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© Copyright 2000 Rogers Media. The following article first appeared in the July 2000 edition of
BENEFITS CANADA magazine.
Out of the loop
The PBSA requires that plans with more than 50 pensioners have a Plan Information Council. Not that
this means much.
By Dian Cohen
Should pensioners and beneficiaries have avoice in matters affecting their pension plans? Do they have the
basic right to know what's happening to the plan that provides them with the bulk of their daily bread?
The Pension Benefits Standards Act (PBSA) thinks they should. It stipulates that any private pension plan
with more than 50 pensioners should have a Pension Plan Information Council (PIC) on which pensioners are
represented. While this sounds progressive, a random sample of companies speaks to a different reality.
PICs are so ineffective that most of the human resources people I spoke to weren't sure whether or not they
had a council. Even when organizations have PICs, the councils have no responsibility or power, and appear
to exist only because the PBSA mandates that they should.
A LOT AT STAKE
The other sobering realization is that pensioners have a lot to lose if something happens to their pension
plan. The 1995 Confederation Life fiasco is a case in point.When Confed went belly up, many private pension
funds disappeared, part of the Bell Canada plan being one of the most publicized examples. In retrieving
the pensioners' money, all sorts of issues had to be negotiated with the liquidator, the courts and the
federal government. Almost by default, Bell's pensioners organized themselves to represent group registered
retirement savings plan stakeholders in the negotiations.
In the wake of the Confed case, the PBSA was amended. Yet the very pensioners most actively involved with
their PIC were totally unaware of the revisions.
In a recent article, the Canada Gazette noted that when the amendments were out for public comment,
"few comments were received from individual plan members, retirees or other beneficiaries." No wonder. They
aren't in the information loop because they seem to have no collective voice. Plan sponsors are not
deliberately or maliciously barring pensioners from accessing information. Indeed, many go to great lengths
to communicate with their pensioners. But the fact remains that no one in the system has any incentive to
put them into the loop.
Pensioners don't pay union dues or provide any real value to their former employers. Yet they have
legitimate concerns, more so today than 20 years ago.
Companies are restructuring at blinding speed--spinning out, acquiring, liquidating, merging. In the
witheringly competitive environment of 21st century globalization, nothing a firm does is beyond
scrutiny.That includes pensions, their structure, their surpluses and their administrative costs.
Legislative changes are coming fast and furious--trying to keep up with the companies they are meant to
regulate. Pensioners and their beneficiaries are understandably concerned that they seem to be the only
group that is never consulted or informed when changes occur.
What are some of their issues? Start with surpluses. Ownership of the surplus has been contentious for
years. For pensioners the question is: what happens to it if a plan is wound up? They'd like to know what
their former employers' intentions are as well as the results of the last audit of their plan. Some
pensioners would even like to go to a meeting once in a while.
The PBSA regulation that mandates PICs only applies to private pension plans of federally regulated
industries. The problem is that most people in Canada have pension plans that are provincially chartered.
Only banks, railways, ports and telecommunications organizations are federally chartered. What happens
provincially is even more difficult to document.
Next month, this column will explore some possible alternatives for pension plan governance. But the bottom
line is that pensioners and their beneficiaries have raised some legitimate questions and concerns that
deserve consideration.
Dian Cohen is an economics consultant with a special interest in pension issues.
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