PENSION AND RETIREMENT CONCERNS
Implications of Bill C27 for our Pensions

THE BILL

Bill C27 is a Federal Bill introduced by the current Liberal Government in October 2016.   It affects pension legislation which applies to federally regulated private and public corporations, but it could readily be used as a model to push against Defined Benefit Plans.  It allows a new type of pension plan to be implemented by those corporations.  Previous to Bill C27, for the most part,  only two types were allowed where the Federal Government had control.  They are Defined Contribution Plans and Defined Benefit Plans.  Our teachers’ pension is an example of a Defined Benefit Plan.  The new plan which would be allowed under the bill is a Target Benefit Plan (sometimes inappropriately called a Shared Risk Plan).

TYPES OF PENSIONS    

Defined Contribution  
Employer and employee  contribute a defined amount to the plan each month..
Upon retirement benefits are determined by the amount in the Plan which has been invested
during your working years.
Employers are no longer responsible for yourpension  benefits.
Pension is unpredictable and  insecure.

Defined Benefit
Employer and employee contribute a defined amount  to the plan each month
Upon retirement benefits are determined by a Pension formula  re how long you have worked
This pension is guaranteed by your employer for life.
Pension is predictable and secure.

Target Benefit
Employer and employee  contribute a defined amount  to the plan each month.
Upon retirement benefits are determined by a Pension formula  re how long you have worked
but  only part of the benefit is guaranteed (the Targeted part) and the rest depends on
how well the plan’s investments did.
Employers are no longer responsible for pension benefits.
Pension is unpredictable and insecure.

WHY IS THIS A PROBLEM?  

Most employers are anxious to remove risk from their books.  Defined Contribution and Targeted Benefit Plans allow them to do that. Their corporate bottom lines look much better.  Defined Benefit Plans appear as liabilities on corporation books and shareholders do not like that.  Bill C27 allows Federally Regulated private and public corporations to replace their defined Benefit Plans with Targeted Benefit Plans.  If these corporations are allowed to adopt Target Plans for new employees or to convert existing Defined Benefit Plans to Target Plans, then all governments and private companies will consider doing the same thing. There is no doubt that Target Plans are better for employers and worse for employees.

WHO IS CONCERNED  

RTO has joined a large group including ACER-CART, the national voice of retired teachers, The National Association of Federal Retirees and the Canadian Coalition for Retirement Security to inform Canadians on the possible impact of Bill C27. The Canadian Labour Congress is also concerned about the issue for their workers’ pensions.

WHAT CAN YOU DO?

Write to The Honourable Bill Morneau, Minister of Finance, to express your concerns.

Minister of Finance


The Honourable William Francis Morneau


Department of Finance Canada


90 Elgin Street


Ottawa, Ontario,  K1A 0G5

Or email him at bill.morneau@canada.ca

Tell him that you are very concerned that he has introduced a bill that even Stephen Harper abandoned in 2014 because of the concerns that were raised around it.

Bill C-27 would allow Crown Corporations and federally regulated employers to push employees to surrender their defined benefit pension plans for targeted benefit plans.  As we have seen in New Brunswick, many pensioners have been disappointed when they, too, have been pushed to do the same.

In tough times, target benefits can be reduced either going-forward or retroactively, providing less retirement security for Canadians.

Targeted Benefit Plans take all the risk away from employers and place it all on the worker and retirees.  With the markets as volatile as they are, these new plans are the beginning of the end of retirement security for middle class Canadians.