, it is important that we stand up for seniors who are having a difficult time in trying to make ends meet.
More and more, pharmaceutical costs have been shooting through the roof. Far too many seniors are having to decide between buying the prescribed medication they are supposed to be taking or buying food, which is absolutely essential. Many members might be surprised at the number of seniors who are having to make that decision. I would have expected the government to act on this issue in terms of looking at ways in which to provide more funding for our seniors who are in need.
The government will say that the Liberals did not support the last budget, so the Liberals did not support the last increase to the guaranteed income supplement. Nothing could be further from the truth. We support the increase. In fact, we believe there should have been a larger increase going to our seniors under the guaranteed income supplement because we recognize the hardships they are having to endure.
We want to see a government that believes in protecting seniors' interests, those pension issues that are before us. This will be an issue that I will continue to push on and ask the government to do the right thing in addressing those basic three programs that I have emphasized, the OAS, the GIS, and the CPP. These are very important national social programs that Canadians have grown to respect. Canadians acknowledge how critically important they are to the future of our country.
Sixty-five years of age is what we should be keeping the OAS at. If we can afford some of the expenditures the government is making, surely to goodness the government can come up with a little more money to support the GIS in the upcoming budget, and maybe make our seniors a little better off so they can better afford to get food and not have to make a decision between it and prescription drugs.
Mr. Pierre Poilievre (Parliamentary Secretary to the Minister of Transport, Infrastructure and Communities and for the Federal Economic Development Agency for Southern Ontario, CPC):
Mr. Speaker, over 60% of Canadians have no workplace pension. That is because many employers do not want the legal or administrative burden of offering them. These costs can be prohibitively high and the benefits inordinately low for a small business with a limited budget and only five or ten employees.
Let us consider or create an example. Joe and Martha Stephens are a married couple without a pension plan. He owns a corner store and she works as a restaurant manager. Neither the restaurant nor the corner store has enough employees to justify the cost of running a pension plan for its people. It is true that RRSPs help as an option, but some people find them too intimidating or time consuming to establish. On average, each Canadian has about $18,000 in unused RRSP room.
What if thousands of Canadian workers from these kinds of businesses could pool their benefits together to achieve the bulk-buy savings that come with a pooled plan? That would spread the risks and costs among a larger number of people. That is exactly what the pooled registered pension plan offers. Canadians would be able to buy in bulk and get better purchasing power. All of a sudden, the Joes and Marthas and millions of people like them who are on their own could join forces and secure affordable pensions. The design of these plans will be straightforward with simple enrolment and management. A third-party administrator, normally a bank, insurance company or existing pension plan, would be responsible for the administrative and legal duties.
What a relief for a small business owner. These plans would also be subject to the standard pension rules that exist for plans across the sector right now, unlike group RRSPs, which have no similar standard of regulatory practice.
The opposition parties oppose this idea because it is a private sector solution. They believe that government should run and operate everything. They particularly oppose the fact that these pooled pension plans would invest in the stock market. What they fail to realize is that the entire pension system, public and private, relies heavily on the stock market already. Consider the Canada pension plan, 49.6% of which is invested in equities or stocks. These stocks can only pay income into the CPP out of their after-tax profits. Liberals and the NDP want to raise taxes on the very businesses that the CPP invests in. The result would be increased pressures on our public pension system.
For example, the CPP owns $59 million in Bank of Nova Scotia shares. When that company profits, so does the CPP and, ultimately, so do the millions of Canadians who rely upon it. The CPP also owns $13 million in TransCanada shares. Does TransCanada ring bells in this place? I ask because TransCanada is the same company that is attempting to build the Keystone pipeline, which, admittedly, would profit that company but would, by definition, also profit its owners of whom $13 million is represented by the Canada pension plan and the 17 million Canadians who are invested in that plan. The opposition, which opposes this pipeline, is attacking a company that is literally paying its profits into the CPP fund.
The opposition parties are also attacking workplace pension plans, even though they do not realize they are doing so. Take the Canada Post pension plan. During the debate over the postal strike, members of the New Democratic Party simultaneously demanded that the existing pension plan for mail workers be bolstered and that business taxes go up. These concurrent demands are painfully ironic.
