Mr. Speaker, today I am pleased to speak at third reading of Bill C-78. This bill ensures the long term viability of public sector pension plans and puts them on a more solid footing by introducing the investment of contributions in public markets.
Experience has shown that investments in the markets yield a better rate of return, which tends to reduce the costs of the plans. Under the current legislation investment of contributions is limited to government bonds.
Bill C-78 also establishes an investment board, independent of the government, that will be responsible for investing contributions in accordance with the interests of the participants in the plans. Its obligations and authority are set out in the bill to ensure its independence and also its accountability. The bill also contains provisions to ensure that it is an effective operation.
With regard to the investment board, it has been suggested that its directors should be appointed as the governor in council sees fit. Other parties have expressed concern that these appointments would give the government an opportunity to practise patronage. The bill provides that directors be appointed to hold office during good behaviour for a three year period. Directors' terms of office may be renewed for one additional term. The appointment process set out in the bill shows clearly that our intention is to ensure that directors are competent and independent from government.
We have been blamed for failing to include the participants in these pension plans in managing the plans. The provisions of the bill show us that such is not the case. Current and retired employees will be represented in the management of the pension plans through advisory committees that will henceforth be mandatory.
These committees are comprised of representatives of employees and retired employees. These committees will also participate in appointing the directors of the public sector investment board. They will be able to appoint a certain number of members of the nominating committee which recommends candidates for the positions of directors of the board.
During debates in the House and in the committee we were reproached for failing to consult sufficiently with stakeholders. As we have indicated, we consulted with participants and with retired employees through advisory committees on the plans for a number of years. The need to make changes was recognized by the advisory committee on the Public Service Superannuation Act in its 1996 report.
The President of the Treasury Board even established an advisory committee to arrive at an agreement on a new framework for managing and financing these plans. This committee, comprised of representatives of employees, associations of retired employees, representatives of the RCMP and the Canadian forces, met last year on a regular basis. As we know, although there has been agreement on most of the changes proposed through this bill, these consultations have stumbled over the disposition of the actual surplus in the plans. The government thus had to take the necessary decisions and move forward by proposing improvements to the financial management of the plans.
The bill also contains provisions pertaining to the management of the plans. It takes into account the interests of the participants, retired employees and the Canadian taxpayers as well. It reflects most of the elements on which we had agreed in principle.
The proposal in the bill that pertains to the disposition of the current surplus has aroused strong criticism from certain quarters. However, the public, and thus the Canadian taxpayer, supports the government's position on this question. This position is supported by court decisions as well as by the opinions of actuaries and other pension specialists. Many newspapers have also indicated their support for the government's position.
We have also been blamed for failing to make public sector pension plans subject to the Pension Benefits Standards Act. The objective of this legislation is to protect participants in employers' pension plans in areas of activity under federal jurisdiction. The Public Service Superannuation Act already provides equivalent protection to the participants in these plans.
Further to this bill, it has been contended that private sector employers would exert pressure to obtain funds from the pension plans set up for their employees. However, such cannot be the case. It would be hard to imagine provincial governments, which are responsible for employers' pension plans in areas of activity under provincial jurisdiction, allowing private sector employers to withdraw funds from the pension accounts they administer in a fiduciary capacity.
We believe that the plans as amended by this bill will be placed on a solid footing which will permit co-management once the participants are ready to assume their share of the management and risks which are a part of any pension plan. The government remains open to that possibility.
As did the President of the Treasury Board, I can reassure public service employees this bill will be advantageous to them.