On April 1st 2010, CARP was invited to comment on Bill 236, An Act to Amend the Pension Benefits Act. To read the Hansard transcript for this Committee presentation, please Read more
Although the Bill contains nothing CARP might find disagreeable, it does very little to address the overall pension crisis. Many of the provisions are positive but they do not truly address the system issues that affect the retirement income security of Canadians; there is talk of initiatives that would start to rebalance the interests of employers and employees. A number of provisions will also better reflect the more mobile workforce that we are seeing and ensure better pension coverage.
Despite this, the Bill falls short in a couple of areas. It is great to address the issue of deficiency funding but it is of no value to the pensioners if the company itself goes bankrupt and no means/backup funds are set aside to protect their pension benefits.
The Bill includes measures that we have seen before, and the issue of pension reform requires us to move back on the time scale to make sure that during the ongoing operations of the fund, there are rules in place to prevent instability, including: no contribution holidays, proper annual valuations and full funding of deficiencies rather than what has recently been put in place: an extension of the time companies may take before they are forced to fund their deficiencies.
The Bill also makes provisions for members and retired members to have more timely access to information about the fund. The ability to receive timely information will be extremely important. However, getting information, while important, does not give them any kind of mandate for governance. They can’t, for example, indicate whether or not certain types of investments, investment structures or compensation structures are appropriate for people who want more stability rather than a huge amount of growth in the pension fund. As a result, pensioners’ interests are often sub- merged in favour of the active members, who have a different interest. The liability of many funds is actually more weighted in favour of the retired members rather than the active members, and yet they have no proportionate level of input to the governance of the organization.
CARP’s proposal for pension reform contains three main components: first, that there be reform of the existing pension regulatory regime to rebalance the interests of employers and employees; secondly, to prevent the underfunding and insecurity of existing pension funds and thirdly. to create a supplementary savings vehicle that will be universal, affordable and sustainable. Bill 236 contains certain initiatives that will potentially have positive repercussions on pension legislation however, much remains to be done before real reform is underway. If Bill 236 is the first of a series of government Bills to reform the system then CARP applauds it. Let’s just hope these types of measures do not exhaust the media and public focus on the issue. The Bill is currently at third reading. To read more on the bill please click here