The top five holdings of the Canada Post pension plan are the Toronto Dominion Bank, the Royal Bank of Canada, Bank of Nova Scotia, Suncor and Canadian Natural Resources. The banks and oil companies, the twin villains in every left-wing storyline, paid dividends into the pension fund of these unionized workers. These dividends come exclusively from after-tax profits. That means that if we tax these profits more, pensioners will ultimately get less.
On January 1, 2012 the final instalment of our business tax cuts took effect, dropping the rate from 15% to 22%. That is a one-third reduction. By contrast, the NDP election platform proposed increasing the business tax rate from 15% to 19.5%, a one-third hike. That would be a $9 billion tax increase on job creators, the companies in which pension funds are invested. Liberals propose a similar hike on these job creators. That would drastically reduce the after-tax earnings left to the pension funds that own these shares.
We should celebrate the fact that workers are invested in capital markets. It is good for everyone involved. People grow their retirement savings while their money provides investment capital to companies that create jobs.
However, the benefit is not just economic but also societal. Politicians always like to divide people along socio-economic class lines, the workers versus capitalists. However, the two are increasingly becoming one and the same due to direct or indirect share ownership by workers. The old utopian socialist dream was for workers to become owners of the means of production through a process of forced collectivization, nationalization and expropriation.
In an ironic twist of fate, it was the capitalistic stock market and not the state that made workers into business owners. Pooled pension plans, tax free savings accounts, lower taxes on businesses and workers give Canadians ownership over their own destinies. Herein lies the sharp difference between this side of the House and that side. Members on that side want to turn workers against business owners; we want to turn workers into business owners. That is the hopeful, uplifting message that our government offers Canadians who aspire to a brighter, more secure and prosperous future.
Mrs. Anne-Marie Day (Charlesbourg—Haute-Saint-Charles, NDP):
Mr. Speaker, I would first like to thank my NDP colleagues for their various interventions on the government bill before us here today. I think this is a very important subject, one that Canadians are really concerned about. A number of people from my riding have contacted me to share their concerns about their retirement. That is why I wanted to speak here today.
In a democratic country like Canada, the right to retire in dignity after working hard one's entire life is absolutely fundamental. What I mean by “in dignity” is having enough money to pay for groceries, to pay the rent and to pay for health care. The current economic situation, economic projections for the future and our aging population are all crucial factors in determining how we, as a society, should manage our retirement programs.
In that regard, I must commend the government for recognizing the issues that will affect how and when Canadians retire and for trying to come up with solutions to ensure a decent retirement for everyone. Where I disagree with the Conservatives—and where I agree more with the NDP's opinion—has to do with how the government is going about solving the growing problem of access to a decent income when the time comes to retire. Bill C-25, introduced by the government, has many flaws that really need to be examined and understood by Canadians, because, I would remind the House, it is their money on the line.
According to the main points of the bill, the new pooled registered pension plans, PRPPs, a retirement savings vehicle very similar to RRSPs, would enable plan members to pool their funds to reduce costs associated with managing the plan's investments. The bill notes that the benefits of PRPPs are transferable, but that they are not indexed to inflation. These plans are intended for self-employed workers and small and medium-sized businesses that do not have the means to manage a private sector pension plan.
Despite the government's claims, pooled registered pension plans will not enable Canadians to achieve their retirement goals. The plans will not improve income security for retired workers. The plan proposed here is a defined contribution plan, not a defined benefit plan. In this kind of plan, employees set aside funds throughout their working lives, and those funds are invested in stocks, bonds, mutual funds and so on. Investment income depends entirely on market fluctuations. That is an extremely important point. The employees absorb all of the financial risk associated with stock market ups and downs.
If the government made an effort to listen to all of the Canadians whose RRSPs melted away like snow in sunshine in 2008, it would understand that more stable and secure savings options should be made available. People who can tolerate significant risk can turn to the stock market and RRSPs. Worse still, depending on the province, employers could potentially be required to offer this plan to their employees without having to contribute. People already have the option of contributing to a savings plan without employer participation. That is called an RRSP. What more does the government have to offer?
