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MINUTES OF PROCEEDINGS

Meeting No. 46

Tuesday, March 6, 2012

The Standing Committee on Finance met at 3:32 p.m. this day, in Room 268, La Promenade Building, the Chair, James Rajotte, presiding.

Members of the Committee present: Mark Adler, Robert Chisholm, Alain Giguère, Shelly Glover, Randy Hoback, Brian Jean, Hoang Mai, Cathy McLeod and James Rajotte.

Acting Members present: Kelly Block for Dave Van Kesteren, Wayne Marston for Peter Julian and Hon. Judy Sgro for Hon. Scott Brison.

In attendance: Library of Parliament: Mark Mahabir, Analyst ; Brett Stuckey, Analyst . House of Commons: Mike MacPherson, Legislative Clerk.

Witnesses: Department of Finance: Leah Anderson, Director, Financial Sector Division, Financial Sector Policy Branch; Joseph de Pencier, Senior Counsel, General Legal Services; Andrew Donelle, Special Advisor, Pensions, Tax Legislation Division; Lynn Hemmings, Senior Chief, Financial Sector Division; Diane Lafleur, General Director, Financial Sector Policy Branch. Department of Justice: Carol Taraschuk, Senior Counsel, Legal Services for the Office of the Superintendent of Financial Institutions. Office of the Superintendent of Financial Institutions: Christopher Eccles, Specialist, Pension Policy.

Pursuant to the Order of Reference of Wednesday, February 1, 2012, the Committee resumed consideration of Bill C-25, An Act relating to pooled registered pension plans and making related amendments to other Acts.

The Chair called Clause 1.

Carol Taraschuk, Leah Anderson, Diane Lafleur, Lynn Hemmings and Andrew Donelle answered questions.

The Committee commenced its clause-by-clause study of the Bill.

Pursuant to Standing Order 75(1), consideration of Clause 1 was postponed.

The Chair called Clause 2.

By unanimous consent, Clauses 2 to 5 inclusive carried on division.

Clause 6 carried on division.

By unanimous consent, Clauses 7 to 9 inclusive carried on division.

Clause 10 carried on division.

By unanimous consent, Clauses 11 to 20 inclusive carried on division.

On Clause 21,

Wayne Marston moved, — That Bill C-25, in Clause 21, be amended by adding after line 36 on page 9 the following:

“(1.1) If the administrator is insolvent or if the Superintendant is of the opinion that its management poses a risk to the pooled registered pension plans that it administers, the Superintendant may place the administrator under trusteeship.”

RULING BY THE CHAIR

Bill C-25 creates a legal framework for the establishment and administration of pooled registered pension plans for employees and self-employed persons. A position of Superintendent is created to be responsible for the control and supervision of the administration of this Act. The Superintendent issues licences to corporations to act as administrators of pooled registered pension plans. Bill C-25 also contains provisions for the Superintendent to oversee the actions of the administrators, with the power to transfer a plan’s assets to another entity or even to revoke the registration and cancel the certificate of registration of the plan in question. These remedies are clearly defined as is a system of objection and appeals. The amendment attempts to transfer the administrative responsibilities and duties associated with the role of administrator of a registered plan directly to the Superintendent through means of trusteeship. As House of Commons Procedure and Practice (2nd Edition) states on page 766:

“An amendment to a bill that was referred to committee after second reading is out of order if it is beyond the scope and principle of the bill.”

In the opinion of the Chair, the introduction of this scheme is a new concept that is beyond the scope of Bill C-25 and is therefore inadmissible.

The Chair ruled that the following amendment was consequential to the previous amendment and therefore it was also inadmissible:

That Bill C-25, in Clause 34, be amended by adding after line 37 on page 12 the following:

Clause 21 carried on division.

By unanimous consent, Clauses 22 and 23 carried on division.

On Clause 24,

Alain Giguère moved, — That Bill C-25, in Clause 24, be amended by replacing line 1 on page 11 with the following:

“24. An adminis-”

After debate, the question was put on the amendment of Alain Giguère and it was negatived, by a show of hands: YEAS: 4; NAYS: 7.

By unanimous consent, it was agreed, — That the result of the vote on the previous amendment be applied to the following amendment which is therefore also negatived:

That Bill C-25, in Clause 76, be amended by deleting lines 6 to 11 on page 34.

Clause 24 carried on division.

Clause 25 carried on division.

On Clause 26,

Alain Giguère moved, — That Bill C-25, in Clause 26, be amended by adding after line 12 on page 11 the following:

“(2) The criteria to determine whether a pooled registered pension plan is low cost must be determined annually by consensus of a board on which representatives of the government, employers and labour sit.

(3) The purpose of the Act is to provide an investment option at a low cost, and must determine an acceptable low cost by examining the range of other investment options available to Canadians, including mutual funds and exchange-traded funds and their average associated fees.

