Bill C-405: An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act (pension plans)

Bill C-405 LEGISinfo First Reading Bilingual view XML PDF Pension Benefits Standards Act, 1985 Companies’ Creditors Arrangement Act First Session, Forty-second Parliament, 64-65-66-67 Elizabeth II, 2015-2016-2017-2018 HOUSE OF COMMONS OF CANADA BILL C-405 An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act (pension plans) FIRST READING, June 1, 2018 Mr. O’Toole 421532 SUMMARY This enactment amends the Pension Benefits Standards Act, 1985 to authorize the administrator of an underfunded pension plan, in certain situations, to amend the plan or to transfer or permit the transfer of any part of the assets or liabilities of the pension plan to another pension plan. The amendments also provide for the tabling of an annual report respecting the solvency of pension plans. The enactment also amends the Companies’ Creditors Arrangement Act to provide for conditions respecting the approval of any plan offering incentives to certain directors, officers or employees to remain in the company’s employ. Available on the House of Commons website at the following address: www.ourcommons.ca 1st Session, 42nd Parliament, 64-65-66-67 Elizabeth II, 2015-2016-2017-2018 HOUSE OF COMMONS OF CANADA BILL C-405 An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act (pension plans) Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: R.‍S.‍, c. 32 (2nd Supp.‍) Pension Benefits Standards Act, 1985 1 Section 29 of the Pension Benefits Standards Act, 1985 is amended by adding the following after subsection (8): Amendment — liquidation, assignment or bankruptcy of the employer (8.‍1) If an employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act and the amount required to permit a pension plan to satisfy all obligations with respect to pension benefits and other benefits to be provided under the plan is greater than the assets of the plan, the administrator may (a) despite subsection 10.‍1(2) and the terms of the plan, amend the plan to change the nature or form of the pension benefits and other benefits to be provided under the plan; or (b) apply to the Superintendent for permission to transfer or permit the transfer of any part of the assets or liabilities of the pension plan to another pension plan. Consent to amendment (8.‍2) Before a pension plan may be amended or part of its assets or liabilities transferred in accordance with subsection (8.‍1), (a) the administrator must provide any prescribed information, in the prescribed manner, to the members or former members, to any other persons entitled to pension benefits and to the representatives of the members or former members and of any other persons entitled to pension benefits; and (b) the amendment or transfer must be approved by more than one third of the members or former members and of any other persons entitled to pension benefits or by the representatives of more than one third of the members or former members and of any other persons entitled to pension benefits. No action against administrator (8.‍3) No action lies against any administrator for amending a plan or for transferring or permitting the transfer of any part of the assets or liabilities of a pension plan to another pension plan in compliance with subsections (8.‍1) and (8.‍2). 2 Section 40 of the Act is replaced by the following: Annual report 40 (1) The Superintendent shall, after consultation with the Chief Actuary of the Office of the Superintendent of Financial Institutions and as soon as possible after the end of each fiscal year, submit to the Minister a report on (a) the operation of this Act during that year; and (b) the success of pension plans in meeting the funding requirements, determined in accordance with section 9, and the corrective measures taken or directed to be taken to deal with any pension plans that are not meeting the funding requirements. Tabling in Parliament (2) The Minister shall cause the report to be tabled in each House of Parliament on any of the first 15 days on which that House is sitting after the day the Minister receives it. Transmission to provinces (3) As soon as possible after the tabling of the report in Parliament, the Superintendent shall transmit the report to the relevant provincial ministers responsible for finance and provincial securities commissions. R.‍S.‍, c. C-36 Companies’ Creditors Arrangement Act 3 The Companies’ Creditors Arrangement Act is amended by adding the following after section 11.‍52: Limitation — pension plans 11.‍53 No order may be made under this Part respecting the approval of a plan offering incentives to certain directors, officers or employees to remain in the employ of the debtor company for the period during which the com­pany is expected to be subject to proceedings under this Act unless the court is satisfied (a) if the debtor company participates in a prescribed pension plan for the benefit of its employees, that the relevant parties have entered into an agreement, approved by the relevant pension regulator, respecting the payment of the amounts referred to in subparagraphs 6(6)‍(a)‍(ii) and (iii); (b) that the directors, officers or employees are necessary for the successful restructuring or liquidation of the debtor company or for the protection and the maximization of the value of the company’s property; (c) that the directors, officers or employees have received a job offer from another person than the debtor company and the offering of the incentives is necessary for their retention in the employ of the debtor company; and (d) that the amount of the incentive offer (i) is not greater than ten times the amount of a similar incentive offer given to an employee of the debtor company for any purpose during the previous calendar year; or (ii) if no incentive referred to in subparagraph (i) was offered, is not greater than an amount equal to 25% of the amount of any similar incentive given to a director or officer of the debtor company for any purpose during the previous calendar year. 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