April 3, 1998 (36th Parliament, 1st Session)


Diane Ablonczy


Mrs. Diane Ablonczy (Calgary—Nose Hill, Ref.)

Madam Speaker, today we are debating a bill that probably does not affect a lot of Canadians, but every legislative procedure which ties the hands of and puts regulations in place for any Canadian is of interest to all of us.
The bill is entitled amendments to the Pension Benefits Standards Act. The bill amends an act that was brought into place some time ago. Its purpose is to improve the supervisory regime for pension plans that are regulated under the act, especially private pension plans established for employees who are subject to federal jurisdiction such as in the fields of banking, interprovincial transportation and telecommunications. Provinces have similar legislation to look after private pension plans that fall under provincial jurisdiction.
The whole point of the exercise is to make sure when employees put their hard earned dollars into the hands of their employers on the understanding that they are going to have some pension benefits at the end of the day, that their interests will be protected and looked after. This is so they will not end up 20 years later with the company in bankruptcy and a notice on the door saying sorry but they have no pension.
This is an important bill, not just in the federal jurisdiction. Quite often measures put into place federally are looked at, mirrored and seen as a benchmark for what is done in the provinces.
For at least a decade there has been controversy about actuarial surpluses in private employer-employee pension plans. This is a very nice problem to have. It is wonderful to be a member of a pension plan that actually has more money in the bank than will ever be needed to pay the full pensions of all the people in the plan.
That is such a nice situation one could only very much wish that the same prudence had been exhibited by our federal government with respect to the Canada pension plan. Far from having to worry about who gets a big surplus in the Canada pension fund, we have to worry about who is going to get stuck with paying for a debt in that plan of $485 billion. The government says it is no problem, that it will just make our kids and our grandkids pay it, so what is there to worry about? The money is not there but the government will just get it from them. That is how our federal public pension plan has been managed.
Fortunately there has been a bit more prudence in some of the private pension plans and there is actually a surplus. One issue which has been raised is what happens to a surplus when there is one. Obviously it should not just sit there for ever and ever. It needs to be allocated in some fair and reasonable manner.
This was not a problem much before the mid-1980s, but there has been spectacular growth in some of the private pension plans over the last few years. One plan we know about enjoyed a 21% growth in 1995, 20% growth in 1996 and 17% growth in 1997. It would be nice to have that kind of return on our Canada pension plan. Instead, our kids are promised less than 2% growth. That is what we are giving our kids but the private pension plans do not seem to have that trouble. It is nice for them. It is too bad the children and the youth of Canada cannot expect that kind of prudent management for their pensions.
If there is a surplus in the millions of dollars in these pension plans, who is entitled to it? One might think that the entitlement would be fairly simple, that it would go back to the people who put it in, the employers and the employees. But there always seems to be some tension.
Is the employer company entitled to the surplus because it managed the plan so well and therefore the surplus should be its reward? Or should the surplus belong to the workers who actually made the capital investment in the first place? These questions in the past have been left to the courts to decide. The judicial part of our system does rule in these kinds of disputes.
This issue was brought to a head in 1986 when the owner of Dominion stores took back $63 million from three employee pension plans. The employees were not too impressed with this so they went to court. The court ordered the owner of Dominion stores to return the funds to the employees. This caused some concern in the provincial sphere because at that time the province of Ontario had legislation that regulated these funds.
In 1986 Ontario put a moratorium on all the surpluses so they could not be taken or distributed. Although the moratorium has been relaxed somewhat, the provincial rules for division of surpluses are very stringent. There has to be agreement by 90% of the employees before any surplus in private pension funds can be distributed.
The official opposition believes there are some questions in Bill S-3 with respect to accountability. It is our duty, mandate and responsibility on behalf of the citizens of this country to hold the government accountable by being a watchdog to make sure when the government takes steps that it is doing the right thing.
The Reform Party has been playing that role vigorously with respect to the whole issue of payment of compensation to hepatitis C victims. In a host of other issues the official opposition looks at the issue and indicates its concern that the government is not treating citizens of this country fairly.
