MP Gallant seeks local input on improving pensions

October 28, 2009

OTTAWA, ONTARIO… MP Cheryl Gallant, (Renfrew-Nipissing-Pembroke), is asking constituents to provide suggestions for pension reform to assist her when the Federal Government introduces legislation later this session of Parliament.  The Honourable Jim Flaherty, Minister of Finance, recently released an important reform plan on behalf of the government, for the federal private pension legislative and regulatory framework.

"Our Government listens carefully to Canadians," confirmed MP Cheryl Gallant. “People need to know that when they save for their retirements, when the time comes the funds will be there when they need them. They  need protection from employers who use the courts and high-priced Toronto lawyers to avoid paying what they promised to people who have given their lifetime to that company. I would like constituents to review the package and make suggestions if they have not already had the opportunity to do so."

The Federal Government’s Pension Reforms are the result of extensive consultations, beginning with the January release of a discussion paper, Strengthening the Legislative and Regulatory Framework for Private Pension Plans Subject to the Pension Benefits Standards Act, 1985, and including online consultations.
The package includes measures to enhance protections for plan members, reduce funding volatility for defined benefit plans, make it easier for participants to negotiate changes to their pension arrangements, improve the framework for defined contribution plans and for negotiated contribution plans and modernizes the rules for investments made by pension funds.

In particular, the Government plans to restrict an employer’s ability to take a contribution holiday unless a 5-per-cent funding cushion remains, change the solvency funding methodology to make it less volatile and less pro-cyclical by basing the funding requirements on a three-year average, and require employers to fully fund pension benefits on plan termination. The proposed changes are aimed at federally regulated private pension plans, which represent about 7 per cent of pension plans in Canada.

“There have been some recent court decisions that have been unfair to workers, like allowing retroactive amendments to existing pension plans. Protecting workers’ pensions is a priority for me and our government,” remarked Cheryl Gallant, MP.

Protecting seniors is a priority for our Government. In addition to these pension framework modernizations, the Government has taken action by increasing the Age Credit amount by $1,000 as of 2009, on top of the $1,000 increase introduced as of 2006, increasing the age limit for maturing pensions and Registered Retirement Savings Plans to 71 from 69 as of 2007, introducing pension income splitting as of 2007 and doubling the amount of income eligible for the Pension Income Credit (to $2,000 from $1,000) as of 2006.