Finance Committee on Oct. 19th, 2022

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Let's hope that this time will be the right time and that my colleague Ms. Marilyn Gladu's bill will turn the situation around.

Everything you have just said touches me very much. In your testimony, you recalled that pensions were not indexed to inflation. So, in addition to losing 10% or 30% of their pension, pensioners see their purchasing power eroded over the years and decades. It is therefore not surprising that they have to choose between food and medicine. These are unacceptable situations, especially when, as in the case you mention, it is a large company that has not paid what it should by underfunding its pension scheme.

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Peter Fonseca]

You have two and a half minutes.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That's excellent, thank you.

In your presentation, you explained the importance of letting banks, because they can refinance, come before pension schemes in the order of priority of creditors. Can you say something about that?

I just saw my colleague Ms. Gladu arrive. She doesn't want to ask questions, but she says hello. She was at an event to commemorate Louis Riel and she has just joined us.

I am listening, Mr. Lapierre.

[Nicolas Lapierre]

As I said, Bill C‑228 is the result of work and consensus. This was also the case last year for the one presented by Ms. Gill, but I will focus on this one. We spent three years meeting with you in Ottawa. I won't name them, but some parties were extremely concerned that we were initially going to come before the banks. The number one argument from all the members who saw this as a problem was that it would prevent business recovery and investment. We have listened to you and we agree with you. It was difficult to reach a consensus on this bill, but we have reached it and we are satisfied with the bill. The work is done, there has been ample debate and we have all the ingredients to quickly resolve the situation and show Canadians that we care about their financial health.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Now we're going to hear from the NDP, and this will close off the first round.

We have MP Angus joining us.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Chair. It's an honour to be at this committee.

If I were just reading the business press about bankruptcies, it would seem to me to be sad: markets and tragedy, and everyone trying to do their best. But I come from mining country, and we've seen how it plays out. We've seen how the Pamour gold mine, an extraordinary gold operation, was taken over by Peggy Witte and Royal Oak, how it was stripped of assets and how she paid out bonuses to all the members of the board of directors.

They left that mine till it fell into the ground, and then they all gave themselves golden parachutes and they walked away. That wasn't considered criminal behaviour. She was mining woman of the year, and the Pamour miners—many who were injured, who had illnesses—were left with nothing.

I want to ask the Canadian Labour Congress, is this something that just happens in my region among working-class people, or is this how corporate Canada has treated workers and their pension obligations time and time again?

[Siobhan Vipond]

Thank you for that question.

I think almost every witness here has said that there are lots of examples, so it isn't just in one region. Quite honestly, there's the example you gave, but also, when we look at Sears Canada, everything that happened was legal. Everything that happened was allowed, so we sit here looking at you and we're asking you to do something, because nobody hears the stories of these pensioners and thinks they're just, they're fair and that's what should be happening.

We know that people should have a good job and get a retirement, but we have a system set up that is not serving them well, because these rules are such that it can just be ripped out from under them. We know these rules have to change so that we are protecting pensioners. As Mr. Lapierre said, they can't be making that impossible choice between whether it's food or this.

I also think it's false to say that this means it's not helping the economy. We know that the best way we can build our economy is to put money in people's pockets, people who are consumers. Guess what? That means giving workers enough money so they can make choices.

I appreciate your framing. You're absolutely right. It is heartbreaking to hear from retirees and pensioners with their stories, but it also is a call to action for us to make changes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I want to follow up on the call to action, because when the Pamour mine went down and the Kerr-Addison gold mine, one of the richest mines in the country, was stripped of its assets and the pensioners were left with nothing, the pensioners believed that they had savings, but they were lied to, and then they found that they were at the back of the line.

When I hear people say how unfair it is that we move these people, who spent their lives and literally gave the health of their lives to the company, and that somehow we're going to affect business if we give them any priority.... What happened at Pamour happened 30 years ago. I would have thought that it would have changed, but then I look at Sears. Then we are told “Oh well, it's a bricks-and-mortar business and they can't compete”, blah, blah, blah. Sears was a damn good business. It was taken over by a hedge fund bandit, Eddie Lampert, who stripped it. Again, it was perfectly legal.

We had legislation brought in that was supposed to protect those Sears workers. What lessons have we learned? Did Bill C-97 do the job it was supposed to do, or are we just continually letting these bandits rob pension funds and strip assets out of good, valuable companies?

[Siobhan Vipond]

That's exactly what is happening. We are prioritizing the shareholders and the CEOs over those promises and those deferred benefits and deferred wages that workers have had.

We need to see those changes. I absolutely agree with you. We will be having these same conversations in 30 years if we don't take action that's actually going to mean that these pensions and these promises are protected from these arbitrary kinds of profits being pulled out. They're not being pulled out of nowhere. They're being pulled out of the pockets of these pensioners, and that's a completely unfair scenario that is happening.

