I stand with the members of the opposition parties in general in believing that the CPP is our best and most reliable pension system and that it must be expanded. I am concerned about this new approach, because it is discretionary. It appears to create the greatest benefit for those people who buy and sell investment services.

I would like to ask my hon. friend what can be done and whether we can put forward perhaps a private member’s bill from this side of the House to ensure that we protect the pensions that are held in firms that go into bankruptcy. For such plans as that of Nortel or Catalyst Paper and others, can we make those secured creditors in bankruptcy?

Hon. Judy Sgro: Mr. Speaker, we had many discussions and actually asked many questions of the government on this side of the House in that whole debacle with Nortel, calling on the government to make the kind of changes to the Bankruptcy Act that would eliminate the contribution holiday. The government did take some action on that part of the file, requiring a larger amount of surplus before they could take a contribution holiday, but there is much more to be done when we come to this whole issue of protecting individuals’ pensions.

We all believe that, when we put money into a pension fund, it is sacrosanct. Certainly, we Liberals believe it has to be protected 100%. We have to realize people are counting on that money to be there, and if a company goes bankrupt and leaves them as Nortel did, many have nowhere to go.

We have examined many different options. The Province of Ontario has a fund, as does the U.S., which backs up to $1,000 per month some of the pensions of companies that go bankrupt, but that is under huge pressure and it is not necessarily the best answer either.

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The member mentioned that in his riding, Catalyst Paper’s current situation is causing real problems for people in Saanich—Gulf Islands, and people in the Ottawa area know well the disaster that befell so many Nortel workers, particularly those with disability pension plans that they had been counting on.

What does the member think it will take to get government action to protect private pension schemes in bankruptcy?

Bruce Hyer: Madam Speaker, as I mentioned in my speech, the hon. member for Thunder Bay—Rainy River introduced private member’s legislation that was excellent and would put pension plans first ahead of other creditors. I hope he will reintroduce that legislation in this House and I hope all members of Parliament will support it. Just as paycheques should come before creditors, so should their pension plans, which are really paycheques held in arrears.

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I am attracted to the idea of more municipal bonds. I know we are thinking outside the Bill C-25 box, but what does the member for London—Fanshawe think of Canadians being able to put their retirement savings in municipal bonds in their own communities?

Irene Mathyssen: Madam Speaker, that is something we should be investigating.

In December 2010, the federal government said it was going to sit down with the provinces and talk practically in a progressive way about the retirement crisis we face. Perhaps future talks with a different government would find something solid and workable. I hope there is a different government in 2015. In fact I know there will be a different government.

Perhaps we can sit down with municipalities and find something solid and workable that would invest our pension funds in a way that provides a significant return, safety and security, defined benefits and the kind of pension deserved by Canadians who have spent their entire lives building this country, putting in place the social safety net. It would be far better than allowing that bunch to destroy our social safety net, because, quite frankly, that is what they are up to.

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On Thursday, the committee turned its attention to bill S-5, commonly referred to as the Financial Systems Review Act, which the government described as a mostly technical bill dealing with upgrades to certain Acts that govern the regulation of financial institutions.  The bill was referred to the committee after its second reading in the House of Commons and was already introduced and passed by the Senate. The bill is divided into six sections: the first 4 sections make amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act.  Section 5 makes amendments to other acts that govern the Bank of Canada, the Office of the Superintendent of Financial Institutions (OSFI) and the Financial Consumer Agency of Canada (FCAC), amongst others. The bill would remove duplicative disclosure requirements for foreign customers of insurance companies, would give the final say to the Minister of Finance regarding large foreign acquisitions by Canadian banks, increase the fines that the Financial Consumer Agency of Canada can levy on misbehaving institutions, and increase the numerical size of the ownership threshold on the biggest banks in Canada.  Minister of State for Finance Ted Menzies appeared before the committee to introduce the legislation and answer questions from committee members.  Later on, representatives from the Canadian Bankers Association, the Canadian Life and Health Insurance Association, OFSI and FCAC testified about the importance of passing the bill. Questions from committee members focused on the level of consultation with industry representatives the Department of Finance took when drafting the bill and the need for the continued regulation of the financial sector in Canada.

For more information on Bill C-25:

http://www.fin.gc.ca/n11/11-119-eng.asp

For more information on Bill S-5

http://www.parl.gc.ca/About/Parliament/LegislativeSummaries/bills_ls.asp?source=library_prb&ls=S5&Parl=41&Ses=1&Language=E&Mode=1

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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

http://www.fin.gc.ca/n11/11-119-eng.asp

Canadian Labour Congress Proposal

http://www.canadianlabour.ca/action-center/retirement-security-everyone/retirement-security-reform-1-double-cpp-benefits

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To start off its study on Bill C-25, Minister of State for Finance Ted Menzies testified and answered questions from MPs on the proposed legislation.  The minister focused on the low administrative and financial burdens PRPP’s impose on small businesses, as well as the fact provincial governments have privately expressed support, as key benefits to the plan. However, opposition members pressed the Minister on why he did not pursue more options with the framework of the Canadian Pension Plan, which would guarantee savings amongst all Canadians.  There was some debate between the government and the opposition as to whether the competitions between financial institutions to offer PRPP’s would drive the administrative costs down below the levels of the CPP.  When the Committee resumes after the coming break week, it will hear from other industry stakeholders regarding Bill C-25.

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My question is on other urgent pension matters that I do not know that the government is dealing with. I wish we were able to look at pension issues and not be merely focused on this quite inadequate private sector pooled registered pension plan. Instead, I wish we were able to look at the urgent issue that pensions that were not protected in the private sector be protected as secured creditors in bankruptcy, such that the workers at Nortel would not be wiped out by what happened to them. This is a continual problem in our economy.

Why are we not acting to protect the pensions of people under the superannuation scheme, of retired RCMP, military and civil servants who lose pension benefits to their surviving spouse if they remarry after age 60.

Those are urgent issues and I do not see the government addressing them.

Pierre Poilievre: Mr. Speaker, the hon. member has raised good questions.

I would simply add that in order for any of our pensions, public or private, to function, we need a strong business sector generating the wealth to pay into those funds.

We have created a vibrant business sector by signing nine new free trade agreements, by lowering business taxes by one-third, by cutting red tape and by moving forward with a budget that is coming this spring that will reduce the cost and the burden of government so that we can unleash the strength of free enterprise so that people can aspire to provide for themselves, their families and, eventually, for their retirements.

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Does the hon. member think we can expand CPP right now to deal with those people who do not have pensions?

Hon. Bob Rae: Mr. Speaker, I hope we can. The CPP is a joint plan. It is run jointly by the federal government and the provinces. I agree with the hon. member that we have to recognize that the economy of the past, where people went into the workforce after high school or university and thought their jobs were for life and that they had secure pensions, has changed. Thirty years ago, who would have thought that Nortel would be gone, or that companies we relied on and thought would be there would not be there?

I see my colleague from Sudbury looking at me. When I first started working in Ontario in the 1970s there were 18,000 hourly employees at Inco. There were 15,000 at Hilton Works in Hamilton. Those days are gone. We have to recognize the need for change. The public sector needs to step up with a flexible plan. Until we get the provinces onside, the best we can do is to have some sort of competition for the proposed private plan. We have to recognize that we still have a long way to go to get to a better situation for our current workers and future retirees.

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