Thank you, Mr. Chairman, and good morning, members of the committee.
The Bell Pensioners' Group is a federally registered, not-for-profit organization that advocates on behalf of the retirees of Bell Canada. We'd like to thank you for recognizing the importance of the pensioners' perspective by inviting us here today, because we are not always included or invited to the table.
To illustrate that point, last May the Conference Board of Canada held a pension summit and there were over 200 participants. The chair of the summit went on at length to say that it was very important to have all the stakeholders at the table, and yet over two days, not one presentation was on the perspective of the pensioner, and of the 200 participants, there was only one pensioner there.
We're grateful to have the opportunity to dialogue on a critically important topic: Canada's place in a competitive world. We agree that if Canada is to have a meaningful place in the world of the future, then citizens and businesses, and by extension the economy, must prosper. Canada's pension plan system is crucial to our future not only as individual citizens, but also because it supports our economy in very important ways.
Pension funds are now the largest institutional investor class among G-10 countries. The vast resources of these funds are available for the kinds of long-term infrastructure investments that are critical to Canada's long-term economy. If we peel that pension plan system back one more layer and look at private pension plans, like the one I have, it is also a critical pillar in the national pension system.
Private pension plans allow the transfer of risk from individuals to collectives, and by doing so they achieve what David Dodge has described as a more efficient allocation of savings. These large funds are able to take risks that individuals cannot. They have experienced, professional asset managers who are equipped to make informed decisions. They are also, usually, examples of very good corporate governance.
What will happen if these investment machines are no longer in place? Recently we have seen a decline in defined benefit pension plans. If this continues, the transfer of financial return and longevity risks back to individuals could be quite painful for our country. Individuals are less able to manage and absorb losses. This could result, ultimately, in increased financial assistance that would have to be funded by the taxpayer. Also, if there are fewer defined benefit pension plans available, the capital required for long-term infrastructure investment will not be available, and that will impact our growth potential.
If these are not good enough reasons to act now, consider this. In the 1990s, income from private pension plans grew in importance from 18% to almost 30% of total retirement income. This significant shift suggests that it is timely to re-examine the assumptions on which current legislation and regulations are based at the federal level, but also at the provincial level.
What can this committee do? In our brief we made five recommendations, but I feel that the first two are the most crucial.
First of all, you can ensure that Finance Canada is tasked and adequately resourced to follow through on a 2005 consultation paper entitled “Strengthening the Legislative and Regulatory Framework for Defined Benefit Pension Plans Registered under the Pension Benefits Starts Act, 1985” in order to determine what permanent changes are required, in particular, to action the recommendation that pension plans be solvent at all times.
We would also ask for your support for modification to key legislation such as the Canada Business Corporations Act, the CCAA, and the Bankruptcy and Insolvency Act to recognize that retirees are key stakeholders, and to ensure that pension benefit entitlements receive maximum protection should a pension plan sponsor fail.
In closing, pensioners are important stakeholders in the determination of our country's future. The Bell Pensioners' Group is available and willing to represent the views of the Canadian pensioner at any time.
Thank you.