Top Issue to Watch in Parliament: Retirement security and Bill C-27

February 14, 2018
Broken piggy bank with hammer and money.

MPs are expected to continue debating in Parliament proposed changes to what types of pensions federally-regulated employers can provide.

The Liberals’ Bill C-27, introduced in the House of Commons in October 2016, would allow Crown corporations as well as federally-regulated sectors – like air transportation and banking – to offer target-benefit pension plans.

Target-benefit plans land somewhere in the middle between defined-benefit pension plans and defined-contribution pension plans. Defined-benefit plans – typically offered by government and unionized workplaces – guarantee set payments for life and are managed by the employer, who takes on all the risk for those payments. In the case of defined-contribution plans, employers and employees both pitch in but employees take on much more risk; they decide how to invest the funds and the size of their benefits depends on the returns of those investments.

In the case of target-benefit plans, employers manage the plan and both sides share the risk. A percentage of the set payment might be guaranteed – so employees have an idea of how much they can expect – but benefits could decrease if the pension plan performs poorly.

Many unions, labour groups and other associations have come out hard against Bill C-27, insisting the bill would force workers and retirees to assume too much risk with their pensions and would therefore break the Liberals’ vow to improve retirement security.

On the flip side, others say the introduction of target-benefit plans would be positive because it would expand the range of options available to employees in a system where many defined-benefit plans are underfunded. Bill C-27 also notes that employees already under a defined-benefit plan would have to consent to exchanging it for a target-benefit plan.

C-27, which would amend the Pension Benefits Standards Act, hasn’t advanced in Parliament since its introduction. MPs are currently debating the bill at second reading; should it pass that stage, it will go on to a review by a parliamentary committee.

The bill has gotten increased attention in recent months, however, due to outrage over Finance Minister Bill Morneau’s sponsorship of the proposed legislation and the subsequent initiation of an investigation by the federal ethics watchdog.

The ethics commissioner is specifically looking into whether Morneau broke federal conflict of interest laws by sponsoring the pension bill while he still owned millions of dollars in shares in his family human resources company, Morneau Shepell, which stands to benefit from the proposed changes.

Act now and tell your MP to scrap Bill C-27.