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Just before Christmas last year it came to light that the Trudeau government was trying to play Grinch with defined benefit pensions the most secure pensions in Canada. Thanks to thousands of Canadians speaking out, including more than 500 SEP members, the Trudeau government hit the brakes on Bill C-27 to do consultation on the controversial legislation. SEP has been monitoring C-27 closely and has an update for members.
Click here for a background on C-27.
The federal governments decision to pause C-27s progress in parliament came with an invitation to stakeholders to provide submissions on the legislation to Minister of Finance Bill Morneau. SEP along with the Canadian Labour Congress and other unions will be taking the government up on its invitation.
The Canadian Labour Congress (CLC) has produced a draft submission of that is under review by affiliates including SEP. Consistent with the CLCs earlier messaging on C-27, the focus of their submission is on opposition to any legislation that would enable the conversion of accrued DB benefits to target benefits.
The Society is in agreement with the CLCs focus but also believes it is important to address other serious problems with C-27, including:
- It deviates from Canadas historic practice by not requiring that Target Benefit plans [click for definition] be jointly governed. Rather, C-27 sets out a governance structure that at best provides only token representation for plan members and/or their unions. The employer may retain majority control over the fiduciary board of a TB plan.
- It requires the establishment of stability objectives that may be prescribed by regulation and that cannot be changed through collective bargaining. This could lead to overly conservative funding requirements that promote benefit security at the expense of pension adequacy.
- It sets a dangerous precedent. If the proponents of C-27 are successful in setting a cross-Canada pattern for replacing existing Defined Benefit plans [click for definition] and even existing jointly governed (known as Jointly Sponsored Pension Plans or JSPP) and TB plans with this new TB model, Canadian workers can expect to have pension plans that are less secure, are controlled by their employers, cannot be collectively bargained, and may suppress benefit levels due to overly conservative funding policies that result in huge cash cushions that will never be used to fund pension benefits.
Though the government has not signalled its intention to reverse course on Bill C-27, the time for submissions means the bill will not be back before parliament until at least its fall session. Stay tuned for further advocacy initiatives aimed at stopping Bill C-27.