Let's Take the Politics Out of Pensions
Canadians expect their governments to work together to protect them. Let’s take the politics out of pensions.
We are calling on the federal government to protect pensioners when companies become insolvent by:
Amending insolvency legislation and enabling the creation of a Distressed Pension Facility in the event of a corporate insolvency. If a defined benefit plan is underfunded on a solvency basis at the time of wind-up, its assets would be transferred to this new form of plan, and would ensure all Canadian pensioners receive 100% of their pensions and are treated equally, regardless of where they live.
Creating a federal pension insurance program that insures 100% of the pension liability. This should be fully funded by the plan sponsors. While this would impact only federally regulated pensions, it would create a model for similar plans at the provincial level.
Amending insolvency legislation to extend super-priority to the unfunded pension liability. While this would not guarantee pensioners would receive 100% of their pensions, it is an action the federal government should take to provide increased pension security to all pensioners of companies entering insolvency.
Get the facts on common pension myths
As a result of advocacy efforts by the CFP, the federal government introduced some pension protections in 2019. Bill C-97 added some new tools to the litigation tool kit available to pensioners in the event of a corporate insolvency. (read more - expandable) These include:
All parties now have a duty of good faith in insolvency proceedings, and courts can now compel disclosure and levy fines.
Certain payments made by a corporation in the twelve months prior to filing for insolvency are now subject to review.
Reducing the initial orders to ten days and limiting them to only that which is reasonably necessary. This shortens the time in which other stakeholders can present their position, a positive for pensioners who need certainty about timing.
CFP Executive Members with Federal Seniors Minister Deb Schulte
Ontario is the only Canadian jurisdiction to offer some pension insurance through the Ontario Pension Benefit Guarantee Fund. CFP is actively working with the Government of Ontario and Financial Services Regulatory Authority Ontario to expand the scope of pension protection.
CFP is calling on the Ontario Government to:
Make protection of defined benefit pensions a high-impact priority for FSRA and the provincial government in 2020
Ensure full pension insurance for all pensioners by increasing employers’ contributions to the Pension Benefit Guarantee Fund (PBGF)
Identify and enact specific legislative and regulatory changes to enhance the government’s ability to prevent pension defaults, such as:
abolishing pension funding relief except in true hardship cases
preventing the sale of a company until its pension is fully funded
blocking executive bonuses or issuance of dividends when a pension falls below established solvency funding requirements.
In the wake of recent high profile insolvencies, including Groupe Capitales Medias and Sears, CFP is leading an active advocacy campaign in Quebec. We are calling on the Government to establish a Quebec Pension Insurance Plan (QPIP) that would cover 100% of the pension liability in the event of corporate insolvency. We have successfully raised awareness about the issue of pension insolvency and the need for a QPIP.
Our campaign is gaining the attention of politicians, the media and other advocacy groups. We are grateful to FADOQ, which has committed to joining our advocacy efforts. On Dec 12, the Quebec Premier Legault indicated at a press conference in California he was open to look at a pension insurance program. We continue to advocate for the QPIP.
The CFP continues to sound the alarm for pension protection in British Columbia following the provincial government’s move to reduce solvency funding for defined benefit pensions.
In August 2019, under the shadow of a holiday weekend, the British Columbia government released, "A Review of the Solvency Funding Framework under the Pension Benefits Standards Act: Report on Stakeholder Committee Process August 2019". This report outlines the findings of the review which examined the solvency funding requirements for defined benefit pension plans.
This report is entirely focused on reducing sponsors’ obligations to fully fund pensions. It fails to recommend tangible solutions to protect pensions when companies with under-funded pensions file for bankruptcy. Rather, the report recommends that solvency funding be reduced to 85%, rather than the 100% currently required. It also recognizes that many pension plans don’t currently meet 85% threshold. This means that if a company goes bankrupt, pensioners will experience a 15% cut (or more) to their pensions. That’s a huge hit to their retirement security.
CFP will continue to advocate for greater protections for BC pensioners.
The CFP was dismayed to see the Manitoba government follow British Columbia’s decision to reduce solvency funding for pensions registered in that province. We raised our concerns in a recent letter to the editor