Finance Committee on June 1st, 2021

[Erin O'Brien]

“The Centre” means the Financial Transactions and Reports Analysis Centre of Canada, which is in the list of definitions. That comes up in terms of the consequential amendments we were discussing, just in terms of ensuring that there is information sharing between the two organizations. Payment service providers—

[Ted Falk, Conservative, Provencher, MB]

Yes, and that's my question, Ms. O'Brien. They are two separate organizations, but it seems as though the centre is going to be the entity that actually does the work, and the Bank of Canada is going to be overseeing the centre. I'd just like to have a better idea of what that relationship is going to look like.

[Erin O'Brien]

Yes, absolutely. Thanks. It's a great question.

Payment service providers, many of them, will be subject to both the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, PCMLTFA, and the retail payment activities act. Clauses 181 to 183 require the Financial Transactions and Reports Analysis Centre of Canada to provide the Bank of Canada with information on convictions and violations under that act as part of the registration requirements under the retail payment activities act. The amendments would also provide that FINTRAC—“the Centre”—may share information with the Bank of Canada that would support the bank in terms of its oversight of payment service providers in carrying out its responsibilities.

[Ted Falk, Conservative, Provencher, MB]

The “Centre” and FINTRAC are the same organization.

[Erin O'Brien]

Yes. The “Centre” is like a short form for FINTRAC.

[Ted Falk, Conservative, Provencher, MB]

Okay. It will be the one that actually regulates the retail payment section as well.

[Erin O'Brien]

No. It's responsible for regulating anti-money laundering and anti-terrorist financing, so it will kind of stick to its knitting, so to speak.

The Bank of Canada will be given the responsibility to oversee payment service providers, but payment service providers would be subject to both regimes, and should a payment service provider have violated the PCMLTFA, FINTRAC would provide that information to the Bank of Canada. The bank would have more complete information on the conduct of a particular service provider, and that would be included in its consideration or determination as to whether or not it could include a payment service provider on the registry.

[Ted Falk, Conservative, Provencher, MB]

Okay. Thank you.

[The Chair, Liberal, Wayne Easter]

All right. We'll go to Ms. Jansen.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I'm wondering if I missed the answer or it wasn't given: How many new employees will this new program require?

[Erin O'Brien]

That's a great question, and I don't have a specific answer to that. I would need to follow up with the Bank of Canada. We're anticipating hiring a few analysts at the Department of Finance to help us stand up the national security requirements, and we're partnering with other security and intelligence agencies, but I don't have a specific number of employees.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

On that number you gave us for expected costs of $160 million or $161 million, did that include the cost of the new employees you're going to require?

[Erin O'Brien]

That's all in, so it would be operational, employees.... That's everything we're anticipating over the next six years.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

You must have the numbers, then, somewhere. If you know the final dollar amount, you must know the number of employees somewhere, right? Is that correct?

[Erin O'Brien]

We must have some estimates.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Yes. It would be great to hear that. Thank you.

[The Chair, Liberal, Wayne Easter]

All right. I see no further questions. I think we're in agreement to see these clauses 179 to 188 as a group.

(Clauses 179 to 188 inclusive agreed to on division)

(On clause 189)

Thank you to the witnesses who came forward for the retail payment activities act.

We'll turn now to division 9 and the Pension Benefits Standards Act, 1985.

I believe you're still the lead on this one, Ms. O'Brien. Go ahead.

[Erin O'Brien]

You're not getting rid of me yet.

[The Chair, Liberal, Wayne Easter]

That's good.

[Erin O'Brien]

In fact, I'd actually like to direct you to my colleagues, Kathleen Wrye and Neil Mackinnon, who are experts in this area.

[The Chair, Liberal, Wayne Easter]

Okay. We now have Ms. Wrye and Mr. Mackinnon.

We'll start with clause 189. Does anybody have a little overview on clause 189?

[Kathleen Wrye, Acting Director, Pensions Policy, Financial Crimes and Security Division, Financial Sector Policy Branch, Department of Finance]

Yes, Chair. I will provide that. I'll actually provide an overview for clauses 189 to 192, and then I can go through them each individually.

On what this division does, budget 2021 proposed the establishment of a revised federal framework for multi-employer negotiated contribution pension plans that strengthens planned governance, transparency and the sustainability of benefits. Negotiated contribution plans are a type of defined benefit plan with multi-employers that are also a bit unique in that contributions are fixed by an agreement, so employers are required to contribute only the amount set out in the agreement. Clauses 189 to 192 cover the legislative amendments required to establish this revised framework.

Clause 189 amends the Pension Benefits Standards Act to set out new requirements for negotiated contribution plans to have both governance and funding policy, as well as other requirements related to those policies. An example of such requirements would be a transition period for existing negotiated contribution plans to set up a governance and funding policy, as well as regulation-making authority with respect to the content of funding and governance policies.

[The Chair, Liberal, Wayne Easter]

Okay. I'll hold you on that one and we'll see if there are any questions on clause 189 first. For the benefit of the committee, in the bill we're on pages 245 and 246.

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Yes, I have just a couple of questions. First, can you just define for me the distinction between defined contribution plans, defined benefit plans and negotiated contribution plans? There seems to be a conflation of those, but it's probably just because I don't clearly understand the distinction between them.

[Kathleen Wrye]

Certainly. It's a very good question. Pension terms can tend to be a little confusing, and every jurisdiction tends to call things something slightly different.

Defined contribution plans, simply put, are like group RRSPs, except that they're registered pension plans. Employees and employers both put money into the plan, and at retirement you get your lump sum, which is contributions plus investment income, and that's what you have. You manage that lump sum for your retirement.

Defined benefit plans are similar to the public service plan. Employers and employees put their contributions in, and at the end, when you hit retirement, instead there is a formula that calculates, based on the text of the plan, that this is the amount you're going to receive monthly for the rest of your life.

Negotiated contribution plans are a type of defined benefit plan. What's unique about them is that contributions are set out by an agreement. With the everyday defined benefit plan, if there's a plan deficit—that is, there's not enough money in the plan to pay out all the benefits—then the employer puts more money in. With negotiated contribution plans, as the name describes, the contributions are negotiated. They're fixed, so no more money goes into the plan. In order to meet funding requirements set out in legislation, these plans typically would adjust their benefits so that benefits could be reduced in order to meet a plan deficit.