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R. Maxine Collins' Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:

Regulatory Framework for Federally Regulated Defined Benefit Pension Plans

Pension Charts


The Department of Finance Canada [Finance] website contains the following statements with respect to the Defined Benefit Pension Plans consultation paper.

    The objective of this consultation paper is to seek the views of Canadians on how to strengthen the legislative and regulatory framework for defined benefit pension plans registered under the Pension Benefits Standards Act, 1985 (PBSA) in order to improve the security of pension plan benefits and ensure the viability of defined benefit pension plans.

    One of the main purposes of the PBSA is to set out minimum standards for federally registered pension plans to ensure that the rights and interests of pension plan members, retirees, and their beneficiaries are protected.

This submission will focus on the "rights and interests of pension plan members".

Within this context, I refer to subsection 16(8) of the Divorce Act, R.S.C. 1985 which reads as follows:

    "The court, in making an order for custody or access, shall only take into consideration the best interests of the child of the marriage as determined by reference to the condition, means, needs and other circumstances of the child."

While there is much to be applauded in the federal and provincial government regulation of pension plans, there is also an inherent "big brother" element. In creating legislation which disallows access to locked-in pension investments in order that these funds may be available for retirement, it can be said that plan members are being protected from themselves. From this perspective, the legislation is offensive and one cannot help but speculate as to the potential success of a legislative challenge. Alternatively, in the mind of individual pension plan members it may be prudent to accept the perceived offence in favour of the ultimate good intended by the legislation.

However, certainly while governments are parenting pension plan members cast in the role of children under the PBSA and similar provincial legislation; this legislation should provide the same consideration as given to the children of divorce in Canada. That is to say, governments should ensure that pension legislation contains provisions dealing with the overall best interests of plan members given financial conditions, means, needs and other relevant circumstances rather than focusing on the overall best interests of the pension funds.

Small Pension Rules

To paraphrase statements appearing on the Finance website, private pension plans may be viewed as the gap filler between public pension benefits and a desired level of post retirement income. However, when the level of investments held in a private pension plan will have no consequential effect on a plan member’s post retirement quality of life, it makes sense that a plan member should have the right to withdraw these funds.

Currently, the PBSA does not contain a provision dealing with "small pensions".

Currently, only the provinces of Alberta, Prince Edward Island and Newfoundland and Labrador have not enacted pension legislation allowing for withdrawals under these circumstances[1]. As such, based on population distribution data contained on the Statistics Canada website[2], under provincial legislation a potential 88% of the population of Canada can gain access to locked-in pension funds when the funds held fall within prescribed parameters.

Based on federal government employee data contained on the Statistics Canada website[3], in 2004 a total of approximately 10% of federal government employees resided in the provinces of Alberta, Prince Edward Island, and Newfoundland and Labrador. As such, under the PBSA only 10% of federal government employees are on par with their provincial counterparts in terms of small pension lump sum withdrawals.

Financial Hardship

Currently, the PBSA does not contain a provision dealing with "financial hardship".

Currently, only the provinces of Alberta and Ontario have enacted legislation permitting the withdrawal of a lump sum payment under financial hardship circumstances. However, the legislation in Alberta does not apply to pensions administered by the Alberta Pensions Administration Corporation [APA] which includes the public service pension plan.

Based on federal government employee data contained on the Statistics Canada website[4], 41.4% of federal government employees resided in the province of Ontario in 2004. As such, under the PBSA more than 40% of federal government employees are not on par with their provincial counterparts in terms of the ability to withdraw funds under prescribed financial hardship conditions.

While the PBSA does contain a provision allowing for withdrawal of funds in the event of shortened life expectancy, it does not contain a provision allowing for a lump sum withdrawal by a plan member to, for instance, prevent eviction from his/her home due to rental payment arrears.

Under no circumstances would a reasonable person consider a government to be acting in the overall best interests of plan members when life on the street is considered preferable to permitting the withdrawal of locked-in pension funds. As an aside, it can also be stated the majority of doctors would agree that homelessness shortens life expectancy.

