Manitoba Committee Hansard — 12 April 2021 (Legislative Affairs Committee, Sitting 5, 42nd Legislature, 3rd Session)

42-3-la5

Manitoba — Debates (Hansard)

Third Session – Forty-Second Legislature of the Legislative Assembly of Manitoba Standing Committee on Legislative Affairs Chairperson Mr. Jon Reyes Constituency of Waverley Vol. LXXV No. 5 - 6 p.m., Monday, April 12, 2021 ISSN 1708-668X

MANITOBA LEGISLATIVE ASSEMBLY Forty-Second Legislature Member Constituency Political Affiliation ADAMS, Danielle Thompson NDP ALTOMARE, Nello Transcona NDP ASAGWARA, Uzoma Union Station NDP BRAR, Diljeet Burrows NDP BUSHIE, Ian Keewatinook NDP CLARKE, Eileen, Hon. Agassiz PC COX, Cathy, Hon. Kildonan-River East PC CULLEN, Cliff, Hon. Spruce Woods PC DRIEDGER, Myrna, Hon. Roblin PC EICHLER, Ralph, Hon. Lakeside PC EWASKO, Wayne, Hon. Lac du Bonnet PC FIELDING, Scott, Hon. Kirkfield Park PC FONTAINE, Nahanni St. Johns NDP FRIESEN, Cameron, Hon. Morden-Winkler PC GERRARD, Jon, Hon. River Heights Lib.

GOERTZEN, Kelvin, Hon. Steinbach PC GORDON, Audrey, Hon. Southdale PC GUENTER, Josh Borderland PC GUILLEMARD, Sarah, Hon. Fort Richmond PC HELWER, Reg, Hon. Brandon West PC ISLEIFSON, Len Brandon East PC JOHNSON, Derek, Hon. Interlake-Gimli PC JOHNSTON, Scott Assiniboia PC KINEW, Wab Fort Rouge NDP LAGASSÉ, Bob Dawson Trail PC LAGIMODIERE, Alan Selkirk PC LAMONT, Dougald St. Boniface Lib. LAMOUREUX, Cindy Tyndall Park Lib.

LATHLIN, Amanda The Pas-Kameesak NDP LINDSEY, Tom Flin Flon NDP MALOWAY, Jim Elmwood NDP MARCELINO, Malaya Notre Dame NDP MARTIN, Shannon McPhillips PC MICHALESKI, Brad Dauphin PC MICKLEFIELD, Andrew Rossmere PC MORLEY-LECOMTE, Janice Seine River PC MOSES, Jamie St. Vital NDP NAYLOR, Lisa Wolseley NDP NESBITT, Greg Riding Mountain PC PALLISTER, Brian, Hon. Fort Whyte PC PEDERSEN, Blaine, Hon. Midland PC PIWNIUK, Doyle Turtle Mountain PC REYES, Jon Waverley PC SALA, Adrien St. James NDP SANDHU, Mintu The Maples NDP SCHULER, Ron, Hon.

Springfield-Ritchot PC SMITH, Andrew Lagimodière PC SMITH, Bernadette Point Douglas NDP SMOOK, Dennis La Vérendrye PC SQUIRES, Rochelle, Hon. Riel PC STEFANSON, Heather, Hon. Tuxedo PC TEITSMA, James Radisson PC WASYLIW, Mark Fort Garry NDP WHARTON, Jeff, Hon. Red River North PC WIEBE, Matt Concordia NDP WISHART, Ian Portage la Prairie PC WOWCHUK, Rick Swan River PC

105 LEGISLATIVE ASSEMBLY OF MANITOBA THE STANDING COMMITTEE ON LEGISLATIVE AFFAIRS Monday, April 12, 2021 TIME – 6 p.m. LOCATION – Winnipeg, Manitoba CHAIRPERSON – Mr. Jon Reyes (Waverley) VICE-CHAIRPERSON – Mr. Ian Wishart (Portage la Prairie) ATTENDANCE – 6 QUORUM – 4 Members of the Committee present: Hon. Mr. Fielding, Hon. Mrs. Guillemard Messrs. Lindsey, Reyes, Wasyliw, Wishart APPEARING: Mr. Dougald Lamont, MLA for St. Boniface PUBLIC PRESENTERS: Bill 8 – The Pension Benefits Amendment Act Mr. Kevin Rebeck, Manitoba Federation of Labour Mr. Romeo Ignacio, Amalgamated Transit Union, Local 1505 Ms.

