Mr. Speaker, imagine someone who has worked for 30 some years and has contributed to their workplace pension from every paycheque during that time. Obviously, that plan would be their plan for their golden years. It is a pension that would help pay for some of their expenses and perhaps even give them a chance to enjoy a vacation or a few luxuries they perhaps did not have when they were a little younger. What happens if a year or two before retirement their company goes bankrupt? What happens when their company can no longer pay out the pension the person has been counting on for decades? Well, pensioners in Canada have seen this happen before. We saw it with Nortel, and recently with Sears. Those are two examples that come to mind.
The issue of pension shortfalls has certainly shaken Canadians' confidence in the sustainability of defined benefit pension plans. We cannot blame them. This is a nightmare that is facing many of these workers, and it is a long one. They probably have a lot of sleepless nights and spend a lot of time worrying how it will all work out in the end. They are not sure. They are wondering if it will force them to look at shelving their retirement plans and maybe returning to work for a long period of time, well past what they had anticipated. They may be thinking they should have perhaps saved a little more money for their retirement, but they thought they had this pension plan to rely upon. They wonder what they are going to do now. They wonder what happened to all the money they had invested into the pension plan. Those are the kinds of questions going though their heads.
That is why I am pleased to stand here today in support of my colleague, the member for Durham and his bill, Bill C-405. It addresses these concerns in a balanced sort of way.
I want to clear up some of the misconceptions we just heard regarding the legislation, because the bill would really aim to create peace of mind through flexibility, by making underfunded pension plans more nimble so that more benefits for pensioners could be recovered in these kinds of situations, in a balanced way.
The bill would also improve accountability and transparency by creating a more robust requirement for government agencies to report to Parliament and Canadians. Companies facing bankruptcy would also be prevented from exploiting loopholes or abusing certain rules that would allow for payouts to executives while the pensions are underfunded. Therefore, there is a delicate balance that needs to be achieved between addressing the concerns of sustainability of defined benefit pensions and not adversely affecting other creditors, the bottom lines of companies, etc. Both of those are important, and I believe that Bill C-405 seeks to address those issues in a balanced way.
It goes without saying that the best way to ensure the health of pensions and ensure retirement security for Canadian workers would be to keep companies in business. That is the ideal. It means we have to make sure we create a competitive field for companies to succeed. It means always looking at ways to lower taxes, which is obviously the opposite of what we have seen from the Liberal government, whether payroll taxes, carbon taxes, removal of tax credits, or going after small business owners by branding them as tax cheats and trying to gain more revenue out of them that way.
All of these things are the opposite of what we should be seeking to do as a government. It should be trying to make the opportunities easier for our job creators by lowering taxes and ensuring we are not putting up unnecessary roadblocks and barriers to their success. It certainly means not bringing in a job-killing carbon tax that would hurt Canadians' chances of getting a job, or the ability of businesses to compete and grow and therefore create more jobs.
However, I do not want to get too far down the line of the failures of the Liberal government, because we could talk for hours about that, so I will just move back a little more toward this unfortunate reality.
Despite the efforts made to ensure that we are creating a level playing field and giving opportunities to businesses to be competitive and to able to succeed and to create opportunities and jobs, sometimes companies will fail. Hard-working, loyal employees can be left in the dark in those situations. They can be unsure about the future of their pensions.
This bill would amend the Pension Benefits Standards Act of 1985 to authorize the administrator of a pension plan to amend an underfunded pension plan in certain situations, and to provide for the tabling of an annual report on the solvency of pension plans. Again, that is the transparency we are talking about.
The bill would also amend the Companies' Creditors Arrangement Act to add limitations on orders made to cover certain costs. Now, members might be asking how the bill would do that. Let me try to provide some answers.
The bill would add flexibility to the refinancing, replacement or amendment of terminated pension plans with unfunded liabilities, so that administrators can obtain the highest payments possible. That flexibility obviously would give them the ability to try to make sure that the best possible arrangement can be worked out.
It would also limit the degree to which large bonuses and pensions could be given to executives while pensions for regular workers go underfunded. We have all seen the headlines, like the Global News story from July 2017 that “Sears managers, executives get $9.2M in bonuses while thousands laid off”.
Obviously we have seen headlines like that, and it frustrates and angers anyone who sees them, other than maybe those people who were getting the bonuses, but that is a pretty small number of Canadians. We need to be focused on the workers, the people who are hearing about being laid off. It certainly is not fair to them. It is something that needs to be addressed; there is no doubt about that.
Previous arrangements with super priority, I do not think are an option. These arrangements create issues in the credit and bond markets that can lead to more insolvency, which obviously does not help anyone.
This week is Small Business Week when we think about small businesses. Many times, some of those other creditors can be small businesses. Because they are small, sometimes when they are dealing with a large company, it can be their only, or one of their only, customers. When small business owners are not able to get paid for the services or goods they are providing those businesses, it could drive some of those small businesses out of work. That means their families and employees would lose out. We have to be conscious of that as well. We need a plan that creates security and transparency for Canadians.
Another example in this area was Wabush Mines, which shut down in 2014. Their workers saw their pensions slashed by 21% to 25%, because their plan was not fully funded. Then the health benefits for 2,400 retirees were cut as well. Some of those workers saw cuts of more than $1,000 a month to their pensions. They worked hard for their benefits, and they were left with a lot less than they had planned for. In this case, there was no priority for pensions during the restructuring proceeding, and the pensions were underfunded. Proceedings took place and the pensions ended up being wound up after liquidation. That process meant that the fixed rate annuity then only paid the pensioners a small fraction of the total amount they had originally agreed to. Obviously, that is something we want to try to address.
That is what this bill does. It would provide greater flexibility for the administrator in situations like that to manage the funds of an underfunded pension at its windup. That would really help. It is something that could have been done already if this bill had been in place. They could have purchased a variable annuity or could have created a group plan that would utilize economies of scale and help pool the risk. Both of those options would have produced higher returns for those pensioners over time. That is what they would have ended up with under this bill.
We can look at other cases, such as Nortel, Sears, Target and others. People were caught by surprise that the pensions were underfunded. The transparency and accountability that Bill C-405 would help in that regard. At the very least, there would obviously be greater transparency and accountability, but there would also be the flexibility and nimbleness needed to address these issues.
I certainly hope all members of the House will choose to support a bill that would be able to address those issues for workers in a balanced kind of way so we can give the nimbleness and flexibility needed.