Last November, in its press release announcing Bill C-25, the government said:
||...over 60% of Canadians do not have a workplace pension plan. Because of this, our government acted by introducing legislation...that implements pooled registered pension plans.... Our Conservative government is delivering PRPPs to offer a new, low-cost and accessible pension option to help Canadians meet their goals.
What low-cost, accessible pension is the Conservative government talking about? Last year, only 31% of eligible Canadians contributed to an RRSP. The rest just could not afford to. Currently, Canadians have $500 billion in unused RRSP contribution room available.
Let us say it again loud and clear: Canadians do not have access to an affordable and accessible retirement because they have absolutely nothing left at the end of the month to put into savings. And the Conservatives are asking them to take what little they have managed to put aside and put it into investment funds administered by banks, the very banks that have nearly wiped out the global economy, with no guaranteed income and no guarantee that the funds available will see the workers all the way through retirement?
And the Conservatives want these funds to be managed by fund management “experts” at the banks and insurance companies without any limits on the cost of their management fees and bonuses that will be paid out of the pockets of our future retirees?
During a radio interview, the Minister of Industry said:
|| By pooling retirement savings, PRPPs will allow Canadians to benefit from greater purchasing power. We are talking about economies of scale here. Canadians will essentially be able to buy in bulk. Professional administrators will exercise a duty of care to ensure that the funds are invested in the best interests of the plan members.
In my opinion, the advantage of economies of scale is quite questionable. We should learn from the Australian experience, but this government is again turning a deaf ear, as it did to the warnings from the United States about the omnibus Bill C-10.
Ten years ago in Australia, a similar system provided very disappointing results. Their system was mandatory, with the possibility to opt out, a bit like what the government wants to do here. The Australians came to the conclusion that, even though people saved because it was mandatory, the returns on investment did not outpace inflation.
The report commissioned by the Australian government attributes these discouraging results to the high costs and fees, even though it was thought that competition among the banks would, as we just heard, lead to reduced costs and economies of scale. So much for that argument; it does not fly. Let us have the wisdom to learn from our Australian counterparts and avoid making the same mistakes.
What Canadians want is not another incentive to save more money. The average Canadian is already trying to save and can barely manage. First we have to come up with a solution closer to the source of the problem. Canadians want to have a decent income that will allow them to save. The solution is job creation.
The excessive debt of Canadian households has made the headlines again, and 1.6 million Canadian seniors are living in poverty. By OECD standards, the CPP system is relatively miserly since other similar countries have much more generous public pension plans.
In 2010, one in four workers had a low-wage job. Does the government think that a Canadian who earns $13 an hour will be able to meet his needs and the needs of his family and contribute to his PRPP, where his hard-earned money will be at the mercy of the stock market as it operates today?
Canadians must understand that the measures proposed here are superficial and risky. The government has not taken the time to carefully consider the problem.
Mr. Mark Adler (York Centre, CPC):
Mr. Speaker, it is my great pleasure to rise in the House today to speak in favour of Bill C-25. Ensuring that Canadians are able to retire with financial security is of paramount importance to our government. Therefore, we are helping millions of Canadians save for retirement more easily by introducing the pooled registered retirement pension plans. This new low cost and accessible option will help more Canadians meet their retirement goals. This is especially important for those working in small business and the self-employed.
PRPPs will improve the range of retirement saving options by providing a new accessible, straightforward administratively low cost retirement option for employers to offer their employees. It will allow individuals who currently may not participate in a pension plan, such as the self-employed and employees of companies that do not currently offer a pension plan, to make use of this new type of retirement vehicle. It will enable more Canadians to benefit from the lower investment management costs that will result from membership in a large pooled plan. It will allow accumulated benefits to move with each individual as he or she moved from job to job. It will ensure that funds are invested in the best interests of the plan members.
What has led to the development of PRPPs? Canada's aging population and the global financial crisis have highlighted the need for retirement income security. In this context, a joint federal-provincial working group was established in May 2009 to undertake an in-depth examination of retirement income. The working group concluded that overall the Canadian retirement income system was performing well and provided Canadians with an adequate standard of living upon retirement.
However, some Canadian households, especially modest and middle-income households, are at risk of not saving enough for retirement. There are a number of factors that may be contributing to this risk, including declining participation in employer-sponsored registered pension plans. The proportion of working Canadians with such plans has declined from 41% in 1991 to 34% in 2007.
Some Canadians may also be failing to take advantage of the discretionary savings opportunities offered to them through individual structures like RRSPs. Participation in RRSPs reached a peak of 45% of the labour force in 1997, before levelling off to 39% in 2008.
After careful consideration, the ministers of finance agreed to pursue a framework to establish pooled registered retirement pension plans as an effective and appropriate way to help bridge existing gaps in the retirement system.
There are many benefits to PRPPs.
First, PRPPs are an innovative new pension plan designed to address the lack of low cost, large scale retirement savings options available to many Canadians.
Second, some Canadians may be failing to take advantage of the savings opportunities offered to them through individual structures like RRSPs. For an example, on average, each Canadian has over $18,000 in unused RRSP room.
Third, many Canadians can only access a workplace pension plan if their employers offer one. Many employers do not want the legal or administrative burden of offering a pension plan. As a result, over 60% of Canadians do not have a workplace pension. Recent data suggests that 97.8% of total business establishments are small firms, those that employ 15 people or less, and at this time these firms are unable to efficiently provide a pension plan for their employees due to the costs presented by such plans. As a former business owner, I understand the difficulties associated with the costs and burden of administering a workplace pension plan.
Fourth, the designed features of the PRPP will remove a lot of the traditional barriers that might have kept some employers in the past from offering pension plans to their employees.
Fifth, the design of these plans will also be straightforward to allow for simple enrolment and management. A third party PRPP administrator will take on most of the responsibilities that employers bear in existing pension plans, including the administrative and legal duties associated with administering such a plan.
Sixth, by pooling pension savings, PRPPs will offer Canadians greater purchasing power. They will be able to buy in bulk. Achieving lower prices than would otherwise be available, means they will get greater returns on their savings and more money will be left in their pockets when they retired.
Finally, PRPPs are intended to largely harmonize from province to province, which also allows for lower administrative costs.
Bill C-25 is of great importance to Canadians. We must give Canadians the confidence that when they finally do retire, they will be financially secure. In order to achieve this goal, our government has put forward a strong proposal to provide Canadians with the ability to save for their retirement on their own terms. Our government is working tirelessly to ensure financial stability for all Canadians. Providing proper pension opportunities is one of the ways we can ensure we stay firmly focused on what matters most to Canadians, jobs and a strong economy.
Pooled registered pension plans are a smart and effective way for our people to save for tomorrow today. Therefore, I urge all those present today to join me in supporting Bill C-25.
Mr. Charlie Angus (Timmins—James Bay, NDP):
Mr. Speaker, it is a great honour, as always, to stand and represent the people of Timmins--James Bay.
The voices of the people of Timmins—James Bay are once again being shut down by a government that is afraid to deal with the pension crisis that it is creating. The government has shut down debate on an issue that is fundamental to the future of Canadians, their pensions. The government shows amazing contempt for the democratic process.
However, I think the government really wants to get the pension issue off the table as fast as possible. When people look at this so-called pension plan, the average Canadian knows this is a scam and it is not going to fly.
Pensions were the first thing I learned about in politics. My granny Angus lived in a little room upstairs in our townhouse. She was a mining widow. Every month when that Canada pension cheque came in, she would come downstairs, hold up that cheque and say, “The NDP fought for this.” I used to think my grandmother was a little crazy. I would say, “Nanny, there has always been a pension.” She would say, “No, there wasn't always a pension. People fought for that pension.”
