Evidence of meeting #53 for Government Operations and Estimates in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was post.
A video is available from Parliament.
2:15 p.m.
Actuary, Mercer (Canada) Limited
I would echo Ms. Cover's words. The one important lever that can help to address risk is the ability to vary benefits when needed. Inflation seems to be the one that is the most often targeted for that, but it's quite effective.
2:15 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
When the Canada pension plan was underfunded and it was in its doldrums, the then finance minister, Paul Martin, decided to create the Canada Pension Plan Investment Board. Would going that way be an option for Canada Post?
Maybe, Ms. Hemmings, you have some ideas.
2:15 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
CPPIB was created for very different reasons. The governance structure is entirely different, such that you have provincial stewards. I'm not sure how you would transplant that model onto Canada Post.
I think if you want to involve all the parties with representation from the unions and the employees and the employer, the proposed target benefit plan, which allows the benefits and contributions to be adjusted up or down as the plan performs is probably a better model than is the CPPIB model.
2:15 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
My next question is for Ms. Hemmings.
Do you confirm the conclusions of the working group concerning the general deficit of Canada Post, or is this question completely outside your field?
I would in any case like to know your point of view.
2:15 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
Are you just asking for the actual deficit? That is now at $8.1 billion.
2:15 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Yes, I should have been more specific. I was talking about the overall Canada Post deficit.
2:15 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
Is it the solvency deficit?
2:15 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
I am talking about the report that was prepared by the working group. This was the first phase of the study on Canada Post. I would simply like to know, generally speaking, if the Department of Finance agreed with the deficit as it was set out.
2:15 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
I think any questions about the deficit and whether we feel it is accurate are better put to Mercer, the external actuary.
2:15 p.m.
Actuary, Mercer (Canada) Limited
There are a couple of kinds of deficits in the report. One is the solvency deficit for the pension plan specifically, and that comes from our valuation report. We certainly agree with the task force on that and that's a matter of record in the past. It has been reviewed by the regulator as well.
They also speak of an operating deficit in terms of revenue versus expenses projected into the future. If that's the type of deficit that you're asking about, it's a very different type and it's outside of my area of expertise. I can't speak to that.
October 31st, 2016 / 2:15 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
I have another question for you, Mr. Skinner and Mr. St-Germain.
Representatives of the Canadian Union of Postal Workers have repeatedly told us that in their opinion the pension plan is not necessarily in deficit.
In your opinion, are they playing politics, or are they basing their opinion on actuarial studies conducted by some of your colleagues?
When they say that their pension plan is not in deficit, is that statement based on facts?
2:15 p.m.
Actuary, Mercer (Canada) Limited
It's certainly in a deficit situation on a solvency basis. It is currently in a surplus on a going concern basis. That may be the statement you're referring to.
The argument they're putting forth, I believe—I don't want to speak for them—is that the solvency basis is not appropriate and therefore not important. I think that's a legitimate discussion to have, and we're having it today. That's the source of that discrepancy.
2:15 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Mr. Skinner, you discussed shared risk pensions. From what I've read, that seems mostly about the indexing of the pensions and taking the shared risk on indexing. Is that mostly correct?
2:20 p.m.
Actuary, Mercer (Canada) Limited
That's probably the most common thing we see, although there are other things that can be done.
2:20 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
What other large pensions out there would be doing this right now? At Teachers', you sound like you have a tiny bit of that, but not a pure shared risk.
2:20 p.m.
Director, Pension Strategy & Enterprise Risk, Ontario Teachers' Pension Plan Board
Yes, Teachers' does. HOOPP, the hospitals of Ontario pension plan, does have a shared risk on indexation.
2:20 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Do you know of any private sector unions doing that, or is it more in the public sector?
2:20 p.m.
Director, Pension Strategy & Enterprise Risk, Ontario Teachers' Pension Plan Board
I'm sorry?
2:20 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Do you know if there are any in the private sector doing that or is it mostly public?
2:20 p.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
CN does. Is that a stronger way forward than looking at other changes to the pension, do you think?
2:20 p.m.
Actuary, Mercer (Canada) Limited
I think it's a very effective way to address risk so that it gets spread out more over time. It will affect the provision of benefits to some degree. That's the point—
