Government Operations Committee on June 7th, 2016

[The Chair, Conservative, Tom Lukiwski]

Oh, I'm sorry, Mr. Weir.

Mr. Weir, I didn't want to ignore you. I didn't want to skip over you.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, well, thanks very much.

I did want to follow up on the line of questioning about Valeant Pharmaceuticals. The answer seemed to characterize it in terms of the S and P 500 and American equities. It's a Quebec company that's listed on the Toronto Stock Exchange, and surely your funds are invested in Canadian equities as well. I'm wondering if I'm missing something in terms of the answer focusing on American markets.

[Daniel Garant]

You're not, because we don't have an active position in Valeant. We own the index in some equities, but we also own a lot of private assets, like real estate, infrastructure, and so on.

[Erin Weir, NDP, Regina—Lewvan, SK]

No, no, I—

[André Bourbonnais]

Valeant is quoted on the New York Stock Exchange.

[Daniel Garant]

On New York, yes.

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes, but it's on both Toronto and New York. Would you be exposed to it through both indices?

[André Bourbonnais]

We would be.

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes. It was the focus on the American side of things I was wondering about, but I guess you're exposed to it through both.

[André Bourbonnais]

If it's part of the TSX, we would be exposed to it.

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes. Okay, understood.

I also wanted to ask about some aspects of the plan that you're managing money for. Let me know if these are questions you can't answer, but I am curious to know if the pension benefits will be administered through the Phoenix pay system.

[André Bourbonnais]

Sorry, I didn't hear your question.

[Erin Weir, NDP, Regina—Lewvan, SK]

Treasury Board and Public Works have brought in this new pay system for federal public servants. I'm wondering if the pension payments are going to be administered through that same system.

[André Bourbonnais]

I'm not aware of that.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, no problem.

I have another question about the plan itself.

There was a significant change in the benefits that took effect in 2013, where people who are in the federal public service prior to then are eligible to retire with a pension at age 60, or even 55 if they had 30 years of service. People joining the federal public service after that date have to wait until age 65, or maybe age 60 with 30 years of service.

An issue that's been brought to my attention is that people who were in the armed forces prior to 2013, but then transferred that pension credit into the federal public service plan because they get a civilian job, are put into the latter group, as though they hadn't started until after 2013. I wonder if you're aware of that problem and if you think there's any possible way of remedying it.

[André Bourbonnais]

That's a policy decision, and that's a very unsatisfactory answer, but we just manage the money that is given to us. That would not be in our privy to make any kind of recommendation with respect to that question.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay. Perhaps this is an actuarial matter that you couldn't comment too much on, but I will ask whether treating veterans in the group that can retire at age 60, or 55 with 30 years of service, assuming they had started before 2013, would have a significant effect on the cost of plan benefits.

[André Bourbonnais]

I think it's a policy question that you and your colleagues need to address. It's not in our mandate.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay.

I was going to ask if a member of the federal public service, or even a member of the general public, thought a return of a bit more than 4%, based on professional management, sounded fairly attractive, would you be at all open to managing other money that people might want to contribute to outside of the pension plan?

[André Bourbonnais]

I think there's a lot of speculation as to the enhancement of the CPP, or whether the CPP should manage other money. In our case we have a specific mandate. It's a policy question, and we would need a modification to the act. We'll let the politicians determine whether or not we should manage more money.

[Erin Weir, NDP, Regina—Lewvan, SK]

I totally agree it's a policy matter. My question would be this. Would that pose any problems for you as managers? Would there be any technical problem with saying people could contribute money and essentially just receive whatever rate of return the fund generated?

[André Bourbonnais]

Yes, I think the difficulty would be if we have a different investment mandate. If it's the same investment mandate, I think the commingling of the funds could be an issue but we could deal with that with our infrastructure. But to the extent that we have the same investment mandate, I think we could take more money in. As a matter of fact, one of the questions for the Minister of Finance is to determine whether to fund the pre-2000 liability and get us to manage that money, and we've told the Minister of Finance that we would be ready within three months to accommodate them if they decide to make that decision.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, so if a mandate stayed the same, it was just to fund the public service pension plan, and there were people who were prepared to piggyback on that investment strategy and thought that the rate of return at relatively low cost was worthwhile, there wouldn't be any fundamental problem with that or reason that it couldn't be accommodated.

[André Bourbonnais]

Correct.

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes, so you feel confident that you could probably take on more money and perhaps might even benefit from the economies of scale.