Thank you, Mr. Chair.
Good day and welcome to our witnesses.
To follow up on Mr. Wallace's comments, I'd like to relate to you my experience as a municipal councillor some years ago, in 1986 and 1987. I was appointed to serve on the committee responsible for my municipality's pension fund. The plan was a non-defined benefit plan and the municipality was responsible for any unfunded actuarial liabilities. Someone said earlier that a pension fund was merely compensation deferred. A pension fund is comprised of employer and employee contributions, but it is also at the mercy of other unknown factors that are controlled by external and internal authorities, namely the pension fund managers. How well the fund performs is an unknown.
On looking at the actuarial liability, I was thinking that if the pension fund was simply compensation deferred, than the actuarial liability was simply additional taxation deferred. We're talking about direct services and this is an additional form of taxation.
I had a question about non-defined benefits or defined contributions. You answered my question when you said that a defined contribution plan called for a certain level of expertise on the part of the persons investing the money. In terms of management, companies must stay in business to sustain pension funds over time. Businesses need to perform well. In the case of Nortel, some weaknesses were apparent. Generally speaking, pension funds have long been manipulated by employers, who would seize any actuarial surpluses. We all know what happened to companies that were facing bankruptcy or that had an agreement with creditors. In future, important measures need to be taken with respect to pension fund management.
As for employers who manipulated pension funds, greater control is needed over pension fund management to minimize long-term risk. To say that the company is responsible for all actuarial liabilities isn't right. The company cannot predict these liabilities any more than pensioners can.
Summing up then, what steps can we take to protect pensioners and those who are set to retire soon so that their retirements are secure and companies do not face too many unknowns, which could hamper their growth? It always comes back to that question.