According to The Ottawa Citizen, Finance Minister Dwight Duncan said legislation to be introduced this fall will toughen pension requirements for companies and fortify the guarantee fund. The new legislation will aim to tighten rules for valuing pension assets and liabilities, making it more difficult for companies to avoid making contributions when plans become underfunded.
Companies will also be prohibited from taking “contribution holidays,” unless plans are funded to a certain threshold, and will have to act more quickly to fund plans if benefits are improved.
The legislation will also boost fees for pension plan members to bolster the Pension Benefits Guarantee Fund. The fund does not have enough cash to cover new claims in 2010, and retiring baby boomers are expected to put a strain on it, according to the news report.
The government put $500 million into the fund to help pay Nortel and General Motors pensioners, among others, earlier this year.Nortel pensioner Anne Clark-Stewart, who works with the Nortel Retirees and Former Employees Protection Committee (NRPC), said the new rules will do little to help pensioners who are “caught in the throes of bankruptcy,” according to the news report. She said if the reforms had been put in place last year, $30 million would have been raised for the fund. In February, Nortel agreed to set aside funds for termination payments of former Canadian employees (See Nortel Settles on Pension Issues with Former Canadian Employees).