Michelle Gawronsky, Manitoba Government and General Employees' Union Mr. Don Mackinnon, private citizen Mr. Martin McInnis, C o-operative Super- annuation Society Pension Plan Mr. Robert Moroz, Manitoba Association of Health Care Professionals Mr. Jeff Traeger, United Food and Commercial Workers, Local 832 Mr. Mike Sutherland, Manitoba Nurses Union Mr. Matt McLean, Canadian Union of Public Employees Mr. Paul McKie, Unifor Bill 11 – The Workplace Safety and Health Amendment Act Mr. Kevin Rebeck, Manitoba Federation of Labour Mr. Romeo Ignacio, Amalgamated Transit Union, Local 1505 Ms.

Michelle Gawronsky, Manitoba Government and General Employees' Union Mr. Robert Moroz, Manitoba Association of Health Care Professionals Mr. Mike Sutherland, Manitoba Nurses Union Mr. Stephen Terichow Parrott, Canadian Union of Public Employees, Manitoba Bill 18 – The Workers Compensation Amendment Act Mr. Kevin Rebeck, Manitoba Federation of Labour Mr. Romeo Ignacio, Amalgamated Transit Union, Local 1505 Ms. Michelle Gawronsky, Manitoba Government and General Employees' Union Mr. Curt Martel, private citizen Mr. Robert Moroz, Manitoba Association of Health Care Professionals Mr.

Mike Sutherland, Manitoba Nurses Union Mr. Phil Kraychuk, private citizen WRITTEN SUBMISSIONS: Bill 8 – The Pension Benefits Amendment Act Margaret Myles, private citizen MATTERS UNDER CONSIDERATION: Bill 8 – The Pension Benefits Amendment Act Bill 11 – The Workplace Safety and Health Amendment Act Bill 18 – The Workers Compensation Amendment Act * * * Mr. Chairperson: Good evening. Will the Standing Committee on Legislative Affairs please come to order. Our first item of business is the election of a Vice-Chairperson. Are there any nominations for this position? Hon.

Sarah Guillemard (Minister of Conservation and Climate): I nominate Mr. Wishart. Mr. Chairperson: Mr. Wishart has been nominated. Are there any other nominations? Hearing no other nominations, Mr. Wishart is elected Vice-Chairperson.

106 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 This meeting has been called to consider the following bills: Bill 8, The Pension Benefits Amendment Act; Bill 11, The Workplace Safety and Health Amendment Act; Bill 18, The Workers Compensation Amendment Act. I would like to inform all in attendance of the provisions in our rules regarding the hour of adjourn- ment. A standing committee to consider a bill must not sit past midnight to hear public presentations or to consider clause by clause of a bill, except by unanimous consent of the committee.

A written submission for the following person has been received and distributed to committee members: Margaret Myles, private citizen. Does the committee agree to have this document appear in the Hansard transcript of this meeting? [Agreed] Prior to proceeding with public presentations, I would like to advise members of the public regarding the process for speaking in a committee. In accor - dance with our rules, a time limit of 10 minute s has been allotted for presentations, with another five minutes allowed for questions from committee members.

If a presenter is not in attendance when their name is called they will be dropped to the bottom of the list, including the other two bills if they're presenting at each–for each bill. If the presenter is not in attendance when their name is called a second time, they will be removed from the presenters' list. The proceedings of our meetings are recorded in order to provide a verbatim transcr ipt. Each time someone wishes to speak, whether it is an MLA or a presenter, I first have to say the person's name. This is the signal for the Hansard recorder to turn the mics on and off.

Also, if any presenter has any written materials for distribution of the committee, please send the file by email to the moderator who will distribute it all to the committee members. Thank you for your patience. We will now proceed with public presentations. Bill 8–The Pension Benefits Amendment Act Mr. Chairperson: I will now call upon Kevin Rebeck from the Manitoba Federation of Labour, and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Mr. Kevin Rebeck (Manitoba Federation of Labour): Good evening. Hello. Mr. Chai rperson: Yes, hello. Good evening, Mr.