My grandfather, Charlie Angus, worked 38 years at the largest gold mine in North America. Those men had no pensions because it was expected that they were going to die young. They were going to die from silicosis, emphysema or heart failure in their early forties. That is what happened to all the immigrant miners. They were going die in a run of muck or a rock blast. They did not have to worry about pensions. However, if they lived long enough, they were stuck. Charlie Angus went to work and died on the shop floor at the Hollinger mine when he was 68 years old. The miners worked until they died. That was the way it was when I was born.
Sixty-eight years old. I was thinking about what a different world that was, when my grandfather had to be at the mine at 68. Just a few months ago, at a Tim Hortons in Timmins, a guy came up to me and said, “I can't live on my CPP. I worked my whole life as a contract miner. I'm going back underground.” I said, “How old are you, sir?” He said, “I'm 68 years old.”
The pension crisis that exists in our country is not this fabricated crisis that the Prime Minister told the millionaires about in Davos. The pension crisis in this country is that we have a system that works but that citizens are not able to pay enough into it. The CPP is an excellent, well funded system. It is the simplest and the lowest cost. It guarantees people the chance to retire in dignity. So, in my riding 68-year-olds would not have to go back to work.
When the Prime Minister spoke to millionaires in Switzerland, the message he delivered to them was that our senior citizens are living too high off the hog. He did not have the guts to come back to tell senior citizens in this country what he was going to do.
We have been trying to get a straight answer from this attack on old age security. Old age security represents the poorest people. It delivers the most basic pension. Pension plans are built over 30 years. Over the last 30 years, we have had maybe 15 years of Liberal and 15 years of Conservative governments. Did they not see the demographic crisis that now, suddenly, the Prime Minister has become aware of? Did they not see that these senior citizens were getting too much? We are trying to get an answer as to how this could be.
The human resources minister said today that we have to worry about future invasions of our country. Is this conspiracy stuff? It has been 150 years since the Fenians came over the border at Buffalo and fired off a few muskets. Are the Conservatives saying that our senior citizens should not be getting old age security because the human resources minister is worried about future invasions?
The Prime Minister has floated the trial balloon and has now gone to ground. He sent out my favourite conspiracy theorist, the Ron Paul guy, the parliamentary secretary, who told us today that one of the companies that is behind the Keystone development has money in pensions. If we increase pensions it is going to cost that company money; he considers this another attack by the NDP on the Keystone pipeline. I was thinking, is this crackpot bizarre republicanism or is this just the normal course for the Conservatives?
Is this man anywhere close to reality? I do not think he has ever had a real job. He has always lived within this Conservative attack bubble. However, my people back home do have real jobs.
I hear Conservative backbenchers saying that the problem with RRSPs is that people have unused capacity. I was a contract worker. I raised three children on various jobs. I was never able to save enough money for RRSPs so my capacity was “taken up”. When people go from contract to contract, which goes for most in my generation, in between the contracts they use up their savings. That is the reality. I am now 50 years old. I am almost there, but people can see from my grey hair that I am older than a lot of the demographic. In my generation, people have not paid into a pension plan. They have been trying to save in RRSPs.
Now people are being told the government is going to change the name of the RRSP and the best thing is, the employer might contribute. It is not that the employer will contribute. The government will just change the name. If RRSPs worked, it would be sufficient, but they have not worked. I am sure my colleagues have friends with private sector savings who, like many of my friends, lost 40% of the value of those savings in 2008 when the recession hit. We are possibly going into years of negative real growth. Yet we are being told to tell people to put more money into the RRSP system and that the system will deal with it.
Meanwhile, we have a system that works. We have the CPP. When talking to pension experts, the one thing they say is that the CPP works and we should allow workers to contribute more to the CPP. That is a reasonable solution. However, that is a public solution. The government does not believe in the things that have made this country work. We put our resources together and created a public pension plan that is sustainable and doable. CPP has protected Canadians for 40 years. Pension experts say that is where we need to go, but that is where the government does not want to go.
