Evidence of meeting #36 for Status of Women in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was plan.
A recording is available from Parliament.
4:30 p.m.
Liberal
The Chair Liberal Hedy Fry
Ms. Cameron, did you want to...? You have not been allowed to contribute here. I'd like to see if you have something to say.
4:30 p.m.
Managing Director, Private Pension Plans Division, Office of the Superintendent of Financial Institutions Canada
As the regulator, we don't actually make any rules around the bankruptcy act or the priority of pension claims. I can understand the issues they're speaking to, but we don't really have a formal position. There are arguments on either side.
4:30 p.m.
Liberal
The Chair Liberal Hedy Fry
And you're not allowed to have a formal position, is that it?
Okay, thank you.
Ms. Byers.
4:30 p.m.
Executive Vice-President, Canadian Labour Congress
I would just ask that Joel have a chance to respond to some things as well, because he has child care responsibilities to take care of, so he won't be able to be with us for the whole time. I want to make sure he has an opportunity to respond to part of the question you asked.
4:30 p.m.
Liberal
4:30 p.m.
National Representative, Social Economic Policy, Canadian Labour Congress
I know. I'm already at risk that the CAS will pick up my kid.
I want to add just a couple of things to what Dan has said. He's absolutely right. The culture on Bay Street has really changed. I don't have time to get into it now, but I would direct members of the committee to look at some of the documents that Diane Urquhart, an independent financial expert, has been promoting lately to really describe what's going on in bankruptcy courts today, where you actually have a whole class of interests that literally use what's called the “junk bond” industry, very minimal bonds. What they often do, in a predatory way, for companies going into bankruptcy protection, is buy up those bonds, knowing that the bankruptcy procedure is a tax-sponsored procedure. For every dollar they invest in getting ahead of workers getting to their pension money, they often make $1.30. It's a very profitable business. There are a lot of hedge funds, private equity funds, and vulture funds that are involved in this. At the moment, Canada has the unfortunate distinction of being one of the only places in the world that allows those sorts of junk bond holders to buy their own insurance. They're called credit default swaps. What they do is buy their own insurance going into a bankruptcy proceeding, so they're completely covered, and they often make $1.30 on every dollar they invest, and they rank ahead of pensioners right now. The Nortel pensioners are finding this out from first-hand experience. The Canwest experience is ongoing. We don't know what will happen there, but definitely there will be pension cuts. AbitibiBowater....
I want to tell you two quick stories before leaving, because I want the voices of these workers to be heard here. I was in New Brunswick three weeks ago, and I spoke to a worker from Nackawic, New Brunswick, whose pulp and paper plant closed in 2004 with a 52% funded pension, but she didn't get a 52% funded pension. After all the creditors who were ahead of her picked through the carcass of her employer, she got $400, after 16 years of service—not $400 a month, not $400 a year, but a commutative value of $400. That's fact. It's happening all over the place, in Ontario and Quebec in the manufacturing sector; in B.C., in northern Ontario, and the Atlantic in the forestry sector; and we're seeing it with some of these large, formerly blue-chip federal sector employers.
The unfortunate thing is, the federal government's announcement today, while I hope it's well-intentioned, has no intervention in the bankruptcy proceedings, which is federal jurisdiction, to be completely clear. The government of the day could bring in an emergency system of pension insurance. It could tell Canadians that they will adopt the pension plans that Canadians have in bankruptcy court at their full value—so a 52% funded pension would be a 52% pension. It could even rank up their status in bankruptcy hearings. The announcements today do some positive things, but they don't get to the eye of the hurricane right now, which is bankruptcy proceedings, where people are losing decades and decades of work.
I would hope this committee could forward a statement to the government that there's an urgency here. Nortel pensioners, particularly the long-term disabled, are literally moving from a regime where they got a workplace pension to the social assistance or welfare system. That's the reality now. I would encourage you to be a voice for those people.
4:35 p.m.
Liberal
The Chair Liberal Hedy Fry
Thank you very much.
We now move into the second round.
Ms. Wong, for five minutes.
4:35 p.m.
Conservative
Alice Wong Conservative Richmond, BC
Thank you, Madam Chair.
Thank you very much for coming.
I think one of the questions I would like to raise is connected to what Dave just said about the fact that whatever kind of reform you're suggesting, from 25% to 50%...and then immediately benefiting those who haven't even paid into the pension plan. Am I right to assume that about the CLC recommendation?
4:35 p.m.
