Standing Committee on Finance (FINA)

The Standing Committee on Finance continued its study on Bill C-25 this week, hearing from multiple business, labour and civil society organizations.

Bill C-25, “An Act relating to Pooled Registered Pension Plans and making related amendments to other Acts” would enact legislation enabling the creation of PRPP’s, a new retirement savings vehicle being proposed by the government.  Business organizations, such as the Canadian Federation of Independent Business and the Canadian Bankers Association, were generally very supportive of PRPP’s, citing their low cost and administrative burdens to business.  Furthermore, these witnesses said the plan appropriately targets modest income workers in the private sector who may not have access to a workplace pension. However, many labour organizations and civil society groups expressed reservations about the plan, saying that the government should explore other options, such as enhancements to the Canadian Pension Plan. According to these witnesses, PRPP’s offer very few new features than group Registered Retirement Savings Plans and worry that the voluntary enrollment by businesses and employees means PRPP’s will not address the lack of retirement savings amongst certain demographics of the population. In their opinion, a version of the Canadian Labour Congress’s proposal of a phased-in doubling of CPP contributions would do more to help Canadians save for retirement.

However, the government has responded that it does not have the necessary provincial support for CPP enhancements and business organizations have expressed concerns that their members are still recovering from the financial collapse and that raising their contributions rates will drive down wages and limit hiring.

The committee also heard from the Canadian Association of Retired Persons and the Canadian Bar Association, who raised the concern that the proposed PRPP further normalizes Defined Contribution plans over Defined Benefit Plans.  Defined Contribution plans are considered lesser plans by these witnesses, as employees contribute a defined amount, but do not receive a guaranteed benefit when they retire. The committee also heard testimony from the Canadian Medical Association, who testified that Canadians also need to be saving for potential long term care they may require later on in their life.

Pooled Registered Pension Plans

Canadian Labour Congress Proposal