Rebeck. Please proceed with your presentation. Mr. Rebeck: Thank you. Can I just have clarity which bill is first? I had a different list in the email than I see on the screen. Mr. Chairperson: Mr. Rebeck, it is Bill 8. Mr. Rebeck: Bill 8, there we go. Great, thank you. I'm Kevin Rebeck, president for the Manitoba Federation of Labour. The Manitoba Federation of Labour is Manitoba's central labour body, repre - senting the interests of more than 100,000 unionized workers.

Every worker has the right to live in dignity after they retire from working life, and Canada's pension system is set up to combine workplace pension plans with the Canada Pension Plan, Old Age Security and Guaranteed Income Supplement in supporting Canadians after they've retired from working life. Together, this system has made a profound impact on lowering senior poverty rates in Canada. The labour movement has always fought for expanded retirement supports like the CPP, as well, to protect and extend workplace pension plans.

We believe that the government should be pursuing three overarching goals in securing greater retirement stability for working families: No. 1, they should protect existing workplace pension plans in both the public and private sectors, and ensure any legislative changes do not allow employers to convert existing pension plans to weaker ones; No. 2, should enhance retirement security by extending strong pension plans to more Manitoban workers; and No. 3, we should ensure that Manitoban –advocates for national approaches to strengthening retirement security for all workers.

Working families in Manitoba are increasingly worried about making ends meet and saving enough to live a good life when they retire from their working lives. We also know that without robust retirement security options, retired workers are often forced to rely on social supports like the GIS, which increases the costs borne by government. At a time of rising economic inequality and worries about the futur e,

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 107 government should be doing what they can to increase retirement stability and security for working families. This bill follows the rerelease of the Pension Commission report over three years ago, a review that raised a number of very troubling proposal s. We're pleased to see that this government has listened somewhat to the labour movement and chosen not to pursue some of the report's most extreme recom - mendations to weaken retirement security for Manitoban workers contained in that report.

For instance, we're glad to see that the govern - ment has dropped the idea floated in the pension committee's review of allowing for the conversion of strong, defined benefit pension plans to weaker targeted benefit plans. We're also encouraged to see that the government is not pursuing the idea of ending universal parti - cipation in workplace pension plans. I'm also glad that the earlier proposed changes to reduce planned solvency requirements to 85 per cent from 100 have been removed. This would have been the wrong approach, and we're firmly opposed to an across -the- board reduction in solvency requirements.

Weakening solvency requirements could open the floodgates to allowing pension plans to run chronic deficits, putting current and future pension incomes at great risk. We hope the new rules creating a solvency reserve account will provide greater supports to pension plans to ensure workers' deferred wages are there for them at retirement. We are, however, concerned that this bill creates greater ability for workers to unlock their retirement savings in whole and in part prior to their retirement.

As a rule, workers are almost always financially better off if they leave their retirement income locked in until retirement. This is especially true with respect to pens ion benefits. Unlocking retirement funds can be very risky for individual plan members, leaving workers exposed to inadequate –or even poverty -level–retirement income in their later years. But we certainly acknowledge that there may be specific cases of se vere financial hardship which could warrant some unlocking of retirement savings.

The risks associated with depleting one's retirement income prematurely and the required investment and financial planning knowledge required to mitigate such losses would li kely not be available to the average person should they choose to unlock their pension. We recommend the government act to educate working people about the financial advantages of leaving retirement funds in place for retirement and only permit unlocking of retirement funds in cases of extreme financial hardship.

There are a number of excellent financial literacy organizations here in Manitoba who could assist on developing resources, including SEED Winnipeg and community financial counselling services. Making it easier for workers to unlock these funds raises the likelihood their retirement income may not be–extend as planned through retirement. We have concerns that the government's motivation for the expansion of unlocking is rooted in freeing up a larger portion of secure pension funds for access by the private investing industry and shifting financial liabilities away from government and employers.

