1. Presentation by: Jo-Ann Hannah CAW-Canada
A Labour Perspective on Pension Plan Governance CPBI 2007 National Conference June 13-15, 2007 Winnipeg Convention Centre
Presentation by:
Jo-Ann Hannah
CAW-Canada

2. Overview Why governance matters Employer as Plan Sponsor
Interests of plan members vs. business operations
Who protects the interests of plan members?
Service providers
Pension Committees
Joint Trusteeship
Regulator
A modest proposal

3. Good Governance = Efficiency
Co-ordinate parts of pension promise:
Investment, Funding, Administration
Keep all the players in sync:
Avoid major (costly) mistakes
e.g., Co-ordinate fund investments with member demographics
Cleaning up the pension mess: Why it will take more than money (CD Howe Institute, 2004)

4. Good pension governance matters to unions
Pensions are a key issue in collective bargaining

5. And an organizing tool . . . Want a pension? Get a union!
80% of union workers have a pension plan compared to 27% of non-union workers

6. Pension funds sizable compared to corporate assets
Of Canada’s 100 largest DB plans, 33 had assets >= 20% of total corporate assets
-- CICA, 2003
“Consider: with the pension assets of one of the domestic automakers, you could buy all three companies.”
-- Bradley D. Belt, Exec. Dir, PBGC, 2006

7. Dual demands on employer Business interests & Members’ interests
Use of surplus in pension fund
Priorities
investment
administration
Assumptions on rate of return for pension assets and liabilities
CIA actuarial review

8. When Pension Trustees Intervene
In UK, pension trustees have intervened in corporate decisions
WH Smith takeover bid, 2004
Pension trustees demanded upfront funds for pension shortfall
Recent examples
M&S, Uniq
Currently, Boots

9. “Who will bell the cat?” Submission to Senate Committee on Banking, 1998

10. CD Howe recommendation
Employer pension plans administered by an outside body

11. A Role for the Professionals?
OSFI: Peer review for actuaries
“Actuarial valuations are supposed to be prepared according to demanding professional standards; yet we find errors, too many errors.”
Nicholas Le Pan, former Supt. at OSFI
Speech to General Meeting, CIA, Montreal, 2004

12. “We believe people behave differently when someone is watching.”
-- Ontario Securities Commission Chair, David Wilson

13. Actuaries as whistleblowers
Canadian Labour Congress
Service providers have not only a “duty of care” but a “fiduciary duty” to plan members
CAPSA Model Law Recommendation
Actuaries act as “whistleblowers”
Actuary must tell plan administrator to correct “material contravention” within 30 days

14. CIA Response:

15. Pension Committees Quebec has legislated pension committees
Positive aspects
Quebec Federation of Labour training program
For consideration
Lack of expertise and knowledge -- CIA
Liability of committee members
Limited union resources
CAW – 400 defined benefit pension plans

16. Joint Trusteeship Actively promoted by many Labour Feds
Important to public sector unions
Voice on issues that matter to members
Investments
P3s – pension funds used to privatize public sector jobs
Benefits and contributions
How to use shortfall? surplus?
Multi-employer pension plans (MEPPs)

17. Labour: Strengthen the role of the regulator

18. Role of the regulator
Regulator (NOT administrator) attest to plan’s compliance with legislation
Pension Commission
Equal labour & employer representation
Deal with policy issues, court decisions
Superintendent reports to Commission

19. Move to self-regulation
OSFI and FSCO
Regulators shift focus from administration to risk management

20. A modest proposal Transparency (CAPSA Principle #9)
“The plan administrator should provide for the communication of the governance process to plan members, beneficiaries and other stakeholders to facilitate transparency and accountability”
Unions?
Prior Notice of Amendments to union

21. Communication
Members are reassured when company and union communicate same message