Multi-Employer Benefit Plan Council of Canada
May 14, 2012
Via Email: labourlegislationLRWS@gov.sk.ca
Mr. D. Morgan, Q.C.,?Minister of Labour Relations and Workplace Safety Ministry of Labour Relations and Workplace Safety 300 - 1870 Albert Street?Regina, Saskatchewan?S4P 4W1
Dear Minister Morgan,
We are writing in regards to A Consultation Paper on the Renewal of Labour Legislation in Saskatchewan (the “Consultation Paper”) seeking input on the province’s labour legislation. We are pleased to make this submission.
About MEBCO
Our organization, the Multi-Employer Benefit Plan Council of Canada (MEBCO), was established in 1992 as a not-for-profit, federal non-share capital corporation. MEBCO’s mandate is to represent the interests of Canadian multi-employer pension and benefit plans with provincial and federal governments regarding proposed or existing legislation and other policies affecting such plans.
MEBCO’s volunteer Board of Directors is responsible for identifying issues that impact upon multi- employer plans and developing strategies to address those issues. They are elected from all professions and disciplines involved in multi-employer plans, including union and employer trustees, professional third-party administrators, non-profit and in house administrators, actuaries, benefit consultants, lawyers and chartered accountants.
Saskatchewan Labour Legislation
MEBCO’s interest in your review of Saskatchewan’s labour legislation is in respect of its impact on beneficiaries of pension and benefit plans. In particular, the Consultation Paper refers to Bill C-377, An Act to Amend the Income Tax Act (requirements for labour organizations). We have significant concerns with the disclosure required under Bill C-377 in respect of recipients of pension and benefit benefits, which we believe will have a detrimental and unjustified impact on pension and benefit plans.
MEBCO believes that Bill C-377 goes far beyond the intended objective and would impose enormous costs and other implications for many private and public entities doing business in Saskatchewan. The Bill proposes to require disclosure of personal information (including personal health and medical information) which conflicts with legislation already in place. Further, the Bill proposes to duplicate existing financial disclosure requirements applicable to pension and benefit trusts.
Concerns with Bill C-377
Bill C-377 would mandate certain disclosure from “labour organizations” and “labour trusts”, as defined. The definition provided for “labour trust” includes “a trust or fund...that is established or maintained in whole or in part for the benefit of a labour organization, its members, or the persons it represents.” This definition is broad and would capture any benefit fund that has any unionized beneficiaries, including public sector plans and any applicable public or private entity.
Pension and benefit plans are already subject to extensive disclosure requirements under other provincial and federal legislation. For example, s. 6 of Saskatchewan’s Pension Benefits Act, 1992, requires the administrator of a pension plan to produce for the Superintendent, any record that relates to the plan. The legislation also requires that a copy of annual financial statements be provided to any union member that makes such a request. Further, pension and benefit plans are already required to file annual statements with the Canada Revenue Agency. In addition, trustees of pension and benefit plans are subject to stringent fiduciary duties at common law that obligate them to act solely in the best interests of the plan and its beneficiaries. Similar duties arise under section 11 of the Saskatchewan Pension Benefits Act, 1992.
Bill C-377 will create additional and unnecessary red tape for a sector that is already in a difficult state. This extra administrative layer does not further the goals of the proposed legislation. Since the transparency and disclosure provided for under existing pension and benefits legislation already ensure plan members and other stakeholders receive sufficient information and disclosure concerning these plans, all that this additional red tape will serve to accomplish is the unnecessary depletion of plan assets reducing the amount available to pay intended benefits to plan members and beneficiaries. These funds have fixed contribution rates and fixed resources, and therefore, the cost of compliance will necessarily result in smaller benefits for workers.
Bill C-377 requires the disclosure of a statement each time a “labour trust” enters into a transaction worth more than $5000. That statement will have to set out the name and address of the payer and payee, the purpose and description of the transaction, and the amount that has been paid or received. The plans and funds which MEBCO represents would have thousands of such transactions in a year. Many multi- employer plans administer funds worth billions of dollars, and have numerous agents conducting large transactions on a daily basis. Just like all large institutional investors, pension and benefit plans need to respond to market situations quickly, and new investment transactions occur constantly. Some transactions would be part of the competitive advantage of institutional pension fund managers (i.e. what they buy and sell) and the proposed Bill could significantly impact on the ability of multi-employer pension plans to retain skilled asset managers. Bill C-377 would require that an immense amount of material be filed by multi-employer plans. The cost of complying with this proposed legislation will be a significant cost to those plans.
Perhaps the greatest evidence that Bill C-377 has been drafted without the realities of pension and benefit plans being taken into account is the fact that the disclosure required under Bill C-377 would seem to require that whenever a plan makes a payment of greater than $5000 to a beneficiary, it is necessary for the plan to disclose the amount of the payment, the name of the individual it is paid to, and their address. This information is required to be provided to the Minister and apparently this private information will then be made available to the general public. We believe that this represents an improper intrusion on the privacy interests of pension and benefit plan beneficiaries. We are certain that the Bill is in conflict with the Personal Information Protection and Electronic Documents Act (PIPEDA) and Saskatchewan’s Health Information Act.
Although many periodic pension and benefits payments are less than $5000, there are many situations where payments could surpass that threshold. When an employee’s membership in a plan is terminated, it is possible for the employee to recover the commuted value of the pension from the plan. In such cases, payments of greater than $5000 are typical. There are also health related payments such as dental, life insurance, prescription drugs, dependent life insurance, accidental death and dismemberment insurance and disability benefits that could exceed the monetary threshold set out in the Bill. When an employee or pensioner passes away, there is often a death benefit paid to his or her surviving dependents out of a health and welfare fund. A payment such as this would typically be for far more than $5000. Bill C-377 would require each of these payments, along with various pieces of personal information, to be individually reported to the Minister and made publicly available. Again, we presume that this was not the intention of the drafters of the Bill. We assume Bill C-377 is not intended to and should not require the financial situation of individual pensioners and beneficiaries to be placed before the public. Further, since Bill C-377 also requires that the purpose and description of the transaction be disclosed, the Bill will require the disclosure of sensitive medical information where the payment to a beneficiary is in relation to coverage under a health plan.
Considerations
For all these reasons, we believe that Saskatchewan should not incorporate the provisions of Bill C-377 into any revisions to its labour legislation due to the serious flaws discussed above. It is inappropriate to impose these types of requirements on “labour trusts”, such as pension and health and welfare plans. The requirements of Bill C-377 are redundant, in conflict with existing legislation, costly, invasive of privacy and generally unsuited to the regulation of such plans, especially the multi-employer plans that MEBCO represents.
We enclose an article on Bill C-377 that was recently published in the International Foundation of Employee Benefit Plans periodical, Plans & Trusts.
We hope that our concerns will be considered by your Ministry. We appreciate you taking the time to consider our comments on this issue and we would be pleased to discuss this matter further with you.
Respectfully submitted,
Bill Anderson, President
Cc: Sid Matthews, MEBCO Director, Sid Matthews and Associates, Emerald Park, SK (ph. 306-570-2822)
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