Finance committee  Implementing a superpriority, similar to the WEPPA, of a couple of thousand dollars per pensioner or per member, or something of that magnitude that can be calculated and reserved by banks would very likely deal with the risk associated with access to capital that we see. Certainly, in our materials, we are supportive of a WEPPA-like priority on a per-member basis that is not volatile, that is calculable and that is understandable.

Finance committee  I think we are supportive of five to seven years, and the reasons are these: It's about two valuation cycles for a pension plan. It would allow for pension sponsors to renegotiate whatever lending agreements they have, renegotiate collective agreements to the extent they have to in order to be able to continue to access capital on a seamless basis, and then to do the windup, if they need to.

Finance committee  To give banks a priority over pensions...? I'm not sure I understand the question.

Finance committee  You're asking whether, if the pension deficit had a spot perhaps behind secured creditors but ahead of unsecured creditors, that would be a good compromise. I would say it could be a good compromise in some situations. CCAA insolvencies can be very complicated and nuanced. It depends on the liquidation value of the company.

Finance committee  I think there is the ability to test that theory based on the prior restructurings that have occurred. For example, we can see in a case in Sault Ste. Marie, Ontario, which I assume Mr. Lapierre knows quite well, that the legislation that was passed in order for the lenders to lend into the company once it restructured included an exemption from the deemed trust provisions in the Ontario act.

Finance committee  The 9% represents 1.2 million working Canadians accruing a defined benefit pension. Assuming that's equally distributed, that's 40% of them.

Finance committee  Sure, I'll start, and then Ross can feel free to jump in. The decline of the defined benefit pension plan in the private sector is a known issue. It is one that provincial legislatures across the country have tried to reverse by tweaking funding obligations and, in a lot of cases, revamping funding obligations so that pension plans can be maintained on a going-concern basis and so that there is more of an incentive to maintain defined benefit pension plans.

Finance committee  Mr. Lawrence, maybe I could answer on behalf of the ACPM. We did poll our members. Some of Canada's largest defined benefit pension plan sponsors are included in that group. We asked them this: If Bill C-228 made their access to capital more expensive, what would they do? Over 40% of them said they would wind up their defined benefit pension plan.

Finance committee  I think studies have been done showing that the cost of capital will increase for companies that are investment-grade and have defined benefit pension plans. We can provide those to you. I would also say that a well-funded pension plan at a point in time is not necessarily an indication that the pension plan will always be well funded.

Finance committee  That's right. I suppose there's a difference between investing in risk-free, or very nearly risk-free, assets and moderately risky assets to improve the outcome over the long term—

Finance committee  It has been a solution for Stelco retirees and for all of the pension fund—

Finance committee  I guess I would put to you whether or not it's fair to those active employees that they will no longer have a defined benefit pension plan. That's the choice. You're choosing between—

Finance committee  They will wind up their plans.

Finance committee  We are not in favour of a priority for pension deficits. We are in favour of helping retirees in insolvent company pension plans. If their benefit is going to be cut, traditionally the plan is wound up and annuities are bought from an insurance company, as has been alluded to.

Finance committee  Thanks, Ross. Our goal in appearing before you today is to share with you other options that can help this committee achieve its important goal, but without sacrificing that 9%, or about 1.2 million private sector workers in Canada, who are presently accruing defined benefit pensions.