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Anthon Pang Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:

Surplus. Ownership (or entitlement) to a surplus should depend on how a surplus was achieved. We already know how much the Plan Sponsor has contributed to the Plan. More specifically, we can determine the total (accumulated) contributions by the Plan Sponsor to make up deficits/shortfalls. In the event of a later surplus, the Plan Sponsor can make a claim against the surplus for previous "topping up" of contributions. Any remaining surplus would be the entitlement of the Plan members. This would also be subject to the following: once a surplus is achieved, a minimum surplus should remain as a reserve as a hedge against a future deficit.

The existing surplus limit should be eliminated. Instead, a Plan could be allowed to reach some level (e.g., dependent on the total expected future payout of the Plan) at which point it could be converted to a defined contributions pension plan, having reached self-sustainability.

Funding (and Full Funding on Plan Termination). A plan which is unsustainable reflects an unsustainable company & business model. I do not believe the existing solvency rules should be relaxed. Air Canada should be considered an exception, not a rule or model for future policy. Furthermore, there should be no difference for financially vulnerable plan sponsors.

Pension Benefit Guarantee Fund. No, no, no. I am vehemently opposed to a guaranteed government bail-out. (Has anyone considered the possibility that such a provision could be considered an unfair trade subsidy?) And I don't think it should matter whether Plan participation is/was mandatory or not (i.e., the ability to opt out). Let's not further divide the have and have nots. I don't see anyone offering to rescue Canadians with self-managed RRSPs which have underperformed and/or suffered drawdowns.



Anthon Pang
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