Thank you, Mr. Chair.
Hello. My name is Katherine Thompson. I'm the president of the Air Canada Component of CUPE. I'm here with you today representing the 6,800 flight attendants across Canada who are employed by Air Canada, a federally regulated company. Our members participate in a defined benefit pension plan sponsored by Air Canada. It is in regard to this plan that I am speaking to you today.
Historically, when given the opportunity, some employers fail to sustain adequate funding for the pension plans they administer. Accordingly, the government enacted pension legislation in order to protect retirees who may now be unable to re-enter the labour force should their pension plans fail.
Air Canada's pension plans, like many pension plans in Canada, have been adversely affected by our economic downturn. The assets of the plans have lost value, which puts more pressure, but certainly not the only pressure, on Air Canada's finances.
We believe strongly that the financial problems facing Air Canada as a business are unique to Air Canada and stem from the financial re-engineering of the company by its hedge fund owners after the company's 2004 insolvency. These problems will have to be addressed now that the consequences of the hedge fund restructuring have come home to roost.
The problems facing the Air Canada pension plans, however, are more common to all pension plans around the world. Those problems are a worldwide crisis in capital markets, in investments that have led to what we believe are temporary reductions in the value of our pension plan assets. Certainly most economic forecasts suggest the worst of these problems will be behind us in 2009, and we will see a slow return to a more normal capital market in 2010.
For these reasons, we recognize and indeed support the need for temporary measures to see Air Canada through this extraordinary period. However, we emphatically reject the argument that the current conditions require far-reaching, permanent change to our pension regulations. As you know, a group of seven federally regulated employers have recently requested very significant reforms to the Pension Benefits Standards Act, reforms that we think are fundamentally flawed. Under the guise of the current financial crisis, this group of corporations is asking to revalue the funding levels of their pension plans. This revaluing we think constitutes the single largest transfer of risk from shareholders to employees and retirees in the history of Canadian pensions.
In response, the Department of Finance released a discussion paper in January 2009 requesting submissions on the Pension Benefits Standards Act. We availed ourselves of this opportunity to provide a comprehensive submission to Diane Lafleur of financial sector policy branch.
I will refer you to our submissions to Madame Lafleur for more specific comments on the group of seven's proposal, as well as our position on the permanent changes to the pension act that they seek.
I would like to use my remaining time with this committee to make three specific suggestions. It is our hope that these suggestions will be of assistance to your committee.
We support extending temporary and balanced funding relief for federally regulated pension plans. We believe that there are clear principles that must be present for relief to be balanced.
Retirees and employees should maintain the right to withhold consent to any concessions that increase risk or simply transfer equity from plan members to other corporate stakeholders.
Any increased risk that may be agreed to should be fully secured through a deemed trust provision.
In conclusion, I'm here to give a voice to the predominantly female and minority-based flight attendants whom I represent, employees who during the course of their careers with Air Canada have not been the recipients of generous salaries or lucrative stock options to aid in their retirement planning. They are now relying on their elected officials to ensure that pension legislation continues to protect the pension plans that they've contributed to in the hopes of being self-sufficient upon retirement.
With these comments, I wish to close and thank the committee for its time and the invitation to address you.