Industry Committee on Dec. 2nd, 2010

[John Farrell]

No, I do not. I think defined benefit plans are the best kind of pension plan that individuals could enjoy. They are pension plans through which the employees, at the end of the day, assuming their company continues as a going concern, will receive a defined benefit, and they know exactly what their pensions will be throughout their term of employment.

A defined contribution plan, on the other hand, sets aside a contribution by the employer and sometimes by the employee. They're put together and invested. Usually the employees in such cases have some say in the way their funds are invested, but at the end of the day, when it's time for them to retire, they will have to take that pot of money and buy annuities at the going market rates. These annuities will provide a stream of income for them from the day they retire until they die, but there's always a risk that when you retire, the financial markets will not be in the shape you would want them to be in to maximize the value of that pot of money moving forward.

On the other hand, if you have a defined benefit plan, such as the one that exists in the federal government, you know what your amount of money will be when you retire. The companies have made a commitment to manage these financial decisions and provide you with a pension at retirement.

I don't have a defined benefit pension plan. I wish I did.

This is predicated on the fact that a company continues as a going concern. Unfortunately, in the case of Nortel, the company went bankrupt at the wrong time, and people were hurt. If I had a defined contribution pension plan over the same period in which the stock markets declined in 2008, and if that was the point at which I was to retire, I would have had great difficulty enjoying a nice pension, as I would even now with low interest rates. I would be taking the risk of the defined contribution arrangements.

[The Chair, Conservative, David Sweet]

Mr. Farrell, Mr. Aitken, Mr. Lopez, Mr. Robertson, I appreciate your being here.

I wanted to correct one thing, and I think this is the first time I've asked a question or had any comment in this committee other than in chairing it. Just for accuracy, Mr. Lopez, when you answered a question, you said that all pensions would have been paid if you'd gone into CCAA bankruptcy protection, and that had Bill C-501 been in place, the pensions would have been paid but the jobs wouldn't have been saved. Actually, the pensions would only have been paid if the assets were there, correct?

[James Lopez]

That's exactly right. There's no way of knowing how much these assets could have been sold for.

[The Chair, Conservative, David Sweet]

Yes. I just wanted to make sure that was clear.

Mr. Rota, you had a question, I believe.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

We've had a lot of discussion about the different pension plans, but one of the points that hasn't come up--and I'd ask the researcher to come up with some figures for us--is how many plans have failed in Canada in the last 10 years. Let's make it the last 11 years, because we haven't had a new defined benefit plan in 11 years. Let's just use that as a point of reference. We'll look at defined benefit and defined contribution, just so we have a handle on what we're making the decision for, because we're basically rushing toward one flagship case. I'm not minimizing the losses or putting them aside, but I'd like to know the scope of what our decision will affect and what we can see coming up.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Rota. I am aware that you wanted to ask that question and I understand a failure can happen in a number of ways. The researchers are going to do that work. Thank you very much for the question. I'm certain all members can benefit from the answer to it.

Go ahead, Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I have another point with regard to the study. I know the rules say we can bring amendments to the floor at the time of the meeting, but if there are any other amendments to be moved, can we suggest that members have them for Monday? Does Monday morning or noon Monday sound reasonable?

[The Chair, Conservative, David Sweet]

I think that's very reasonable, Mr. Lake. It's an immense help to the clerk, the researcher, and of course the legislative clerk when the amendments get here and they are able to deal with them.

Go ahead, Mr. Rafferty.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

There are two things. One is, of course, that you can put amendments forward at any time, so--

[The Chair, Conservative, David Sweet]

Mr. Rafferty, this was just a point on trying to work together and trying to see if we could get the clerks to make the most effective use of time.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Okay. The other thing is that I wonder if the researchers can make sure that when their research is finished, it can also go to all the witnesses who appeared--to everybody, that is, not just the committee. I imagine this can be done.

[The Chair, Conservative, David Sweet]

It'll be entered in the testimony, so they'll be able to have access to it.

Mr. Rota, did you have another point?

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

If we're going in camera, maybe we should do our housekeeping there and let our witnesses go. I know they've come a long way--

[The Chair, Conservative, David Sweet]

Thank you very much, gentlemen.

We'll pause to go in camera. We will resume in two minutes.

[Proceedings continue in camera]