The MFL is unequivocal. The changes to un- locking provisions meet a high threshold for deter - mining the existence of financial hardship, and that labour including worker representatives with pension expertise be engaged to define what constitutes financial hardship to ensure that their rules are in the best interests of workers. In the exceptional circumstances when unlocking is to be permitted, we urge government to provide a clear path for workers to be able to buy back any lost time and requalify for future benefits.

Governments should consider a low cap on unlocked funds so as to help ensure that wor kers are not sabotaged for the future, but this bill goes beyond just allowing greater flexibility for workers to unlock retirement savings in case of financial hardship. In fact, it allows workers to unlock 100 per cent of their pension savings at the age of 65, a provision that carries extreme financial risk.

Allowing workers to withdraw 100 per cent of the funds and placing them in a private savings vehicle, the government's putting people at risk of losing significant amounts of their savings in the ca se of market decline or recession at a time in their life when they're unlikely to have the ability to recover from a major financial loss. There's also the elephant in the room: that Canadians pay the highest mutual fund fees in the world, and moving one's retirement savings to private savings funds means exposing more of the money earned by working people to these fees.

108 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 In fact, according to research by pension expert Hugh Mackenzie, if you consider the accumulation of a typically balanced investment portfolio–60 per cent equities, 40 per cent fixed income –over a working lifetime invested in a typical Canadian mutual fund, you'll see roughly 45 per cent of the retirement savings invested ends up in the hands of mutual fund managers rather than in the han ds of the original saver.

Compared with keeping your money in a workplace pension plan, I don't think anyone could justify that it's a good deal for workers to pay nearly half of your savings to a mutual fund manager. Finally, I want to raise an issue wh ich could impact many Manitobans as this bill currently stands.

Employment and Income Assistance advocates are concerned: with making it easier to unlock pension benefits, particularly for those experiencing severe financial hardship, could lead to EIA off ices encouraging workers to unlock their pension plans before qualifying for EIA on the grounds that EIA is intended to be a benefit of last resort. * (18:10) We're concerned the proposed rules around loosening unlocking provisions will encourage the consideration of retirement savings as potential disposable income to be exhausted prior to EIA eligibility.

We assume this isn't the intent of the unlocking changes proposed in the bill, but we've raised this as a potential issue that could impact people seeking EIA with Department of Finance officials. We'd be happy to work with the ministers of Finance and Families (Ms. Squires) on a solution. This would likely involve some formal change to the EIA regulations to specifically exempt pension benefits in the calculation of an applicant's financial resources.

I want to thank the labour movement in Manitoba for strongly opposing the troubling aspects of the Pension Commission report, and I want to acknowledge this government for listening to some of labour's concerns. That being said, the bill still needs some im- provement in order to ensure a stronger pension plan system for Manitoba workers when they enter their well-earned retirements. And to ensure I understand government's intent with this bill, I'd e nd–like to end with a question for clarity. I spoke earlier, thanking the government for abandoning the solvency requirement changes. I didn't read it in the bill.

Government said, in a news release from November 27th, 2019, that it intends to relax the solvency funding rules for a defined benefit pension plan. Currently, these rules are funded on the basis that 100 per cent of the funds are available to cover obligations of a defined benefit pension plan should a plan terminate and the employer be required to pay out member's benefits. The news release states that it was government's intent to change the funding requirement to 85 per cent.

As I know this bill's been reintroduced since that time, is it still government's intent to reduce solvency requirements from 100 per cent to 85 per cent? We certainly hope not. I'll end there. Thank you. Mr. Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Hon. Scott Fielding (Minister of Finance): Thank you, Kevin, for your presentation, and I do appreciate meeting with you on this. Although we probably differ, in terms of the unlocking piece, really what our intent to do –just to unpack a few things you mentioned, was the unlocking piece.

Of course, you can do that 50 per cent right now under the current legislation. The financial hardship piece, it's something that most jurisdictions have done, and so that's, of course, you know, someone's got, let's say, health issues or maybe their kid or child needs to go to the States or something for some medical conditions or whatever it is, or you're kind of behind in your rent or your mortgage. So you're able to unlock some of the–your pension, essentially, to deal with those important issues.

