Industry committee  I would defer to my colleague, Mr. Morrison, to discuss the changes to the Pension Benefits Standards Act that were part of the 2019 package related to retirement income security. I would invite Mr. Morrison to indicate what those changes included.

Industry committee  Madam Chair, I'm not sure if that was directed at me. I would simply offer that, yes, the Department of Finance is the policy authority and in fact the regulator, as it relates to the Pension Benefits Standards Act. Given their role in the PBSA and obviously being responsible for the overall macroeconomy, as opposed to the Department of Innovation, Science and Economic Development with responsibilities for the microeconomy, there are macroeconomic considerations that I wouldn't be able to offer an opinion on in terms of the degree to which this may impact things like credit markets or lending.

Industry committee  There are probably two contemplations of that. One is the small employers that are plan sponsors. Those are increasingly infrequent. Then there are large employers for which we see the vast majority of defined benefit pension plans being the norm. Those, obviously, are on offer for all.

Industry committee  Unpaid wages are currently a superpriority. Unpaid wages that go essentially up to a maximum are automatically provided a superpriority in both a restructuring and a liquidation context. As I indicated last week, for unfunded wages, in the case of a liquidation or a restructuring, the federal government actually takes the spot of the employee to be able to pay them out immediately and then allow for the restructuring or liquidation to continue.

Industry committee  It's going to vary on a case-by-case basis, and it's going to vary based on the pension regulations they are being held to. Plan sponsors can ultimately make a determination, dependent on their unique circumstances, to terminate and close a plan or potentially to propose to their workforce to convert a plan from a defined benefit to a defined contribution, or to some other retirement scheme.

Industry committee  In some instances it is possible. It is obviously dependent on the nature of the situation. If it's deemed to be extraordinary they may very well find other mechanisms to justify it, but in the case of collective bargaining, it may also be used as a negotiating tool to say, “This is my approach, now articulate the best potential outcome,” knowing that the plan may potentially die and wind up or potentially be converted, either in the case of insurance or in the case of a pension.

Industry committee  My colleagues at the Department of Finance would be far better placed to comment on some of this, but I know there has been contemplation from time to time, for instance, about shortening the time period for special payments—whether special payments should go from a five-year payback period to a three-year payback period.

Industry committee  An unfunded pension liability, as we've noted, particularly depending on the jurisdiction, could be quite large. Three years is not a lot of time, depending on the nature of the markets at the time. There are a few things that should be considered. One is, obviously, that employers that are already in financial difficulty could have difficulty reducing their unfunded pension liabilities during that transition period.

Industry committee  I think the summary is just that I think it's worth looking at the consultations that were held in 2019. Then there was a similar statutory review of the act in 2014 that also yielded significant amounts of consultation and response.

Industry committee  [Technical difficulty—Editor] changes to the law in 2019 as a function of significant consultation. It did make changes to the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Canada Business Corporations Act, amongst others. Those projects of law are actually in their infancy.

Industry committee  It should be clear that this is an analytical view and not a personal one. I come to this from the perspective of simply the analysis that we have been able to undertake as the government department responsible for this statute. I'm trying to bring to bear what we have heard, seen, analyzed and understood through the research and other that we've undertaken.

Industry committee  Yes, obviously we think that the general premise is that the best way to ensure the ongoing vitality and the security of retirement income is for a going-concern entity to be continuing to make pension payments and have its pension plan ongoing. Winding up at any given moment, just given the vagaries of the market, obviously you leave some risk that, on a solvency basis, they may not have sufficient funds.

Industry committee  Yes, a deemed trust is a complicated piece of insolvency, so it's difficult to generalize on the basis of deemed trusts, and Indalex is an issue that remains an issue in a number of potential and current cases. To your broader point, though, about relative levels of fundedness, it is worth noting that the current funded ratio for DB pension plans belonging to companies in the S&P;/TSX composite index increased from 90.8% to 91.2% funded over the past 12 months.

Industry committee  Thank you for the question. Clause 2 extends the superpriority for unremitted employee contributions and unpaid employer normal cost contributions owing to the pension plans to any unpaid special payments and unfunded pension liability. It also extends the superpriority for unremitted employee contributions and unpaid employer normal cost contributions owing to the pension plans to any unpaid special payments and unfunded pension liability.

Industry committee  As we discussed a little last week.... I can point to the policy choices that have been made at the federal level. As indicated, the standard that companies are held to is 100% funded on a solvency basis, with a gap that needs to be made up over the subsequent five years. I do think that companies actually are obligated, federally, to ensure that they are keeping their plans well funded and to continue to have to make payments.