Madam Speaker, I am happy to rise on this motion today. I would first like to make a couple of comments on the previous commentary.
In relation to the Canadian Labour Congress, it put forward an initiative in the last few weeks. I would like to commend several items in its initiative. One goal is to work toward parity between men and women in insurance benefits. That is an admirable goal and I look forward to seeing what can be done in that respect. I am also quite supportive of its work on behalf of older workers, because older workers have a harder time finding new employment. What our government has been promoting for a few years now is the whole concept of lifelong learning and that people need training not only to get back into the employment field but while they are at work to continue in the employment field.
I also want to add my support for the Air Canada workers and their pensions. When we discussed this at the transport committee meeting, I strongly put forward the position, as did the whole transport committee, that this was something we definitely had to look at and make sure that those pensions were not in jeopardy. They are handled separately from the rest of the bankruptcy. Unfortunately a lot of pensions, including Air Canada's pension, had a lot of reduction because of the investments of the pension plan. The point was, for the part that did not cause the decrease in moneys, the secretariat that looked after pensions had to make sure that Air Canada's payments in that pension plan were up to date so that people will continue to get their pensions.
I congratulate the mover for bringing forward this important topic. I also congratulate her for her recent courage in other major developments in her constituency. Everyone is in agreement with the goal and with the principle. Pensions are so important to people. People work hard all their lives. They certainly depend upon their pensions and we certainly would not want anything to get in their way. I am sure everyone agrees with that and it is just the mechanisms on how best to do it that we are discussing in this debate, as well as other debates.
Parliamentarians have always recognized that pensions are so important. That is why they have put in special mechanisms to protect them so that pensions are not at the bottom of the list but in a separate part where they are protected.
I welcome the opportunity to participate in today's debate on Motion No. 400 which proposes to amend the current bankruptcy legislation to ensure that wages and pensions owed to employees are the first debts repaid when a bankruptcy occurs. I would also like to note that my remarks today especially address the pension issues that were raised during a debate that took place on Motion No. 400 in June.
I would first like to put this issue into context beginning with a general overview of the existing pension plan system in Canada.
The purpose of pension plans in our country is to provide retirement benefits for plan beneficiaries. As hon. members know, our system includes both public pension plans and private pension plans. Public pension plans include the Canada pension plan, the Quebec pension plan and old age security. Private pension plans consist of occupational pension plans, otherwise known as registered pension plans or RPPs. They cover both defined benefit and defined contribution plans which are provided as part of an employment contract. I also want to mention that private pension plans are voluntary but must be registered either federally or provincially.
In addition, the federal and provincial governments provide tax assistance for savings in RPPs and retirement savings plans, or RRSPs, to encourage and assist income replacement in retirement.
As I indicated, today's motion proposes to amend the Bankruptcy and Insolvency Act to ensure that wages and pension moneys owed to employees would be the first debts paid when a bankruptcy occurs. We discussed the issue of protecting wages here in the House on June 5, 2003. Today my remarks will focus on the issue of securing pension benefits in bankruptcy proceedings.
The main federal statute that regulates private pension plans of companies that fall under federal jurisdiction, such as banking, interprovincial transportation and telecommunications, is the Pension Benefits Standards Act, 1985, or the PBSA as it is commonly called. While some 1,200 pension plans fall under the purview of this act, close to 90% of all registered plans in Canada are provincially registered.
The PBSA sets out the rules for administration and funding of federally regulated private pension plans. It imposes minimum funding requirements on pension plans to support the solvency and security of the pension fund and its ability to pay out promised benefits.
The Office of the Superintendent of Financial Institutions, otherwise known as OSFI, administers the PBSA. OSFI's role is to protect the rights and interests of plan beneficiaries, having due regard to the fact that administrators of pension plans are responsible for the management of the plans and that pension plans can experience financial and funding difficulties that can result in the reduction of those benefits.
OSFI has a variety of means at its disposal to protect the rights and interests of plan beneficiaries of federal pension plans. Intervention activities can range from meeting with the plan administrator, to asking that a special actuarial report be conducted, to, in extreme cases, replacing the plan administrator with one appointed by OSFI.
In the current environment, OSFI's priority is to identify risks faced by federally regulated pension plans, promote sound management of those risks, and see that corrective actions are taken where appropriate.
The regulatory framework provided by the PBSA, supported by the supervision of OSFI, provides an appropriate framework for protecting the interests of pension plan members, even my comrades in the Alliance.
Federal statutes such as the Income Tax Act also impact on private pension plans. It should be noted that most private pension plans are governed by provincial pension legislation.
As hon. members may know, the PBSA provides protection for pension plan members by requiring the employer to keep the pension fund separate and apart from its own and by deeming the pension funds to be held in trust. In addition, any amounts owed to the pension fund are subject to a deemed trust.
This deemed trust provision protects members of a federally registered pension plan from a scenario where the employer is in financial difficulty and may have to resort to the Companies' Creditors Arrangement Act , the CCAA, or Bankruptcy and Insolvency Act , the BIA. In the event of bankruptcy, moneys owed under the deemed trust provision of a federally registered pension plan would be given priority status.
I would like to remind the House that the Senate Standing Committee on Banking, Trade and Commerce has been reviewing the issue of bankruptcy protection. It is giving the matter full consideration in its review of the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act. To assist the committee, Industry Canada prepared a report describing the wage and pension protection issue, proposing possible solutions and setting out the views expressed by stakeholders about the options proposed.
I agree that ensuring the promised benefits of pension plan members and beneficiaries is a key priority. That is why I have outlined several measures in our current system that ensure that this goal is met. Let me outline some additional measures that are currently in place.
As I noted previously, the Pension Benefits Standards Act, 1985 requires that amounts of a pension plan be held in trust or otherwise kept separate and apart from the assets of the employer. In addition, the pension plan administrators must reference all factors that may affect the funding, solvency and ability of the plan to meet its financial obligations. These rules are already on the books.
It is clear that the current status already largely meets the admirable intent of the motion. The government believes that the Pension Benefit Standards Act, 1985 and accompanying regulations have established the right climate to ensure that pension plan administrators are responsive to the concerns and objectives of plan members and employers.
Most certainly, ensuring sound, secure pension systems remains a priority for the government. Recent reforms to the Canada pension plan, together with recent PBSA amendments and regulations, demonstrate this commitment. I can assure hon. members that the government will continue to make changes to the Pension Benefits Standards Act, 1985 when and if required.
Given the built-in checks and balances and the existing duties and responsibilities of pension plan administrators under the PBSA, today's proposal to amend the Bankruptcy and Insolvency Act does not appear warranted.
However, I am always looking for mechanisms that will ensure that employees receive the hard-earned benefits that are so important to them in their retirement certainly before less important payouts. I look forward to such other amendments or proposals in the future.
