Quebec may provide pension remedy

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This article was published 24/10/2016 (2740 days ago), so information in it may no longer be current.

The answer to mounting concerns over the stability of pension plans in Manitoba might be found by looking at legislative changes in other provinces.

That’s what Premier Brian Pallister acknowledges has been done in provinces such as Quebec to ease the challenging contribution requirements faced by private companies.

He said his government is reviewing the province’s rules surrounding defined-benefit pension payment requirements.

“Quebec has made some changes in the way in which the funding amounts are determined and calculated, so we will have a look at that,” he said. “I do want to make sure the pensions are strong enough to secure the retirements they were designed to secure.”

Quebec introduced legislation this year to remove the solvency requirement for private defined-benefit pension plans. Instead, it adds in a stabilization provision that must be funded on a “going-concern” basis — meaning the company has declared it will continue to run for the next 12 months, at least. Alberta and B.C. have also passed laws easing minimum funding requirements.

The Saskatchewan government converted to defined-contribution pension plans for its public sector in the 1980s. A recent report from CIBC Capital Markets said that gives Saskatchewan an advantage over other provinces.

In Manitoba, sponsors (employers) of pension plans must ensure the fund has adequate assets at any given time to pay out all current and future obligations. The result is the sponsor must contribute annually to the plan to ensure if a company ceased operations, the pension plan would have enough assets to cover all its liabilities going forward.

The “going-concern” model means employers would be on the hook for about 30 per cent less annually, Michel St-Germain, a vice-chairman of policy for the Association of Canadian Pension Management, said last week. However, it offers less security if a company shuts down.

Pallister made his comments after his government passed a regulation last week that allows the prospective purchaser of the Tolko Industries paper mill in The Pas to defer pension contributions. The three-year deferment would be worth about $10 million a year to the prospective buyer, American Industrial Acquisition Corp.

NDP finance critic James Allum argues protecting pensions is his party’s top priority.

“Then we are quite willing to look at (other models) and quite willing to work with the government,” said Allum. “(But) our concern is that they will undermine the pension system in Manitoba, and we don’t want to see that.”

Don Leitch, CEO of the Business Council of Manitoba, said many private companies have been offering defined-contribution pensions for a long time. Leitch said if it is a question between offering an employee pension or not, it often ends up being a matter of what the employer can afford.

Loren Remillard, the president of the Winnipeg Chamber of Commerce, said the chamber has presented ideas to the provincial government, including urging legislation that would allow for registered pooled pension plans that are offered in a majority of provinces but not in Manitoba.

He said opening up the discussion about defined-benefits versus defined-contribution pension plans — all the while respecting collective agreements — will be unpleasant, but it has to happen. “We would hope that both sides would come to the table with the best interests of not only their members but all Manitobans.”

— With files from Dan Lett

kristin.annable@freepress.mb.camartin.cash@freepress.mb.ca