Evidence of meeting #14 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was positions.
A recording is available from Parliament.
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Yes, but is there anything in here that enhances the ability of the retirees, the beneficiaries, to participate in investment decisions?
4:20 p.m.
Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance
Not that I'm aware of directly in the bill.
4:20 p.m.
Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
No. The plan administrator is responsible for making the investment decisions and must follow the prudent person rules and other fiduciary duties that are already part of the act and regulations.
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I take your blandishments, but we've been talking a little bit too much to the Nortel folks. There are a lot of really strange investment decisions that were made, which apparently complied with the prudent rule decision and resulted in real difficulties for these folks. The proposals by the government seem to work on the one side of the equation but don't necessarily work on the other side of the equation.
4:20 p.m.
Conservative
The Chair Conservative James Rajotte
They've answered that it's not in the legislation, which you may find insufficient.
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
No, but the point is, Chair, that maybe the government has come up with the perfect half solution.
4:20 p.m.
Conservative
4:20 p.m.
Conservative
The Chair Conservative James Rajotte
I suspect that's a matter of political debate.
Thank you.
Mr. Pacetti, please.
4:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you, Mr. Chairman.
Thank you to the witnesses.
You're increasing the threshold for the surplus to 25%. Are you also changing the refundability? Will the company be able to take some of that money out? That was one of the points that's been addressed during the retirement pension hearings.
4:20 p.m.
Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
I think you're referring to the income tax change to 25%, is that correct?
4:20 p.m.
Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
That's not part of the Pension Benefits Standards Act; that would be the Income Tax Act. It's a rule about how much surplus can stay in the plan before an employer can resume contributions to the plan. So because that threshold is being increased, there will be more situations where an employer is allowed to contribute to the plan even though they are in a surplus position.
4:20 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Correct, but will employers also have the opportunity to take out some of that surplus?
4:20 p.m.
Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
There are rules currently in the act that govern how surplus refunds can be made under a pension plan. It can be done either after the plan terminates or while the plan is ongoing. They can go two different ways. One way is to show that they have a clear entitlement to the surplus under the terms of the plan and based on the historical versions of the plan, and the other way is to go through a process where they have a proposal that two-thirds of members and two-thirds of retirees and other beneficiaries agree to the proposal. Also, as part of the legislation, before any surplus can be withdrawn from the plan, there is a mandatory cushion that needs to remain in the pension plan.
4:25 p.m.
Liberal
4:25 p.m.
Director, Acturial, Policy and Approvals, Office of the Superintendent of Financial Institutions
Those rules are not being changed in this act.
4:25 p.m.
Liberal
4:25 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Pacetti.
Thank you. I don't see any further questions on part 9, so we'll move to part 10, the agreement on social security between Canada and the Republic of Poland. Are there any questions on this part?
Do you have a question, Mr. McKay?
4:25 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
What's the significance? Just explain to me why it's retroactive to October 1, 2009.
4:25 p.m.
Rakesh Patry Director, International Policy and Agreements, Department of Human Resources and Skills Development
Essentially there had been a procedural error into the coming into force of this agreement. The agreement, by law, needs to be tabled in both houses of Parliament. Due to a departmental procedural error it was tabled only in the House and not in the Senate.
This is an effort to ensure that both houses of Parliament have an opportunity to review the agreement and to ensure that people who would be entitled to benefits, as of when the agreement was supposed to have come into force, will be entitled to their full benefits.
4:25 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
So does that mean both houses of Parliament are still going to have to review the agreement itself, and all you're doing is amending the date?
4:25 p.m.
Director, International Policy and Agreements, Department of Human Resources and Skills Development
Essentially, by including this within the Budget Implementation Act we are offering the houses an opportunity to review the agreement. If it is passed within the budget, then the agreement will be deemed to have come into force retroactive to the original coming into force date.
