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.
- It deviates from Canada’s 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.