Finance Committee on March 16th, 2010

Evidence of meeting #2 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was employers.

A recording is available from Parliament.

On the agenda

Retirement Income Security of Canadians

MPs speaking

Also speaking

Rock Lefebvre Vice-President, Research and Standards, Certified General Accountants Association of Canada

Phil Benson Lobbyist, Teamsters Canada

Ken Georgetti President, Canadian Labour Congress

Serge Charbonneau Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries

Michel Benoit Legal Counsel, Bell Canada, Canada Post, Canadian National Railway Company, Canadian Pacific Railway Limited, MTS Alstream and Nav Canada, As an Individual

Joel Harden National Representative, Social Economic Policy, Canadian Labour Congress

5:05 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Okay, thanks.

Mr. Charbonneau, your idea of a pension security trust strikes me as a bit of a no-brainer in the sense that it's a very good idea. I can't really see any downside. What you're trying to do is to give an incentive for employers to invest more in the pension plan, but they would own it, unlike in the traditional method, where they don't own the surplus.

So if that's the rationale, I don't understand why this government didn't just do it. Is there a downside to it?

I mean, there are lots of things they should have done that they didn't do, but....

5:10 p.m.

Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries

Serge Charbonneau

Yes, there is a downside.

5:10 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

What is the downside?

5:10 p.m.

Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries

Serge Charbonneau

I'm glad you like the idea. I wish more people would, because we've been asking for it for many years.

There is a downside. The downside is that if the money, instead of going into that side fund that could be withdrawn, goes into the real fund, then it would sit as extra surplus. If markets turn around and you go from $105 to $135, and there's extra money to be distributed as maybe contribution holidays, which are very small, we have accessing surplus or benefit improvements.

So from the members' point of view, they probably like having extra cash there so they can bargain for that. What we're saying to them is that the employers have tended to put as little as possible into those funds for that very same reason. They don't want the extra money to sit there and have to be bargained for. This has led to extra risk being imposed on employees and retirees, because employers were not incented to fund more than a strict minimum.

5:10 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Well, as I think you yourself said in your presentation, increasing the surplus threshold to 25% won't do anything at all, because none of them will do it. If they had your proposal, they might.

So the alternative is not a bigger conventional surplus; the alternative is nothing. Isn't that right?

5:10 p.m.

Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries

Serge Charbonneau

The alternative with the pension security trust would benefit them. Remember, the way for the employer to access extra funds is only if there really are extra funds, and above that solvency margin, too.

Sure, employees would prefer to have it sit there and then let's have extra cash to play with, but it won't even be there because they won't be incented to put it in there in the first place, under the current rules.

5:10 p.m.

Liberal

John McCallum Liberal Markham—Unionville, ON

Thank you.

5:10 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you very much, Mr. McCallum.

I want to thank all of you for being with us here today. This was the first meeting. I suspect some of you may be coming back later in the pension hearings.

I believe, Mr. Charbonneau, you were going to submit a paper to the clerk?

5:10 p.m.

Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries

Serge Charbonneau

Yes, definitely.

5:10 p.m.

Conservative

The Chair Conservative James Rajotte

Okay.

Thank you very much.

The meeting is adjourned.