All that is needed for the federal government to expeditiously enact this urgently needed amendment is a change in the regulations to the PBSA.

Provincial Pension Legislation – Other Issues

It should be noted that certain provincial pension legislation allows for withdrawals for reasons other than the two outlined above, e.g., non-resident rules. However, it is clearly evident from the examples of "small pensions" and "financial hardship" that the number of inconsistencies from province to province and between federal and provincial legislation causes advantages/disadvantages depending on the province of residence and the particular legislation governing pension plan members.

While it is understood that consistent pension legislation for all Canadians is a far reaching goal, it is one that should be given consideration by the Department of Finance Canada during this period of consultation and review.

Protecting Pension Funds from Creditors


Creditors have been making considerable progress in seizing retirement savings as can be evidenced by the Supreme Court decision in Bank of Nova Scotia v. Thibault

[2004] 1 S.C.R. 758, 2004 SCC 29 , Date: May 14, 2004. This decision in effect permitted the seizure of a self-directed RRSP.

Consistent with the goal of protecting retirement savings, it appears that the federal government has moved to counter this decision in Bill C-55 [An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act and to make consequential amendments to other Acts].

Bill C-55 proposes to prevent the seizure of retirement savings under bankruptcy proceedings as follows:

    57. (1) Paragraphs 67(1)(b) and (b.1) of the Act are replaced by the following: 

    (b) any property, other than property in a registered retirement savings plan or a registered retirement income fund, as those expressions are defined in the Income Tax Act, or in any prescribed plan, that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides, [emphasis added]

As can clearly be seen, the application of this federally proposed legislation will be impacted by relevant provincial legislation.

"Financial Hardship" Withdrawals

The proposed legislation under Bill C-55 will only protect funds held "in" a retirement plan. Once withdrawn the funds again become subject to seizure.

It is noted by the writer that neither legislation in Alberta or Ontario provides for the protection of funds withdrawn under "financial hardship" rules. As such, funds withdrawn by a plan member to pay rent may be seized by creditors or a trustee in bankruptcy leaving the plan member still subject to eviction.

It is respectfully suggested that future amendments to the PBSA and related regulations with respect to "financial hardship" withdrawals should contain wording clearly protecting these funds from creditors and bankruptcy proceedings. In addition, acting in the overall best interests of pension plan members, Finance should strongly recommend like amendments to the provincial pension legislation in Alberta and Ontario.

Administration of Pension Legislation

There is no doubt the demise of Enron, and subsequent similar occurrences in the U.S., has had a direct impact on Canadian accounting firms, banks, and business in general. This Canadian fallout has also resulted in discussion regarding the need for a single Canadian financial watchdog thereby combining or replacing the current provincial regulatory bodies.

However, as can be seen by reference to the attached Provincial Legislation Chart under the heading Admin. Websites, provincial pension legislation is not always administered by the Provincial Financial Services Commission. In addition, the provinces of Alberta and Prince Edward Island have not enacted one statute dealing with all pension plans causing a concurrent split in administrative responsibility.

It is acknowledged by the writer that the current administrative scheme presents a great challenge to consultation and the future creation of consistent pension legislation in Canada. However, I believe it is a challenge which can be overcome with all parties acting in the overall best interests of pension plan members.

I wish to express my gratitude for the opportunity to present my views to the people who will shape the future federal and provincial pension legislation in Canada.

R. Maxine Collins, CGA

1. Please see attached Provincial Legislation Chart   [Return]

2. Please see attached Population Chart   [Return]

3. Please see attached Federal Government Employees Chart   [Return]

4. Please see attached Federal Government Employees Chart   [Return]

  British Columbia Alberta Saskatchewan Manitoba Ontario Quebec New Brunswick Nova Scotia Prince Edward Island Newfoundland & Labrador

Provincial Legislation Pension Benefits Standards Act
[RSBC 1996] Chapter 352
Public Sector Pension Plans Act, R.S.A. 2000, c. P-41

