Mr. Chair, I want to thank that hard-working member for Winnipeg South Centre for the question.

A central focus of our efforts going forward will be continuing to ensure that Canadians have access to effective workplace pension plans. The Association of Canadian Pension Management offers a concise summary of some of the challenges that we are overcoming. It notes that:

Sponsors of DB pension plans are continuing to struggle with the significant funding challenges posed by continuing low interest and annuity rates, complex and increasingly volatile investment markets, chronic solvency funding issues....

Currently, 96% of pension plans across Canada are in defined benefit plans, as compared to 71% in the United Kingdom, 42% in the United States and 15% in Australia, but faced with such recent developments, employers are under increasing pressure to move their employees to defined contribution models, which exposes employees to market volatility and longevity risk.

Our government appreciates that Canadians want a more predictable option and employers want to attract or retain workers with a strong pension plan. That is why we launched extensive consultation on the proposed framework for target benefit plans, or TBPs in April 2014. Our consultation placed a high emphasis on the importance of consent, and proposes to require plan members and retirees to agree to converting existing benefits.

Target benefit plans would offer new, voluntary, sustainable and flexible pension options to the employees of federally regulated corporations. They would not involve changes to federal public sector pension plans that are governed by their own respective legislation.

The proposed target benefit plan framework combines features of both defined benefits and defined contribution plans. Similar to defined benefit plans, TBPs would provide highly predictable income for life for the employee, but as with defined contribution plans, target benefit plans would offer cost certainty for employers.

The plan would also be flexible, allowing for the conversion of both defined benefits and defined contribution plans into target benefit plans. All plan parties would have a say in the decision as to whether or not to adopt the target benefit plan, as well as how the plan would be designed.

Members and retirees would also benefit from the pooling of longevity risk, which is not a feature of defined contribution plans. In short, by providing a better balance of protection and costs, TBPs would offer a sustainable, innovative pension option to help support better retirement savings for Canadian workers.

Having consulted extensively with Canadians, pension experts and industry, our government continues its work in developing a framework for TBPs that meets the needs of all stakeholders.

Although the details of this framework have yet to be finalized, I can assure Canadians what TBPs will not do: TBPs will not take away benefits that retirees already have earned without their consent. We will not bring forward a framework that allows for the conversion of accrued benefits without explicit consent from pension holders.

We are still working toward finalizing an effective and responsive framework for target benefit plans that reflects this commitment. In the meantime, those who are retired or saving for retirement will benefit tremendously from targeted tax relief, new optional savings methods like the tax-free savings account, and the full range of measures that I have outlined here this evening.

Kevin Sorenson

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