Executive Vice-President, Canadian Labour Congress
I think our recommendations are right there, in terms of page 4. It reads:
We propose to phase in a doubling of the proportion of average earnings replaced by CPP from 25% to 50% over seven to ten years to $1,635 per month, financed by a modest increase....
So it's for both workers and employers, and making sure as well that we're fair to lower-paid workers. I think it's really clear that there's an urgency here. Joel has raised it. Whether it's a private plan or whether it's the Canada Pension Plan, there's an urgency that we do something.
It is an economic stimulus. If you get money into the hands of seniors, they're going to spend it here, by and large.
4:35 p.m.
Conservative
Alice Wong Conservative Richmond, BC
My question is, have you ever directly taken into account the intergenerational inequities in regard to this reform? We are now asking people who are working very hard, who are keeping their jobs, who are paying into CPP--and then also future generations--to pay right now, using their money. They're making their contribution right now. They're paying into it for the people who are already retired. Have you ever looked at that inequity?
4:35 p.m.
Executive Vice-President, Canadian Labour Congress
I think Monsieur Dussault has some details.
But the reality here, folks, is that if the generation now isn't prepared to support the generation who went before us, and there are a lot of women who, for a number of reasons, aren't getting any kind of a pension plan.... I thought we had a bit of a social responsibility to each other.
I still regard women who worked at home and may not have drawn a salary as having contributed something pretty significant, including Madame Demers' mother, who contributed a lot to this country, obviously, but didn't necessarily draw a salary.
4:35 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
If the CLC proposal were implemented January 1, 2010, contributions would be increased immediately or over a period of five to seven years, but the benefits would not be increased immediately. Already retired persons would get nothing, and someone who would reach age 60 in 2010 and start to receive CPP benefits in 2015 would get just five-fiftieths of the increased benefit, because that person would have paid in for just five years rather than 45 years.
That's what full funding is, and this cannot be escaped, because it's a new requirement of the CPP. So intergenerational equity would be preserved, that's for sure, just because it's a requirement of the CPP.
4:40 p.m.
Conservative
Alice Wong Conservative Richmond, BC
Yes.
Another question is that for those who have not paid into the CPP at all, how are we going to administer that?
4:40 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
Those who don't pay into CPP get nothing from the CPP.
4:40 p.m.
Conservative
Alice Wong Conservative Richmond, BC
That means those who are already retired and are receiving CPP will not benefit from this reform at all?
October 27th, 2009 / 4:40 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
No, they won't.
4:40 p.m.
Conservative
Alice Wong Conservative Richmond, BC
Okay.
I have another question. By using this formula, am I right to say we will be benefiting those who are wealthy as well? You don't draw a line at those who are already pretty well off.
4:40 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
No, it's a give and take thing. You get out of the CPP what you have put into it.
4:40 p.m.
Executive Vice-President, Canadian Labour Congress
It becomes part of the tax discussion as well, as I understand it. Does it not?
4:40 p.m.
Conservative
Alice Wong Conservative Richmond, BC
I'm just asking the question because in this reform it means it will benefit the wealthy as well. Am I right to assume that?
4:40 p.m.
Senior Research and Communications Officer, National Office, Federal Superannuates National Association
Yes, but it's—
4:40 p.m.
Conservative
Alice Wong Conservative Richmond, BC
Okay. I just wanted to hear that. I have another question.
You mentioned the pension summit. Everybody knows that Mr. Menzies met with Ken Georgetti of the CLC, and the Canadian Labour Congress was present at the first meeting in Ottawa with Mr. Menzies, and he also met with CARP, with the teamsters, with the Pionairs, and many more related pensioners' organizations.
He went to cities like Halifax, Montreal, Toronto, Ottawa, Whitehorse, Vancouver, Winnipeg, and Edmonton. Are you suggesting that's not enough?
4:40 p.m.
Executive Vice-President, Canadian Labour Congress
Absolutely, it's not enough.
4:40 p.m.
Conservative
4:40 p.m.
Executive Vice-President, Canadian Labour Congress
There hasn't been a summit. What there has been is a series of discussions across the country.
We're saying it's time for us as a society to get together and have a summit around the question of pensions, to be able to deal with how we are going to improve the retirement security for all Canadians, to make sure it's fair all across. And people have to be included in that discussion.
Quite frankly, there will be people who will want to, either directly or through representatives, be able to tell some of the stories like the one about the person Joel mentioned, who is getting $400 as a payout—that's it, for however many years.
We don't want to have closed-door discussions in various places. What we want to do is bring people together, if we really want to do something about the Canada Pension Plan, OAS, and private pension plans.