What have the Conservatives done? They have come up with this glorified RRSP program, but they do not want to debate it. They do not want Canadians to hear about it. It is our job as members of Parliament to stand in the House and represent the concerns of our people. The Conservatives do not seem to like it; it might bother the attack message crew around the Prime Minister. However, that is the parliamentary Westminster tradition. Canadians can hear the debates and judge whether they make sense. Yet forcing through a fundamental change on pensions within 24 hours of introducing this bill would be denying Canadians a perspective on a bill that is going to affect their future.
I would say that the Conservatives know this plan does not hold water. They know Canadians are not stupid and are concerned about their future. When I go back to Timmins—James Bay, I hear more and more about financial insecurity. People do not have what they need. These are people who have done it right, but despite having been careful their whole lives, it is just not there for them. We have a chance to fix this for the next generation, but instead we are seeing a destabilization of old age security. We are seeing an attempt to create this supposed private solution where nobody really has to contribute, nobody really has to participate. It is there to help people add to their savings.
CPP has lots of unused capacity, if we are going to use Conservative terms. In fact, if we compare with the United States, the senior benefit there is $30,000 per year while the maximum in Canada is $12,000. People cannot live on $12,000 a year. They cannot pay their rent on $12,000 a year. Even if we add old age security to that, which is a maximum of less than $7,000 a year, it is still far below. We already have a system that works. It is low cost. It does not create any hassle for the employers because the contribution is already being deducted.
If we allow working people and the self-employed, the contract workers, to make contributions to the CPP, a publicly pooled pension plan, there will be the level of security that a previous generation of Parliament sought for this generation. It will continue to the next generation. However, if we continue to shut down the ability of Parliament to do its work, we are going to get shoddy work. That is what we are seeing from the government.
Mr. James Bezan (Selkirk—Interlake, CPC):
Mr. Speaker, I am pleased to rise today to speak to Bill C-25.
After listening to the debate in the House this afternoon, I must say that I was quite shocked at some of the comments I heard coming from across the floor. The suggestion that all our problems with pension plans can be solved by just increasing the CPP is a misleader. We know that when the finance ministers met and discussed the potential of increasing CPP premiums and benefits that there was no consensus. To have a change in CPP, we need to have the agreement of two-thirds of the provinces representing two-thirds of Canadians. However, there was not enough consensus around the table to move forward on increasing benefits in the Canadian pension plan. That is why we came forward with the pooled registered pension plan, which is being supported in principle by all provinces. There is unanimous support to go forward with the pooled registered pension plan.
In talking to people in Selkirk—Interlake and the businesses up and down the main streets throughout the 71 communities in my riding, they are glad that they may now have some options. Unlike a lot of places in urban Canada, not a lot of big businesses in rural Canada offer employee pension plans. By not having that employer-employee contribution going into a pension program, people have had to use their own savings or go into their RRSPs. Now there would be an option and the ability for all these small businesses to offer a pension.
If we look at the statistics, small and medium size businesses represent over 90% of the businesses in Canada. They employ 67% of Canadians. A lot of those businesses are owned by self-employed individuals. Now they would have an opportunity to participate in a larger fund that would pool their dollars and cut down on the administration cost so that they could make investments for retirement.
Over the break in January, I met with some of my chambers of commerce. I held some prebudget consultation meetings. Even last fall, in some meetings with municipal councils and chambers of commerce, they were talking about a pooled registered pension plan program. They see this as a benefit. They see this as an opportunity to help retain employees because their employees would now have an opportunity to participate in a pension program rather than having to relocate. We see a lot of people going after more lucrative employment opportunities and leaving for other areas of Canada and urban centres. That is the wrong approach for rural Canada.
By having the government move forward on the PRPP, small and medium size businesses and the self-employed would have a competitive opportunity to keep people in their communities. On top of enjoying the great attributes of rural Canada, people would have the ability to have the same potential for retirement earnings and be able to then retire in those communities. It would allow them to continue having the community services, the schools for their children and to make use of their recreational facilities with that taxpayer base through property taxes. Therefore, we need to maintain that population base and this is another tool that would allow us to do it.
I encourage everyone, when we vote in a few minutes on Bill C-25, to support it.