Employment Pension Plans Act, R.S.A. 2000, c. E-8

Pension Benefits Act, 1992, S.S. 1992, c. P-6.001 Pension Benefits Act, C.C.S.M. c. P32 Pension Benefits Act, R.S.O. 1990, c. P.8 Supplemental Pension Plans Act (R.S.Q., c. R-15.1) Pension Benefits Act, S.N.B. 1987, c. P-5.1 Pension Benefits Act, R.S.N.S. 1989, c. 340 Civil Service Superannuation Act, R.S.P.E.I. 1988, c. C-9

Teachers' Superannuation Act, R.S.P.E.I. 1988, c. T-1


S.N.L. 1996, c. P-4.01

Admin. Websites British Columbia Financial Institutions Commission - Pension Standards Alberta APA Corporation

Alberta Finance - Pensions

Saskatchewan Financial Services Commission Manitoba Labour & Immigration- Pension Commission Ontario Financial Services Commission - Pensions Quebec Supplemental Pension Plans New Brunswick Office of the Superintendent of Pensions Nova Scotia Environment and Labour - Pensions Prince Edward Island Public Service Commission

Prince Edward Island Education

Newfoundland & Labrador Finance - Pensions Administration Division
Financial Hardship Withdrawals N/A Employment Pension Plans Regulation, Alta. Reg. 35/2000 ss 41.1(1) & Schedule 4 N/A N/A Pension Benefits Act ss.67(5)

Pension Benefits Act R.R.O. 1990, Regulation 909

Amended to O. Reg. 324/05

General s.83 to 89

Small Pension Rules Pension Benefits Standards Act ss.40(1)

Pension Benefits Standards B.C. Reg. 195/2004] ss. 33(2)

N/A Pension Benefits Act s. 39 Pension Benefits Regulation, Man. Reg. 188/87 R s. 18.2 Pension Benefits Act

R.R.O. 1990, Regulation 909

Amended to O. Reg. 324/05 General s. 22.3

Supplemental Pension Plans Act s. 91

Regulation respecting Supplemental Pension Plans s. 19

Pension Benefits Act s. 34

General Regulation - Pension Benefits Act, N.B. Reg. 91-195 ss. 21(15) & 21(16)

Pension Benefits Act s. 57 & 58

Pension Benefits Regulations, N.S. Reg. 164/2002 s. 78



Data Source – Statscan Population persons (thousands) 2000 2001 2002 2003 2004 2004 Percentages

Canada 30,689.0 31,021.3 31,372.6 31,660.5 31,946.3 100.00%

Newfoundland and Labrador

528.0 522.0 519.4 518.4 517.0 1.62%
Prince Edward Island 136.5 136.7 136.9 137.3 137.9 0.43%
Nova Scotia 933.9 932.4 934.5 936.2 937.0 2.93%
New Brunswick 750.5 749.9 750.3 750.9 751.4 2.35%
Quebec 7,357.0 7,397.0 7,445.7 7,492.3 7,542.8 23.61%
Ontario 11,685.4 11,897.6 12,102.0 12,256.6 12,392.7 38.79%
Manitoba 1,147.4 1,151.3 1,155.6 1,161.6 1,170.3 3.66%
Saskatchewan 1,007.8 1,000.1 995.9 994.4 995.4 3.12%
Alberta 3,004.9 3,056.7 3,116.3 3,158.6 3,201.9 10.02%
British Columbia 4,039.2 4,078.4 4,115.4 4,152.3 4,196.4 13.14%


Data Source – Statscan Federal Government Employees 2004 Persons Percentages $Thousands Percentages

Canada 366,654 100.0% 21,475,879 100.0%

Newfoundland and Labrador

6,970 1.9% 367,227 1.7%
Prince Edward Island 3,532 1.0% 184,023 0.9%
Nova Scotia 23,396 6.4% 1,305,773 6.1%
New Brunswick 13,526 3.7% 709,149 3.3%
Quebec 74,331 20.3% 4,257,240 19.8%
Ontario 151,793 41.4% 9,249,842 43.1%
Manitoba 16,012 4.4% 847,295 3.9%
Saskatchewan 9,041 2.5% 494,056 2.3%
Alberta 26,365 7.2% 1,432,301 6.7%
British Columbia