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Results: 31 - 45 of 656
Gordon St-Gelais
View Gordon St-Gelais Profile
Gordon St-Gelais
2021-06-03 11:20
Good morning, my name is Gordon St‑Gelais in Sept-Îles. I am president of the Comité des retraités de Mines Wabush with a company called Cliffs Natural Resources.
In May 2015, Cliffs put Wabush into bankruptcy. This resulted in the retirees losing their benefits, their drug and life insurance. Many pensioners, when they retire, stop paying for insurance because it costs more. So they keep the company insurance.
In December 2015, the actuary for the pension fund closed the fund because there was no more money coming in. Union retirees then lost 21% of their pension fund, and management lost 25%. People usually retire at about age 60 and normally have maybe 25 to 30 years to live. So the loss is huge because there's no more salary increase. Their pension is reduced by 21% or 25% all of a sudden for the rest of their lives. They also lose benefits. They have to pay more for medication and life insurance. The spouses are also affected. It's a big problem.
Since Sept‑Îles is a remote community and everyone thinks we live at the North Pole, we set up a committee in May 2015 to make representations. We had the support of the United Steelworkers. In October 2017, we went to Ottawa to support the previous bill sponsored by our member of Parliament, Marilène Gill. I hope that this time it will go further, because it's hard for retirees to live on a small pension, which is reduced and never increases.
We went to Ottawa and made representations. Several MPs certainly saw us and heard our arguments. This trip was beneficial for us because Cliffs saw us. We were invited on television and we made some noise to show that we still existed. In fact, the Cliffs people didn't believe that a group of retirees, ranging in age from 65 to 85, could travel by bus to Ottawa to make representations.
As a result of that event, Cliffs contacted us to begin negotiations. This was beneficial to us as we were able to recover some of our benefits and some of our pension fund. We were looking at a 21% loss to the union members and it went down to 7%. You may say that's a lot, but you have to remember that the pension amount is still fixed and the life expectancy is 30 years.
Retirees contributed to their pension fund. As Mr. Cooper was saying, it's part of the workers' salary that they didn't get. Normally, in a negotiation process, the employer says it's a salary that the employees receive, but in truth it's money that the company invests. They don't contribute to the fund when they are in trouble. These companies are still rich. Cliffs Mining is not poor.
We are constantly fighting to get the most for our retirees so that they can live with dignity, despite their medical or family problems.
Thank you for your attention and have a good day.
View Pierre Poilievre Profile
CPC (ON)
Thank you very much, Madam Chair, although there is a new study out from Harvard showing that too many birthdays is the leading cause of death, and I know you don't wish that upon me.
Mr. Thornton, you gave a fantastic presentation, very well reasoned. I'm going to challenge you on it, though, because I think we get to better answers when we have a good debate.
Your first point was that if we prioritize pensions over other liabilities, distressed companies could be forced more quickly into bankruptcy. Can that not be solved by simply having a transition period for the coming into force of this bill, during which time companies that are sub AAA and that have defined benefits could prepare themselves and repair their balance sheets in order to avoid that problem?
Robert I. Thornton
View Robert I. Thornton Profile
Robert I. Thornton
2021-06-03 11:32
At the end of the day, it's a question of fairness. This bill does nothing to create value. When you put somebody artificially on top of the capital stack, it means that there is somebody who is a loser. This is not a balanced bill. It's not a give-and-take situation. It's a take situation.
Imagine, if you will, a stack of bricks in a tub of water. If you take one of the wet bricks out from the bottom and put it on the top, it doesn't mean that you suddenly have fewer wet bricks. It just means that someone else's brick has gone down under water. What's happening here is that this bill will crush recoveries for unsecured trade creditors, and they're the really vulnerable ones.
View Pierre Poilievre Profile
CPC (ON)
Right. I'm sorry but for those kinds of companies that are in a vulnerable position, could we not just have a transition period during which time they could get their balance sheet, including their pension viability, in order to comply with the bill and avoid bankruptcy?
Robert I. Thornton
View Robert I. Thornton Profile
Robert I. Thornton
2021-06-03 11:33
Everybody tries to create value but not every company is successful at it. A period of time, while it might be beneficial, really does nothing to alter the fundamental mechanics of this bill.
View Pierre Poilievre Profile
CPC (ON)
Second, you said that the cost of capital will go up for companies that have defined benefit plans. This is actually, to me, a virtue of the bill, and let me tell you why.
I worry about the fact that CEOs have underfunded their pensions for a long time and have said that problem is for the next CEO or another CEO down the line. Then when the pension problem emerges, the CEO who caused it in the first place is long retired and on his yacht in the Caribbean while the workers are left holding the bag.
Doesn't this bill bring the real cost of underfunding a pension into the present by making it more expensive for companies that don't properly fund pensions to raise money?
