TORONTO, Nov. 25, 2022 (GLOBE NEWSWIRE) — In an open letter to Members of the House of Commons and the Senate, the Association of Canadian Pension Management (ACPM) states their concern that Bill C-228, if passed, will have undesirable and unintended consequences and could lead to a loss of pension coverage for up to a million Canadians.
Among the negative consequences from C-228, is that many DB pension plans will be terminated due to increased costs and the burden of borrowing faced by plan sponsors. These plans are already highly regulated and they cannot incur more costs and risks – they will simply wind up their existing plans or convert them to a retirement savings plan that will be less beneficial for plan members.
An insolvency approach should provide employees and retirees with a high degree of certainty of receiving as much of their pension promise as possible. To avoid negative outcomes, ACPM proposes several solutions to securing pensions and any of them can be implemented by the federal government.
First, allow pension plans to continue to operate despite the insolvency or bankruptcy of the sponsoring employer. Secondly, leveraging an Income Tax Act amendment could enable retirees of insolvent pension plans to convert pension savings into a Variable Payment Life Annuity (VPLA) or Advanced Life Deferred Annuity (ALDA), thus maximizing retirement dollars. Finally, asset pooling on a national level could enable insolvent company pension funds to deliver on the pension promise.
Given such serious issues, ACPM urges that Bill C-228 in its current form be abandoned in favour of pursuing responsive and responsible solutions.
ACPM is the leading advocacy organization for a balanced, effective and sustainable retirement income system in Canada. Our private and public sector retirement plan sponsors and administrators manage retirement plans for millions of plan members, including both active plan members and retirees.