Bill C-259: An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985 (pension plans and group insurance programs)

Bill C-259 If you have any questions or comments regarding the accessibility of this publication, please contact us at [email protected]. First Reading LEGISinfo Bilingual view XML PDF Skip to Document Navigation Skip to Document Content ENGLISHSUMMARYSUMMARY1 Bankruptcy and Insolvency Act1 Bankruptcy and Insolvency Act6 Companies’ Creditors Arrangement Act6 Companies’ Creditors Arrangement Act8 Pension Benefits Standards Act, 19858 Pension Benefits Standards Act, 1985 Second Session, Forty-third Parliament, 69 Elizabeth II, 2020 HOUSE OF COMMONS OF CANADA BILL C-259 An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985 (pension plans and group insurance programs) FIRST READING, December 3, 2020 Mr. Duvall 432037 SUMMARY This enactment amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure that claims in respect of unfunded liabilities or solvency deficiencies of a pension plan are accorded priority in the event of bankruptcy proceedings. It also provides that an employer has to maintain group insurance programs that provide benefits to or in respect of its employees or former employees. This enactment also amends the Pension Benefits Standards Act, 1985 to empower the Superintendent of Financial Institutions to determine that the funding of a pension plan is impaired or that the pension plan administrator is at risk and to set out measures to be taken by the employer in respect of the funding of the plan in such cases. Available on the House of Commons website at the following address: www.ourcommons.ca 2nd Session, 43rd Parliament, 69 Elizabeth II, 2020 HOUSE OF COMMONS OF CANADA BILL C-259 An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985 (pension plans and group insurance programs) Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: R.‍S.‍, c. B-3; 1992, c. 27, s. 2 Bankruptcy and Insolvency Act 1 (1) Subparagraph 60(1.‍5)‍(a)‍(ii) of the Bank­ruptcy and Insolvency Act is amended by adding the following after clause (A): (A.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in sections 81.‍5 and 81.‍6 to liquidate an unfunded liability or a solvency deficiency, (A.‍2) in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, (2) Subparagraph 60(1.‍5)‍(a)‍(iii) of the Act is amended by adding the following after clause (A): (A.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in sections 81.‍5 and 81.‍6 to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament, (A.‍2) an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament, 2 The Act is amended by adding the following after section 69.‍6: Benefits — employees or former employees 69.‍7 On the filing of a proposal under subsection 62(1) in respect of an insolvent person, and until the trustee has been discharged or the insolvent person becomes bankrupt, the insolvent person shall not modify, cancel or cease contributing to an arrangement under which contributions are made by the employer and one or more payments are to be made to employees or former employees of the employer, or for the benefit of or in respect of these employees or former employees, from a group sickness or accident insurance plan, a group term life insurance policy or a private health services plan. 3 (1) Paragraph 81.‍5(1)‍(b) of the Act is amended by adding the following after subparagraph (i): (i.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in this section and section 81.‍6 to liquidate an unfunded liability or a solvency deficiency, (i.‍2) in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, (2) Paragraph 81.‍5(1)‍(c) of the Act is amended by adding the following after subparagraph (i): (i.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in this section and section 81.‍6 to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament, (i.‍2) an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament, 4 (1) Paragraph 81.‍6(1)‍(b) of the Act is amended by adding the following after subparagraph (i): (i.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in section 81.‍5 and this section to liquidate an unfunded liability or a solvency deficiency, (i.‍2) in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, (2) Paragraph 81.‍6(1)‍(c) of the Act is amended by adding the following after subparagraph (i): (i.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in section 81.‍5 and this section to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament, (i.‍2) an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament, 5 Subsection 136(1) of the Act is amended by adding the following after paragraph (d): (d.‍001) the amount of any termination or severance pay owed to a clerk, servant, travelling salesperson, labourer or worker by a bankrupt, less any amount previously paid by the trustee for that termination or severance pay; R.‍S.‍, c. C-36 Companies’ Creditors Arrangement Act 6 (1) Subparagraph 6(6)‍(a)‍(ii) of the Companies’ Creditors Arrangement Act is amended by adding the following after clause (A): (A.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in sections 81.‍5 and 81.‍6 of the Bankruptcy and Insolvency Act to liquidate an unfunded liability or a solvency deficiency, (A.‍2) in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, (2) Subparagraph 6(6)‍(a)‍(iii) of the Act is amended by adding the following after clause (A): (A.‍1) an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in sections 81.‍5 and 81.‍6 of the Bankruptcy and Insolvency Act to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament, (A.‍2) an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament, 7 The Act is amended by adding the following after section 11.‍04: Former employees — benefits 11.‍05 An order made under section 11.‍02 shall not have the effect of enabling the company in respect of which the order is made to modify, cancel or cease contributing to an arrangement under which contributions are made by the employer and one or more payments are to be made to employees or former employees of the employer, or for the benefit of or in respect of these employees or former employees, from a group sickness or accident insurance plan, a group term life insurance policy or a private health services plan. R.‍S.‍, c. 32 (2nd Supp.‍) Pension Benefits Standards Act, 1985 8 Section 9 of the Pension Benefits Standards Act, 1985 is amended by adding the following after subsection (3): Funding impaired (4) The Superintendent may determine that the funding of a pension plan is impaired or that the pension plan administrator is at risk. Measures (5) If the Superintendent determines that the funding of a pension plan is impaired or that the pension plan administrator is at risk, the Superintendent shall (a) notify the employer in writing of the determination and of the measures that the employer is to take, or refrain from taking, in respect of the funding of the plan; and (b) direct the administrator of the plan to inform the members, former members and any other persons entitled to pension benefits under the plan, in the form and manner specified by the Superintendent, of the determination and the measures that the employer is to take in respect of the funding of the plan. Determination 9.‍001 (1) The Superintendent shall, based on the information provided under this section, consider whether it is in the best interests of a plan to make a determination, under subsection 9(4), that the funding of the plan is impaired or that the pension plan administrator is at risk. Notice to Superintendent (2) An employer shall inform the Superintendent in writing, or in the form and manner, if any, that the Superintendent directs, of any proposed or actual decision of the employer, transaction or event, including the repurchase of shares of the employer or the payment of dividends to its shareholders that would result in the solvency deficiency, as defined in the regulations, of a plan exceeding the amount by which A exceeds B where A is the employer’s retained earnings; and B is any unsecured debt of the employer, not including debt relating to a solvency deficiency of the plan. Deadline (3) The employer shall inform the Superintendent in accordance with subsection (2) within five business days after the day on which the employer becomes aware of a proposed or actual decision of the employer, transaction or event. Request — additional information (4) The employer shall provide to the Superintendent any other information requested by the Superintendent for the purpose of this section, within the time and in the manner specified in the request. Notice to administrator (5) If the employer is not the administrator of its pension plan, it shall also inform the administrator in accordance with subsection (2) at the same time as it informs the Superintendent. Notice to members 9.‍002 (1) The administrator of a plan shall, within 30 days after the day on which the employer informs the Superintendent in accordance with subsection 9.‍001(2), give notice of that disclosure, in writing or in the form and manner, if any, that the Superintendent directs, to the members, former members and any other persons entitled to pension benefits under the plan. Copy of notice (2) The administrator shall provide to the Superintendent a copy of any notice given under subsection (1) along with proof of the date of notification. Plan funding 9.‍003 (1) If the Superintendent has determined, based on information received under section 9.‍001, that the funding of a plan is impaired or that the pension plan administrator is at risk, and has notified the employer of that determination in writing, the plan shall, within 30 days from the date of the notification, be funded as follows: (a) by a solvency special payment, as defined in the regulations, equal to the amount by which the solvency deficiency, as defined in the regulations, exceeds the amount of going concern special payments that are payable during the plan year; and (b) if there is an additional solvency deficiency resulting from an amendment to the plan, by an additional annual solvency special payment, payable from the effective date of the amendment and equal to the amount by which the additional solvency deficiency exceeds the going concern special payment, as defined in the regulations, in respect of the unfunded liability emerging from the amendment to the plan. Extension of funding (2) The Superintendent may extend the period within which the funding required under subsection (1) is to be paid or establish a payment schedule if the Superintendent is satisfied that doing so would be in the interests of the plan members’ pension benefit security or continued employment. Published under authority of the Speaker of the House of Commons Publication Explorer Publication Explorer ParlVU