When this bill goes to committee and at third reading the Reform Party will work vigorously on behalf of Canadian citizens whose moneys are deposited with private pension plans. It is important to make sure that when government brings this legislation forward that we research and understand who it is that stands to benefit from it. There are not many big pension plans in the country. Therefore it is a limited number of people who may or may not benefit or who may or may not be penalized or who may or may not suffer potential loss with this kind of legislation.
The role of the superintendent of pension funds is set out under the Pension Benefit Standards Act which is the act we are talking about amending. The superintendent is supposed to make sure that the private pension plans are well funded. In other words the superintendent makes sure that if employees are putting their monthly or weekly contributions into a company pension plan that the company manages those funds in such a way to protect the interests of the employees.
It is unfortunate that the same standard of care and the same vigorous oversight of the Canada pension plan is not in place. There are millions of Canadians in a Canada pension plan that is not funded. Less than 10% of the funds needed to pay pensions under the Canada pension plan are actually in place. Imagine the outcry if private pension plans were allowed to operate with only 6% of the funds that would be needed at the end of the day to pay out pensions actually kept in the fund and the employer spent the rest of the money for its own business purposes. Somebody would be in jail but of course when the federal government does this, nothing happens.
Fortunately for people with private pension plans there is a little more diligence. Somebody does care what private employers do even if nobody seems to care how imprudent the federal government is. The superintendent makes sure that the plan remains solvent and does not hand out surpluses. The courts decide who gets any surplus.
Under these amendments, the role of the superintendent is broadened. If 50% of the employees agree, the superintendent appoints an arbitrator to decide how the surplus in a pension plan is to be distributed. The superintendent did not have this role before.
There is something we are going to be asking some pretty pointed questions on in committee. We understand that under the present act it is very unlikely that the employer would get anything out of a surplus in a private pension plan. Under the new act employers will now have the door opened to recover or to be able to use some of the surplus. Again we wonder whether there is any potential conflict of interest, whether this is appropriate and why this possibility is being opened up at this time. We are going to be asking some questions about that.
Right now an employer might try to approach employees for agreement saying he will get half and they will get half, but they will all get something. Even if the employers and employees agreed, the courts would still be required to give their blessing to any distribution. Under these amendments however, an arbitrator would be appointed by the superintendent who would make that decision. The question in our minds is whether that is a better way to go, whether this is something that is appropriate.
We want to raise this concern at second reading before the bill goes to committee. We want to make sure we do our job, not to just say that it looks like a good idea and modernizes the act so let us just go ahead. We have a responsibility to look into these matters and we will do that. I want to put on the record that is where we will be going on this.
We want to encourage modernization of some of the measures. We want to reduce administrative burdens where this can be done because it is really the employees, the people who benefit from pension plans, who have to pay those costs. If they can be reduced it is a good thing and we would applaud that.
We would also make sure there continues to be a very high level of supervision of these plans. No one wants to find out at the end of the day that the pension plan they paid into all their working lives and are counting on has gone missing, that the money is not there or has not been managed in a way that makes sure pensions are available.
That is the same concern the official opposition has regarding the Canada pension plan. Down the road we believe our children may say they are not going to pay money for a very low return for themselves and the Canada pension plan will simply not be available for us.
As with many bills, we see some positive measures. We see some benefits for the citizens who are affected. However we also do have some real concerns regarding how much this broadening of the ability outside the courts for the distribution of a surplus should be increased. That is a real concern. I urge other parties in the House to also look closely at this area.
We will continue to study the bill during the committee hearings. Other issues may arise. However we have identified the main one. We believe we need to be vigilant on behalf of Canadians to make sure there are not employers who seek to gain a disproportionate advantage from employees, as was the case with the Dominion stores distribution.
We as official opposition in this second reading stage see some good measures of streamlining in this bill. We also see some areas where we would like to probe a little more deeply, look at some of the winners and losers a bit more carefully.
With those remarks I hope we will be in a position to ensure that in whatever form this legislation comes back at third reading, it will truly be in the best interests of all Canadians, particularly those directly affected by the act.

Topic:   Government Orders
Subtopic:   Pension Benefits Standards Act, 1985
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