So, you know, this is something that I get calls on quite a bit from the minister's office, just people looking to unlock some of their savings. You know, I think we're probably going to disagree. I generally think, for the most part, it is, you know, it is a worker's money, and so they can make their own choices. You know, a little bit different from Saskatchewan, where they're allowing, I think after 55, 100 per cent of their pension to be unlocked. Now that doesn't force them to do that. They can keep it in some sort of, you know, fund or they can move it to

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 109 some other vehicle to have savings or they can use it whichever way they would like. So, again, there's three ways to do it: unlocking under kind of a severe, you know, any –some sort of circumstances that are there; No. 2 is the 50 per cent parameter that's already in place in the legislation; No. 3, at 65 you're able to unlock that. Also, just in terms of the education, I do want to thank you for the letter you sent me, in terms of the education. I think you're right. It is important to educate people on these types of things.

Those are kind of some of the comments. Are you just–and just a question, so in regards to the solvency piece, so, like, are you confusing maybe the temporary relief we announced by suspending the solvency test temporary or what are you referring to? There isn't any changes from this, in terms of the 85 per cent. That is based on what other provinces have done. Ontario, for instance, moved in that general direction. I think Quebec has 75 per cent. Nova Scotia, I believe, is moving in that direction and the other few of the provinces are looking at it.

Essentially, it's kind of a best practice in pensions, I guess I would suggest and, you know, if you are able to move to the solvency piece, what it probably prevents is people moving their pensions from a defined benefit to defined contribution. So, I guess that's maybe some points I would make in respect to all of those. Mr. Rebeck: Yes, no, I think I'm hearing a mixed message there that I'm not clear on. My question was: in a news release it talked about moving from 100 per cent to 85 per cent. I think you're saying that is the intent.

I don't see that written in the bill, so I assumed we were leaving it at 100 per cent funding. I hope t hat's the case and that we aren't moving to 85 per cent, but I think I hear you saying that the intent is to move to 85 per cent solvency funding. Mr. Tom Lindsey (Flin Flon): Thank you for coming out and presenting yet again, Mr. Rebeck. It's good to see you. So can you just give us a little more insight into what you see the problem being, going from 100 per cent solvency down to 85 per cent solvency? Mr. Rebeck: Yes.

My worry is that when a company goes bankrupt, like Sears, that workers don't get paid their deferred wages. Pension plans are workers' deferred wages; it's money that they've earned, that they've put away, that's being held in trust and to be there for when they retire. And when we aren't funding things at 100 per cent solvency rate and things go bad, workers are the losers in that scenario.

So we think it's important to keep it at 100 per cent solvency, that there may be situations where an exception may need to be made, and that should be with the support of plan members being part of that call for government relief to give a variance. But an across-the-board blanket rule giving that variance is problematic because it puts workers' retirement security at risk. Mr. Lindsey: Thank you for that, Kevin.

I guess the other question I have is by the government deciding to change the solvency rate, and yet the minister says it's the workers' money, and yet by changing that solvency requirement, he's allowing employers to take a break at the workers' expense that, if a place goes bankrupt, l ike you said, with Sears, there isn't money in the pension plan and then along with other changes that they proposed here, it's all about weakening the collective power of that pension plan, which will leave all workers worse off. Is that kind of a fair statement? Mr. Rebeck: Yes. I think that's a fair statement.

I think when you've released solvency rules, you're really giving an employer a free access to a loan of employers' money, and in the event that things go wrong or bankruptcy occurs, they don't have to pay that back and they've used workers' money to finance things. There have been times when employers– Mr. Chairperson: Thank you, Mr. Rebeck. The time for questions is over. Mr. Rebeck: Thank you. Mr. Chairperson: You're welcome. I will now call on Romeo Ignacio, Amalgamated Transit Union, Local 1505. Mr. Ignacio, please unmute yourself and turn your video on. Mr. Ignacio, please proceed with your pre - sentation.

Mr. Romeo Ignacio (Amalgamated Transit Union, Local 1505): Thank you, Mr. Cha ir. Thank you, everyone.

