When earlier this year the labour movement succeeded in delaying passage of the federal government’s Bill C-27, the government announced that it was providing an opportunity for unions and other groups to comment on the proposed law. On May 15, SEP provided its formal submission on C-27 to Minister of Finance Bill Morneau.
Bill C-27 would create a mechanism for employers to convert secure defined benefit (DB) pension plans governed by the federal Pension Benefits Standards Act to target benefit (TB). The difference is that while defined benefit plans offer a specific level of compensation for retirees, target plans can result in lower levels of benefits paid to plan members if the plan suffers financially from, for example, lower than expected investment returns.
This fundamentally shifts risk from employers to workers. While this legislation would only affect federally-regulated pensions — that includes SEP members at Bruce Power and NWMO — it would create a precedent likely to be followed by the Ontario government.
“Fundamentally, The Society cannot support a framework that permits the conversion of accrued DB benefits to TB benefits,” SEP wrote to Minister Morneau. “DB pension plans are the most efficient and effective means of providing retirement security for Canadians, as recently recognized by the federal government in its expansion of the Canada Pension Plan. Benefits accrued in a DB plan are earned entitlements to a secure lifelong retirement income and should not be converted to less secure target benefits.”
“The Society cannot support any measure that allows this promise to be broken.”
The federal government has not made its plans for Bill C-27 public but the earliest it could return to parliament for a vote is this fall.