It's different when you take pension money from a pensioner versus a bank having to deal with a little bit of loss, so why are we coming after that? One means you can lose your house and not buy prescriptions and not be able to put food on the table. The other one means that maybe your profits are a little bit of a percentage lower. I think we really need to examine whom we're protecting in the current system.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Some of the concerns we had with this bill were on some of the drafting language, and I understand from talking with my colleague from Elmwood—Transcona and with other colleagues about changing it to improve it.... One of the questions for the New Democrats has always been the issue of protection for termination and severance pay. When Peggy Witte walked from Pamour mine, everybody was left high and dry. They showed up to work and there was no work. Termination, severance pay, pensions, these are all tied up.

How important is it to have in language, in law, that protection?

[Siobhan Vipond]

I'm going to ask my colleague, Chris, to jump in on this one. The reason why there are lots of amendments happening for this is that this is a complex issue and there's a lot of history, but we're glad you're attending to it.

Chris, do you want to go into detail about that?

[Chris Roberts]

Sure, I'll answer as well as I can.

The wage earner protection program has been expanded to cover more termination benefits. That's very important for vulnerable workers. It would be great to have that in this legislation so that those owed payments are also protected.

Also, OPEBs, the other pension and related employee benefits in retirement, are extremely important to retirees. Those aren't featured in this legislation.

There's still more work to be done. In response to the member who asked how we can come together around some of the proposals, I would even say that some of the proposals that ACPM has forwarded about allowing plans to temporize, instead of winding them up at the worst possible moment, make a lot of sense.

There are many steps we can take to fully protect pensioners and plan members, but I think it does start with moving them up the queue and not leaving them at the back of the bus in insolvency—

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Angus.

Members and witnesses, we're moving to the second round. In this round, we start off with the Conservatives. I have MP Lawrence for five minutes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, Mr. Chair. Thank you to all the panellists who are here today.

I would like to say a kind word for those companies that are putting in a DB pension and are taking that risk. They are helping Canadians by being part of the 9%, not the 91% of private companies that don't have a DB. I think that needs to be stated on the record.

That being said, Mr. Gray and Mr. Dunlop, I've heard you say over and over that these pensions are going to be wound up, yet I haven't heard one shred of evidence, not one bit of data, as Mr. Powell has pointed out.

Would you stake your professional reputation that 50% of these DBs are going to be wrapped up if this bill passes, or 25%, 10%, 5%? Would either of you be willing to stake your professional reputation on this?

[Ross Dunlop]

I'll go first.

I don't know what, specifically, the numbers will be. I can tell you that when I interact with clients, they're concerned.

Now, DB in the private sector has gone from 20% down to 9% over the last 20 years. Businesses are concerned about the availability of credit and the increased cost of credit. It's going to be some number. I would say you're going to see some companies wind up—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I apologize, but my time is short. With respect, Mr. Dunlop, being “concerned” or “some number” isn't good enough when I'm talking to folks who are going to potentially lose their pension. When I look at this from a greater perspective, I see that you guys are all in the business of risk. One of the things we look at is this: What is the equity, and who's in the better position to absorb it?

Clearly, Mr. Gray and Mr. Dunlop, we have to agree that secured creditors, who are often transnational, multi-billion dollar corporations, are in a better position to absorb that risk than a 74-year-old senior trying to pay her rent or her mortgage, or to eat.

[Andrea Boctor]

Mr. Lawrence, maybe I could answer on behalf of the ACPM.

We did poll our members. Some of Canada's largest defined benefit pension plan sponsors are included in that group. We asked them this: If Bill C-228 made their access to capital more expensive, what would they do? Over 40% of them said they would wind up their defined benefit pension plan. That is based on our membership. Anecdotally, I can tell you that it is backed up with the conversations I'm having. I cannot think of a more direct way of killing defined benefit pension plans in the private sector.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I understand what you're saying, but quite frankly, they're biased. What are they going to say? Are they going to say that this is great, when it will inhibit their ability to have cash flows? There's been talk about it. Talk is cheap. Quite frankly, your suggestion that there's a free lunch, that simply by changing the investment formula we'll be able to save more on these, doesn't make sense. If you're increasing return, you are increasing the risk. Who's going to bear that risk? Ultimately, it's going to be the pensioners.

[Andrea Boctor]

That's right. I suppose there's a difference between investing in risk-free, or very nearly risk-free, assets and moderately risky assets to improve the outcome over the long term—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

That's not a solution. Putting great risk on the pensioners is not a reasonable solution.

[Andrea Boctor]

It has been a solution for Stelco retirees and for all of the pension fund—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

At a casino, sometimes I'm going to win and sometimes I'm going to lose. For those individuals who lose, it's not fair to them. We have billion-dollar corporations that are in a position to absorb this loss, so it shouldn't be on the backs of pensioners.

[Andrea Boctor]

I guess I would put to you whether or not it's fair to those active employees that they will no longer have a defined benefit pension plan. That's the choice. You're choosing between—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Here's the thing. I'll challenge you on that as well.

I used to do due diligence when I practised law. If, in fact, there's no risk, then there's no cost. That means that if these companies are managing their pensions appropriately and diligently as they're supposed to, there's not going to be an additional cost. The lender is going to look and say that the company has a beautiful pension—it's all annuitized, they have no risk, it's going to be paid for and they're doing all the right things—so they won't add a dime of interest. It's only for those companies that are investing it inappropriately and short-funding the employees that there will be additional costs, and maybe there should be.