Robert I. Thornton
View Robert I. Thornton Profile
Robert I. Thornton
2021-06-03 11:34
At the end of the day, greater cost to capital simply means the company is going to be less competitive in a competitive world. My point—
View Pierre Poilievre Profile
CPC (ON)
Mr. Thornton, shouldn't that be the case? If I have a company and I'm not funding my pension plan and I'm leaving possible problems for a future management to solve, then shouldn't I take a whupping from the debt market? Shouldn't they say to me in the present, “Mr. Poilievre, you haven't funded your pension so we're not lending you money.” Wouldn't that create an incentive for me in the present to get my pension properly funded?
Robert I. Thornton
View Robert I. Thornton Profile
Robert I. Thornton
2021-06-03 11:35
Possibly, but the solution I have proposed would do that even more directly and wouldn't risk putting the company in an uncompetitive situation to do it.
Right now the deficits are measured annually and sometimes only over three years, and then you're given five years to fund it. If you measure that quarterly as you can now, you can identify the problem while it's small and not this ogre that comes along to crush pensioners at the end. When it's small, you also put in tight timelines to fix it, so you bring the whole solution into the present.
View Bernard Généreux Profile
CPC (QC)
Thank you very much, Mr. Poilievre.
Mr. Thornton, you are proof that there are always two sides to a coin. We have heard from a number of witnesses on this bill, and I agree with most of them. I am a businessman and I own a small business with 25 to 30 employees.
The pension funds of large companies are often undervalued. As I understand it, you are saying that, when the banks are deciding whether to finance a company, whether it is for day‑to‑day expenses or as part of the revival of a company that is doing poorly, they look at the facts. However, when it comes to pension funds, they would have to rely on an actuarial valuation, and there is a real difference between the two.
What could we fix and improve in this bill to ensure that pension funds can be better funded?
Robert I. Thornton
View Robert I. Thornton Profile
Robert I. Thornton
2021-06-03 11:36
Yes. I am proposing that you do three things. Actually, there's a fourth as well, which my friend from Canadian Bankers Association mentioned.
The first thing is to put the measuring process into as close to real time as you can. It takes weeks to do the actuarial assumptions to figure out whether your pension is in deficit or not, but you do that quarterly, not annually. Then you identify shortfalls and tell the affected stakeholders—the pensions, the union groups and the regulator. Then you make the company fund it over a quicker period time.
You build that right into your pension legislation and inspire the provinces to do the same. In Ontario, FSRA is already looking at this kind of solution. It's a good fix for the problem without affecting the priorities.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2021-06-03 11:38
Thank you, Madam Chair.
Thank you to each of the witnesses. I found your testimony to be very helpful.
I will start off with Mr. Zigler.
Mr. Zigler, you did say that Bill C-253 can be problematic. However, you did offer some solutions.
We have heard that, should Bill C-253 be adopted, it will effectively discourage companies from having defined benefit plans going forward. What would you say to that?
Mark Zigler
View Mark Zigler Profile
Mark Zigler
2021-06-03 11:38
I would say that horse left the barn three decades ago. Most new pension plans are defined contribution arrangements or a group RRSP. The problem is that you have hundreds of thousands of people, if not a million people, in private sector defined benefit plans in this country. This is the regime that we have.
I'm not worried about new plans. I'm worried about protecting the people in the current plans. I'm worried about the fearmongering, frankly, that says all lending will dry up, that everything will dry up if you create some kind of priority.
We created a superpriority for wages, a small one, 15 years ago. Guess what? They are still lending.
Lenders know how to study actuarial reports. They know how to study all aspects of a business that are problematic and depend on future sales, future developments, future interest rates or future mortality, which is what pensions are about. They are sophisticated. They can protect themselves. Other suppliers can protect themselves because they can spread their losses. Even workers can protect themselves to a degree: They can get another job.
Pensioners can't do anything. If their pensions get cut, there's finality. So you have do something here. At least put a cap on this priority and really study the solution that even Mr. Docherty recommended. Create a viable guarantee fund. That's how you protect pensioners.
To do nothing, just because this bill creates a superpriority over everyone, is to ignore the problem and to let down the pensioners of this country.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2021-06-03 11:40
Mr. Zigler, you said that the horse has left the barn, but is it not accurate to say that certain companies now have two-tiered systems where they have defined benefit plans for some employees, but they are now grandfathering those and for new employees they have undefined benefits plans?
Mark Zigler
View Mark Zigler Profile
Mark Zigler
2021-06-03 11:40
Yes, that's true. Many have hybrid plans where they create defined contribution benefits going forward. In fact, that's what Nortel did during the last seven or eight years of its existence, but the vast majority of their liabilities were defined benefit ones.
Results: 31 - 45 of 656 | Page: 3 of 44

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