Finance Committee on March 25th, 2010

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Généreux, the floor is yours.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Good afternoon everyone. Thank you for being here.

I would like to put things in context. I have not been a member of Parliament for long. I arrived in the House of Commons last November. I am also a businessman. Over the past 20 years, I have created jobs in my region. I worked very hard to create those jobs and to keep them. As a businessman and company owner, I do not have the means to set up a retirement plan, and neither do my employees. I would like to put that in context because it will be important when I ask my questions.

I really feel deeply for what has happened to you. I feel that Canadian society has progressed a lot over the past 40 years, having instituted programs like Old Age Security for seniors. Generally speaking, that was well done.

As a businessman, I have never created jobs with a view to one day closing my businesses and kicking my employees out on the street. Business people and company board members have a social conscience. I sincerely believe that they are acting in good faith when they create jobs and are hoping to build their business.

Unfortunately, for all sorts of reasons, some businesses run into trouble. There is a law to protect businesses like that. It is called the Bankruptcy and Insolvency Act. Its purpose is to keep losses to a minimum when businesses go under. Everyone understands that. Recently, the law has had a positive impact in Quebec where some companies would have faced certain bankruptcy had it not been for that law. But the law is in effect, and it helps companies to bounce back, to get back on their feet, and to contribute to retirement funds once again.

What is happening to you is absolutely deplorable. My question is for those retirees here who have been affected by the loss of an income. A little earlier, Mr. Fréchette, you said something important. You said that, instead of promising you things that we were not able to give you, we should have promised you something that we were able to give you. That resonated with me. Businesses can try and adopt certain measures, but they still have to live up to their commitments. This is a commitment shared between the employer and the employee.

Contrary to what one of my colleagues said earlier, I do not think that businesses seek protection under the Bankruptcy and Insolvency Act in order to avoid paying retirees or pension funds. When you create something, you do not do so in order to destroy it. You create it in order to build it. That is how I see things.

So I come back to what you said earlier, Mr. Fréchette. What advice would you give us to stop this happening again?

[Gaston Fréchette]

What would I do if I were a legislator? There are some things I do not understand. I had been retired for seven years when I was affected by the cut. After 40 years of working in the mine, I went to see the big boss in his office. It was a real heart-to-heart. He thanked me very sincerely for everything I had done. If you are not somewhat involved in the running of the pension fund while you are an employee, you just cannot conceive that something like that can happen. It is the least of your worries as an employee. I would say that 95% of workers do not worry about it and that is unfortunate.

There are retirement committees in Quebec, but they are primarily on the management side. The Superior Court has ruled that the money in pension funds belongs to the retirees, but those who administer the funds are primarily in management. So it is not that simple.

In Quebec, pension fund legislation changed in 1991. It required the establishment of retirement committees. Since 1991, our solvency level has never been 100%. It is inevitable, because once there were 1,300 employees and, in 2002, only 400 were left working. There were more retirees than people actually working.

I would like to come back to what you said. Currently, they have invested 75% of our money in the stock market and kept 25% in low-risk investments, whereas, had they been responsible, they would have put 75% of our money in low-risk investments and 25% in the stock market.

So that is what has happened to us and that is why we are not happy. It is also why we have said that we are entitled to fight, and we will do so until the bitter end.

[The Chair, Conservative, James Rajotte]

Merci.

We'll go to Mr. Pacetti, please.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

My thanks to the witnesses for being here.

I have a number of questions because I know that the witnesses all have claims of varying types.

If we wanted to do something today, Mr. Fréchette, Mr. St-Michel and Ms. Blanchard, what could we do for you? Amending the Bankruptcy and Insolvency Act would not help you much.

[Gaston Fréchette]

That would not help us. We are bankrupt.

[Pierre St-Michel]

If the laws were changed today, making pension funds into secured creditors would not affect us because our situation is already in the past. But we would be exceptional cases, and that has its importance.

A bill has gone through the first two stages. I am referring to Bill C-290. The bill actually acknowledges the losses we have faced. Some say that, if the laws are changed, it would be very expensive; others say that it would not.

If the law were to change and retirement funds became secured creditors, ours would be exceptional cases that could be addressed under Bill C-290. I do not know when third reading will take place. I think that would help to make things a little fairer for us.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The company you worked for was called Aciers Atlas, right?

[Pierre St-Michel]

Right, but it no longer exists.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

When did the bankruptcy occur?

[Pierre St-Michel]

There was no bankruptcy. They simply liquidated everything.

When we retired, the actuarial valuations were over 100%. So we were not worried. When the company began to experience problems, everyone who could have stepped in did not. Nothing was paid into the pension funds, which meant that we lost money. The amount depended on the pension plan, because there are three. The losses were between 30 and 58%. When I was working, each time an actuarial valuation was conducted, each year, that is, there was never a problem. The solvency ratio was 120% at one time.

I would like to respond to something that was said a little earlier. When an employer is having problems and does not put the amounts he is supposed to into a pension fund, who pays? It becomes a subsidy to the employer from the pension funds. It is preposterous. That is exactly what happened to us, the retirees from Aciers Atlas.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

C'est beau.

Mr. Sproule, how about you? If there were to be a change right now to the Bankruptcy and Insolvency Act, would that help you at all with the Nortel situation?

[Donald Sproule]

Yes, we believe it would. Nortel is under the CCAA right now but hasn't moved under the Bankruptcy and Insolvency Act.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Is that only going to happen in the month of September? When is that projected to happen?

[Donald Sproule]

We don't know when it's going to happen, quite frankly. There is no date set.

I'd like Madame Urquhart to respond to something you said earlier. I'm stealing from your time, I'm sorry.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Yes, that's why I'd rather just wait, because my follow-up question is on the disability side.

Perhaps, Diane, you can answer that as well.

Is it because these people have long-term disabilities that their benefits are not managed by an insurance company? Why is the money still in a separate fund or unfunded?

[Diane Urquhart]

There's a substantial—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Even for parliamentarians, our fund is administered by outside sources, whether it be Sun Life or—

[Diane Urquhart]

The problem has arisen because there is a substantial number of corporations that self-insure their long-term disability benefits. That means they are acting in the role of an insurance company.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I know what that means, but doesn't somebody agree to that?

[Diane Urquhart]

What happened in the Nortel case was that it was misrepresented. Up until 2005 there were no disclosures that would lead anyone to believe they had a long-term benefit that was not insured by a third party. Remember, this is a non-unionized environment, and post-2005 Nortel indicated for the first time that the plan was self-insured, but said that it, Nortel, was playing a role similar to that of an insurance company. However, it was not playing a role similar to insurance companies.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

And nobody—

[Diane Urquhart]

Since 2004 there were no employer contributions made into the health and welfare trust.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

And nobody at Nortel on the staff or in the union side would have—

[Diane Urquhart]

Well, apparently not, because all of the 400 long-term disabled were shocked when they saw $100 million missing from the health and welfare trust, which they learned for the first time on February 18.