Wednesday, September 22, 2010

Response from Tony Clement Canadian Minister of Industry

Earlier this year I wrote to Tony Clement urging him to support Bill C-501 and help protect pensions, in particular the pensions of Nortel retirees who face a huge cut in income.

Here is his reply:

Thank you for your correspondence regarding pension protection.

The Government of Canada is committed to exploring ways to better protect
workers when their employers go bankrupt. To date, the government has
taken several steps to accomplish this goal. For example, in July 2008,
the Wage Earner Protection Program was implemented to guarantee the timely
payment of unpaid wages, including severance and termination pay, of up to
approximately $3,330, in a receivership or a bankruptcy.

In October 2009, the federal government announced an important pension
reform plan which includes measures that will benefit pension plan
sponsors, plan members and retirees. These measures are intended 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 modernize
the rules for investments made by pension funds. Chapter 12 of the
Statutes of Canada 2010, which received Royal Assent on July 12, 2010,
incorporates a number of the announced pension proposals. Additional
legislative and regulatory changes will also be required in order to
implement all of the announced proposals.

Furthermore, the government has undertaken a very serious and public
discussion with Canadians on retirement income adequacy and security.
Recognizing that retirement income issues have federal, provincial and
territorial (FPT) dimensions, finance ministers set up a joint FPT
research working group to conduct an in-depth examination of retirement
income adequacy. The findings of this group were presented at the Finance
Ministers Meeting in December 2009.

Based on the working group’s findings, the finance ministers agreed to
proceed with the analysis of options to improve Canada’s retirement income
system. To support this work, federal consultations, which included
online consultations and a series of cross-country round table
discussions, speaking engagements and town hall meetings, were launched on
March 24, 2010, to gather input from Canadians on how to further build on
the strength of Canada’s retirement income system.

These efforts, as well as consultations undertaken by provincial and
territorial governments, informed discussions at the June 14, 2010 meeting
of FPT finance ministers. During this meeting, ministers agreed to
explore specific system improvements, such as pension regulation and tax
changes to encourage more retirement savings by allowing broad-based,
defined contribution pension arrangements for multiple employers,
employees and the self-employed; promote financial literacy to empower
individuals to make the best decisions and take more responsibility for
their own retirement; and consider a modest phased-in and fully funded
enhancement to the Canada Pension Plan.

Ministers are seeking to create a strong private and public balance,
acknowledging the importance of both effective government support and
personal responsibility. Currently, no final decisions have been made.
Detailed options for each of these proposals are under study and
development for further review by FPT finance ministers at the end of

Thank you for bringing your concerns to the government of Canada’s
attention. Please accept my best wishes.

Yours sincerely,

Tony Clement

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