(4) The fees paid by the members of a pooled registered pension plan must be significantly less than the fees paid in other options.

(5) The board must conduct its review in a transparent manner and publish an annual report of its findings, containing a thorough discussion of the rationale and evidence used to reach its conclusion.

(6) Any pooled registered pension plan that incurs costs that exceed the board’s threshold for low cost must immediately reduce its costs to come below this threshold.”

RULING BY THE CHAIR

Bill C-25, in Clause 26, provides that any administrator of a pooled registered pension plan must provide those services at a low cost. The amendment attempts establish a board that would seek to determine the criteria to be used to decide what an acceptable “low cost” for such services would be by examining the range of other investment options available to Canadians and their associated fees. As House of Commons Procedure and Practice (2nd Edition) states on page 766:

“An amendment to a bill that was referred to committee after second reading is out of order if it is beyond the scope and principle of the bill.”

In the opinion of the Chair, the creation of this board is a new concept that is beyond the scope of Bill C-25 and is therefore inadmissible. Additionally, the creation of the board may also infringe on the financial initiative of the Crown as the power to appoint persons to a board also includes the power to pay.

The Chair ruled that the following amendment was consequential to the previous amendment and therefore it was also inadmissible:

That Bill C-25, in Clause 57, be amended by replacing line 40 on page 23 with the following:

“(ii) a written statement of all costs associated with membership in the plan that also includes the most recent findings of the board mentioned in subsection 26(5) and an explanation as to how the pooled registered pension plan complies with section 26, and

(iii) any other information that is pre-”

Judy Sgro moved, — That Bill C-25, in Clause 26, be amended by adding after line 12 on page 11 the following:

“(2) For greater certainty, an administrator must not charge the members of the pooled registered pension plan management fees that are more than twice the prescribed rate of the management fees reported by the Canada Pension Plan Investment Board.”

After debate, the question was put on the amendment of Judy Sgro and it was negatived, by a show of hands: YEAS: 5; NAYS: 6.

By unanimous consent, it was agreed, — That the result of the vote on the previous amendment be applied to the following amendment which is therefore also negatived on division:

That Bill C-25, in Clause 76, be amended by adding after line 2 on page 35 the following:

“(u.1) prescribing, for the purposes of this Act, the management fee rate of the Canada Pension Plan Investment Board; and”

Clause 26 carried on division.

By unanimous consent, Clauses 27 to 29 inclusive carried on division.

Clause 30 carried on the following recorded division: YEAS: Mark Adler, Kelly Block, Shelly Glover, Randy Hoback, Brian Jean, Cathy McLeod, Judy Sgro — 7; NAYS: Robert Chisholm, Alain Giguère, Hoang Mai, Wayne Marston — 4.

By unanimous consent, Clauses 31 to 33 inclusive carried on division.

Clause 34 carried on division.

Clause 35 carried on division.

On Clause 36,

Alain Giguère moved, — That Bill C-25, in Clause 36, be amended by adding after line 46 on page 13 the following:

“(2) The Superintendant is not required to notify the administrator, pursuant to subsection (1), of the failure to comply with the direction, if the Superintendent is of the opinion that the employee contributions and the employer contributions are at risk.”

After debate, the question was put on the amendment of Alain Giguère and it was negatived, by a show of hands: YEAS: 4; NAYS: 6.

Clause 36 carried on division.

By unanimous consent, Clauses 37 and 38 carried on division.

Clause 39 carried on division.

Clause 40 carried on division.

On Clause 41,

Alain Giguère moved, — That Bill C-25, in Clause 41, be amended by adding after line 14 on page 16 the following:

“(d) the right of any employee to object to being a member of the plan because of their economic choices.”

After debate, the question was put on the amendment of Alain Giguère and it was negatived, by a show of hands: YEAS: 4; NAYS: 7.

Clause 41 carried on division.

By unanimous consent, Clauses 42 to 55 inclusive carried on division.

Clause 56 carried on division.

Clause 57 carried on division.

By unanimous consent, Clauses 58 to 66 inclusive carried on division.

Clause 67 carried on division.

By unanimous consent, Clauses 68 to 75 inclusive carried on division.

Clause 76 carried on division.

By unanimous consent, Clauses 77 to 86 inclusive carried on division.

By unanimous consent, Clauses 87 to 95 inclusive carried on division.

The Short Title carried on division.

The Title carried on division.

The Bill carried on the following recorded division: YEAS: Mark Adler, Kelly Block, Shelly Glover, Randy Hoback, Brian Jean, Cathy McLeod — 6; NAYS: Robert Chisholm, Alain Giguère, Hoang Mai, Wayne Marston — 4.

ORDERED, — That the Chair report the Bill to the House.

At 4:40 p.m., the Committee adjourned to the call of the Chair.

Guyanne L. Desforges
Clerk of the Committee

2012/03/13 10:24 a.m.