Parliamentary committee sessions on Bill 57 for pension plans

Parliamentary committee sessions on Bill 57 took place on October 27 and 28, 2015.

Bill 57, An act to amend the Supplemental Pension Plans Act mainly with respect to the funding of defined benefit pension plans, was introduced in the National Assembly on June 11, 2015. This bill deals primarily with the funding of private sector pension plans.

For information on the content of Bill 57, please refer to our June 2015 bulletin.

From the outset, the Minister of Labour, Employment and Social Solidarity, Mr. Sam Hamad, emphasized the labour-management consensus at the core of Bill 57. This consensus came up in the work completed by the Comité consultatif du travail et de la main-d’œuvre (CCTM).

The Minister also pointed out that several measures provided for in Bill 57 resulted from the recommendations contained in the report prepared by the Expert Committee on the Future of the Quebec Retirement System (the D’Amours Committee). Most of the recommendations aimed at fostering the sustainability of private sector pension plans have been integrated in the bill.

Below is a summary of the parliamentary committee’s work:

The employer representatives, while recognizing the consensus in part, proposed several ways to improve the bill. They presented ideas discussed as part of the CCTM’s work for which an agreement had not been reached. The main irritants identified by employers are related to:

• the level of the stabilization provision;
• the simplicity of the scale used to determine the level of the stabilization provision according to the investment policy (the stabilization scale), that does not recognize the risk management specific to each plan;
• the level of protection linked to the banker’s clause;
• restrictions on using letters of credit; and
• constraints regarding the use of surplus assets.

The labour representatives unanimously welcomed Bill 57, indicating that it reflected the consensus. Several representatives stressed the importance of the elimination of solvency funding. The key demands of these representatives are to:

• keep to this consensus that reflects compromises on the initial positions;
• reinstate the temporary provisions of Bill 1 that would allow some members to request the payment of a pension by the Régie des rentes du Québec if their pension plan was terminated in the event of a bankruptcy; and
• provide for a different treatment of existing banker’s clauses.

The other stakeholders proposed different possible solutions concerning several aspects of Bill 57, including:

• approaches for establishing the stabilization scale;
• ways of using surplus assets; and
• suggestions regarding the use of letters of credit.

During the parliamentary committee sessions, the Minister talked about the upcoming public hearings on the Quebec Pension Plan and pointed out that this is where the real issue lies. He wants to hear about all potential solutions, including the longevity pension that was central to the recommendations outlined in the D’Amours Committee report.

Several stakeholders brought up Quebec’s historical leadership role and asked the Minister to be the driver of these social changes instead of following the lead of the federal and Ontario governments.

Regulations will soon be published to clarify the technical details concerning the application of Bill 57, including the long awaited stabilization scale and the content of funding and annuity purchase policies. The new bill and its regulations should take effect January 1^st, 2016.

The Minister announced that the CCTM has already been mandated to continue to study the stabilization scale, annuity purchase policies, clauses on the use of surplus assets and transfer values.

Also, the government should soon be introducing another bill that applies specifically to the funding of university sector pension plans.

The Normandin Beaudry consultants will continue to monitor the developments related to this bill and will keep you informed. Please feel free to send us your questions.