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.
1:40 p.m.
Director, Pension Strategy & Enterprise Risk, Ontario Teachers' Pension Plan Board
I am not sure when exactly that happened, but I will look that up for you and let you know.
1:40 p.m.
Director, Pension Strategy & Enterprise Risk, Ontario Teachers' Pension Plan Board
I'll call in, but it was quite some time ago
1:40 p.m.
Director, Pension Strategy & Enterprise Risk, Ontario Teachers' Pension Plan Board
There are several JSPPs within Ontario, or named plans, including OMERS, HOOPP, and OPSEU.
1:40 p.m.
Conservative
1:40 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Thank you very much, Mr. Chair.
Good afternoon, everyone. Thank you very much for being here with us today.
I would like to start with Ms. Hemmings.
You are talking about temporary measures, such as relaxing the solvency funding requirements. Canada Post is relying on this measure right now.
Has Canada Post used this measure before or is it the first time?
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
If I can get some clarification, which measures are you referring to, just solvency relief generally?
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
Solvency relief, whether it's by the letters of credit...is available to everybody. They've taken solvency reduction for three years, as was mentioned, and we gave them special funding relief, one off. However, the other solvency relief measures are open broadly to every federally regulated pension plan.
Does that answer your question?
1:45 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
In a way, yes. However, the solvency relief granted to Canada Post at this time, which you refer to in your notes, is for five years and will end in 2017. Is it the first time Canada Post has been granted this particular relief?
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
Yes.
1:45 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Fine, thank you.
Aside from the study on Canada Post our committee is conducting at this time, do you know if your minister Mr. Morneau and the Minister of Public Services and Procurement Canada are holding meetings? As a parallel process to the study by our committee, have the two departments launched cooperative processes to work together to find solutions to Canada Post's current problems?
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
Minister Morneau is responsible for Canada Post, as is the Minister of PSPC responsible for Canada Post business.
We speak at the official level. We are in constant contact with them in terms of keeping everyone up to date on the status of the pension plan, but that's the extent of our conversations.
1:45 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Fine.
In the last sentence of the next-to-last paragraph in your notes, you say that the purpose of the relief was to provide Canada Post with the time to make itself financially sustainable. In the last paragraph you say that thanks to the recommendations of our committee—and we hope they will be good ones, since the government seems to be counting on them a great deal—you will be able to provide advice by 2017 to the Minister of Finance, following the release of our report.
However, even if our report contains fantastic recommendations and miracle solutions, in a year, in 2017, when the five-year relief measure is set to expire, it will be too soon for our recommendations or the new measures to have been implemented. Moreover, the Canada Post deficit will not have been liquidated.
In short, do you know if the Minister of Finance is already considering extending the funding relief granted under the Canada Pension Plan?
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
I don't really think it would be appropriate for me to speculate about what the minister might be thinking at this time.
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
Obviously he has concerns, but beyond that....
1:45 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Without necessarily speculating as to what the minister thinks, can you tell me, as a public service professional, if you think he is going to have to extend this relief?
1:45 p.m.
Senior Chief, Payments and Pensions, Financial Sector Policy Branch, Department of Finance
I think there are a number of options that are on the table, many of which have been mentioned by the expert panel, but I can't really comment on which direction we're headed in. It's not appropriate.
1:45 p.m.
Conservative
Alupa Clarke Conservative Beauport—Limoilou, QC
Thank you, Madam.
Mr. Skinner and Mr. St-Germain, thank you for your presentation. Math has never been my long suit. I do not understand the graphs at all. My area is political philosophy. However, I would like to understand the situation.
You talked about the risks that could occur if the solvency obligation was removed. What would those risks be, exactly?
1:50 p.m.
Actuary, Mercer (Canada) Limited
One of the key risks remains the size of the plan relative to that of the organization. Even if solvency were to disappear, the going concern obligation would still represent a very large percentage of the revenue of Canada Post and we expect that to continue to grow. Fluctuations in that financial position and the contribution requirements that could arise from that could be difficult for Canada Post to bear.
I will say that projections or estimates of Canada Post's future revenue prospects is outside of our area of expertise. I believe others have looked at that, but we know that there are pressures in that regard and, if revenues are not rising, it would be more and more difficult to sustain the plan.
As I mentioned in my remarks as well, the going concern funding that we have in place in addition to solvency is based on a set of assumptions, and they are only that, assumptions.
In particular, two of the largest ones would be the return on investment and how long people live, their life expectancy or longevity. If either of those do not pan out as we've assumed, we could end up in a deficit position, either temporarily or permanently if we alter the assumptions at some stage to reflect a growing understanding of reality or change in the circumstances. So the risk that's taken.... In fact, the plan, it's invested in equities at the moment. Some portion of the plan is invested in the public equity market, which carries a good deal of risk, because as you know, stock markets are volatile. We do expect that that sort of investment will pay off in the long run, that it will provide higher returns, but it's not guaranteed.
1:50 p.m.
Conservative
1:50 p.m.
NDP
Erin Weir NDP Regina—Lewvan, SK
I want to start out by drawing a connection with the last panel and I just want to confirm that Mercer is owned by the same parent company as Oliver Wyman. Okay, yes. I just wanted to get that on the record.
I have another question for Mercer. Does your analysis of the Canada Post pension plan take account of the recent agreement to expand the CPP?
1:50 p.m.
Actuary, Mercer (Canada) Limited
It does not. No. There's no reflection of the CPP expansion in the Canada Post pension numbers.
