Bill C-567: An Act to amend the Pension Benefits Standards Act, 1985 (protection of the assets)

C-567 Second Session, Thirty-ninth Parliament, 56-57 Elizabeth II, 2007-2008 HOUSE OF COMMONS OF CANADA BILL C-567 An Act to amend the Pension Benefits Stand­ards Act, 1985 (protection of assets) first reading, June 16, 2008 Mr. Martin (Winnipeg Centre) 391074 SUMMARY This enactment improves the protection of the assets of pension plan members and beneficiaries by (a) ensuring that members have substantial representation on boards of trustees, pension committees and pension councils; (b) providing that not more than 10% of the total value of the assets of a pension plan may be held in securities issued by the employer or by a corporation associated with the employer (the limit is currently in the regulations); (c) preventing pension plan administrators and beneficiaries from being restricted in the sale of the employer’s securities unless the directors and officers of the employer are similarly restricted, and in any event for not more than a year; and (d) requiring that information that affects or is likely to affect the value of securities be provided to pension plan administrators and to persons with the power to trade in those securities at the same time it is provided to anyone other than the directors, officers, management and advisors of the employer. Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca .vis1 {position: absolute;display:block;} .vis2 {position: static;} 2nd Session, 39th Parliament, 56-57 Elizabeth II, 2007-2008 house of commons of canada BILL C-567 An Act to amend the Pension Benefits Stand­ards Act, 1985 (protection of assets) WHEREAS it is necessary to ensure that a pension plan is managed in a way that ensures sufficient independence from the employer who establishes it and adequate protection and security for the employees’ interests; WHEREAS employees’ interests in a pension plan must be protected by a statutory limitation on the proportion of the assets of a pension fund that may be invested in or lent to the employer; AND WHEREAS employees who purchase securities of the employer as a part of a defined contribution plan should have the same right to sell or trade in those securities as the directors and officers of the employer and should have timely access to information that might affect the securities; R.S., c. 32 (2nd Supp.) NOW, THEREFORE, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: 1. Section 7 of the Pension Benefits Stand- ards Act, 1985 is amended by adding the following after subsection (2): Representation of members on board of trustees (3) Where a board of trustees or other similar body is constituted, (a) a minimum of one third of its number must be members or other persons nominated by the members to represent their interests; and (b) the members or other persons nominated under paragraph (a) must, if a majority of the retired members so requests, include one retired member. Directors or officers (4) A person nominated to serve on a board of trustees or other similar body under subsection (3) must not be a director or officer of the employer. 2. Section 7.1 of the Act is replaced by the following: Representation of members on pension committee 7.1 (1) Where a pension committee is constituted, (a) a minimum of one third of its number must be members or other persons nominated by the members to represent their interests; and (b) the members or other persons nominated under paragraph (a) must, if a majority of the retired members so requests, include one retired member. Directors or officers (2) A person nominated to serve on a pension committee under subsection (1) must not be a director or officer of the employer. 3. Subsection 7.2(2) of the Act is replaced by the following: Representation of members on pension council (2) Where a pension council is established, (a) a minimum of one third of its number must be members or other persons nominated by the members to represent their interests; and (b) the members or other persons nominated under paragraph (a) must, if a majority of the retired members so requests, include one retired member. Directors or officers (2.1) A person nominated to serve on a pension council under subsection (2) must not be a director or officer of the employer. 4. Section 8 of the Act is amended by adding the following after subsection (4.1): Limitation on assets held in securities (4.2) A defined benefit plan shall not hold its assets in securities issued by the employer or by any corporation associated with the employer within the meaning of section 256 of the Income Tax Act in a proportion that exceeds ten per cent of the total value of the assets of the plan. 5. The Act is amended by adding the following after section 8: Information 8.1 (1) If an employer provides to any person other than a director or officer of the employer information that affects or is likely to affect the value of its securities, it must at the same time provide the information to the administrator of any defined benefit plan it has established and to any person with the power to trade in the securities of a defined contribution plan it has established. Exception (2) Subsection (1) does not apply to information provided in confidence to (a) a director, officer or manager of the employer in the course of business, or (b) a person who provides confidential legal, financial or technical advice to the employer, in order to assist the director, officer, manager or person to discharge duties for or provide advice to the employer. 6. Section 9 of the Act is amended by adding the following after subsection (1): Restriction on trading (1.1) A restriction on the power of the administrator of a defined benefit plan or the beneficiaries of a defined contribution plan to sell securities of the employer held under the plan is void unless it (a) prevents the sale of securities for a period of not more than twelve months after their purchase; and (b) applies equally at all times to all the directors and officers of the employer. Not dependent on employer contribution (1.2) For greater certainty, subsection (1.1) applies whether or not the employer contributes to the employee’s purchase of securities through a pension plan. Published under authority of the Speaker of the House of CommonsAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada