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The Marine Atlantic Pensioners Society's Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:

September 14, 2005

115 Fraser Ave
Sydney Mines, NS
B1V 2C9

Ms Diane Lafleur
Financial Sector Policy Branch
Department of Finance
L'Esplanade Laurier
20th Floor, East Tower
140 O'Connor St.
Ottawa , Canada
K1A 0G5

Dear Ms. Lafleur;

Please find attached a submission on "Strengthening the Legislative and Regulatory Framework for Defined Pension Plans Registered under the Pension Benefits Standards Act, 1985.from Marine Atlantic Pensioners Society (MAPS) representing 1600 retirees and beneficiaries in the Atlantic Region.

We look forward to the results of your consultation process.

You may post these comments on the Department of Finance Website.

Yours truly
Captain Lloyd Palmer
Pensioners Representative
Marine Atlantic Inc.


Surplus:

Any surplus in a defined pension plan should be the property of the plan members, including those who have already retired.

One of the main reasons there is a surplus in the first place, is due to the accumulated contributions made by former employees over their lifetimes of service. Most plan monies are invested and any capital gain added to the surplus.

Some companies such as CN have established a trust fund from surplus monies over the years. This allows for pensioners and survivors to receive annual increases of 10.245% spread over 8 years resulting in a dollar increase of $10,336 based on 1997 monthly pension amount of $1500.

It is the position of Marine Atlantic Pension Society (MAPS) that:

1. All defined pension plans should establish a Trust Fund (similar to CN's) and proceeds from this fund be used to increase benefits to pensioners and survivors.

2. Pension contribution holidays should be eliminated.

3. Pension plans should be 100 % solvent at all times to prevent reduction or loss of pension benefits should the company go out of business.

4. Any increase in pension benefits to active members should be extended to pensioners and survivors.

The Dispute Settlement Mechanism for Surplus Distribution:

It is the position of Marine Atlantic Pension Society (MAPS) that :

1 . The PBSA be amended so that in order for the employer to gain access to pension surplus funds, at least 2/3 members of the plan , including pensioners and survivors would have to support the request.

2. Arbitration would be permissible if the employer received over 50% from the above groups.

Distribution on partial Termination:

It is the position of Marine Atlantic Pension Society (MAPS) that :

1. Since retired members have contributed to the surplus , then they are entitled to share in it rather than have the surplus used for other reasons (i.e. benefit improvements for active employees) over which the pensioners and survivors have no say, and which they may not benefit from.

2. That the PBSA should incorporate an approach similar to Quebec Legislation, which requires immediate vesting of pension benefits for all plan members. This would ensure more generous treatment of all plan members.

Funding:

It is the position of Marine Atlantic Pension Society (MAPS) that

All pension plans should be 100% solvent at all times . The PBSA should be amended to eliminate the 5 year period to repay any deficiency, and the 5 year period should definitely not be increased

Letters of Credit:

It is the position of Marine Atlantic Pension Society (MAPS) that

There should be no letters of credit to deal with solvency .

Extending Solvency Funding period to 10 years:

It is the position of Marine Atlantic Pension Society (MAPS) that

There should be no extending solvency funding for 10 years.

Alternatives to Relaxing Funding requirements:

It is the position of Marine Atlantic Pension Society (MAPS) that:

There should be consideration of special accounts such as the trust fund set up by CN .

Disclosure of funding information:

It is the position of Marine Atlantic Pension Society (MAPS) that:

1. Plan members should have timely and accurate information regarding the funded status of their pension plan and the financial condition of the plan sponsor including:

a. Knowing when the plan is under funded ;

b. If the company is unable to fund or maintain the plan ;

c. The company should adopt a statement of funding policy, which would document the sponsors' approach with respect to funding the plan;

d. There should be no contribution holidays.

C. Void Amendments:

It is the position of Marine Atlantic Pension Society (MAPS) that:

The solvency rate should be 100 % at all times , especially for long term plans ( 20 years or more ) . If this cannot be achieved the solvency rate should not be lower than 90 %.

D . Full Funding on Plan Termination:

It is the position of Marine Atlantic Pension Society (MAPS ) that:

On plan termination, plan sponsors would have an obligation to pay into the plan the amount necessary to provide the full benefits promised to plan members at the date of termination of the plan.

E. Pension Benefit Guarantee Fund:

It is the position of Marine Atlantic Pension Society (MAPS) that:

For financially vulnerable sponsors the government should set up a Pension Benefit Guarantee Fund (PBGF ) ,which would provide pension compensation to employees, retirees and beneficiaries if an employer becomes bankrupt or insolvent and its pension plan is under funded.

The PBSA should be amended to ensure employers are properly funding their pension plans at all times

Captain Lloyd Palmer
Pensioner's Representative
Marine Atlantic Inc.