110 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 Good evening. This is Romeo Ignacio. I'm the president of the Amalgamated Transit Union, Local 1505. As far as the presentation for Bill 8, I don't have a lengthy presentation. I understand there's a lot of delegates and I, you know, I appreciate that you have given me the opportunity to speak today. I do have to–hearing Mr. Rebeck, I do have to speak regarding the solvency as well.

I believe 100 per cent solvency should be the goal of any pension just because, you know, our –any member who was on [inaudible] pension deserves that, and I believe, you know, when you retire you shouldn't be having to worry about what's going to happen when you're too old to work. I think–I know not everyone has a pension–has any pension, for that matter –but those who have contributed to any kind of pension, whether it's the City or the Province, or even private pensions, there has to be a perfection because this is, you know, this is where–what retired people depend on.

I know I've dealt with some retirees who, you know, took early retirement benefits and now have to deal with repaying it. There's a provision about not just advance and recovery benefit, and for somebody who was retired and have to deal with pretty much fixed income, it's very difficult. * (18:20) And so we don't want to be finding anybody having to worry about that, what they're going to do when they do retire and have this issue about solvency. Also, we support –as a union, we definitely support a strong pension, and it should be extended to other private sectors as well.

As you may know, we do have a new bargaining unit; it's a private contractor, under the Winnipeg Transit Plus department. And it's unfortunate that they don't come with their own pension, being a private contractor. However, they are providing service to the City, and, you know, when they get to a point where they can no longer work–and obviously, for bus operators and any employee or contractor, for that matter, that works in the transportation business, it's very difficult. There's a lot of things –there's a lot of factors that could affect your employment, parti - cularly old age.

And so you don't want to be seeing our members work beyond 60 or 65 when they're, you know, not in their peak of physical, you know, abilities. And so a strong pension should be –is definitely necessary in order to protect them from losing–from having to worry about their retirement and, you know, what they're going to be doing if they ever reach a point where they can no longer operate the vehicle. And so I would advocate for a strong education and any program to support providing a pension, whether it's private contractors or private companies or public.

And, you know, to me, it's a win- win situation for everyone. It just gives everyone , you know, those who have retired, who have provided their service to the City or to the Province, the ability to actually enjoy life and, you know, contribute back to the province. That is all, and I'm available for any questions. Thank you, Mr. Chair. Mr. Chairperson: Thank you for your presentations. Do members of the committee have questions for the presenter? Mr. Fielding: No. Thank you very much for your presentation.

Appreciate your time here tonight, and I understand you're speaking a few other bills, so we'll wait for the other bills to come as well. Thank you. Mr. Lindsey: Thank you for your presentation here tonight. And pensions are something that's so important. Do you think that now would be the right time to start loosening the requirements that keep pensions locked in? People are obviously suffering in a lot of cases with COVID, the downturn in jobs and all the rest of that.

But would you say that allowing people to unlock their pension now may help them very short term, but down the road, it's going to leave them worse off? Mr. Ignacio: Yes, well, thank you for the question, Mr. Lindsey. Yes, I actually wanted to speak on that as well.

And it is unfortunate that we have some members within our union that have relied on that, but it is our position that we shouldn't have to go there because the pension is to protect our members in the future, and we don't want to be taking the risk in taking the money that's available to invest it some - where or even, you know, use it, because that defeats the purpose of a pension. It's a protection for your future. So I would also advocate for education, not just for those plan members, our plan members, but for all plan members because at the end of the day, this is a protection for their future.

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 111 Mr. Lindsey: Well, thank you for that. And would you agree that maybe it'd be a better thing for the government –particularly now with jobs the way they are, precarious due to COVID–would we be further ahead for the government to institute some other programs that may financially help people either make the rent or the mortgage payment or keep themselves active as opposed to selling off their future, getting rid of their pension? Would there be a better way of helping working people right now? Mr. Ignacio: Thank you for that question.

Yes, definitely, I would support something like that. I believe the –there's a lot of reasons , definitely. There's probably some exceptions to the rule as well, but it's important that we try and provide options for plan mem bers to take rather than depend on that pension, because once you take it, you know, you put your future at risk. Mr. Chairperson: Are there any other questions from the floor? Mr. Fielding: Thanks, going to ask one more question–I think I'm allowed through the rules, right? To ask another question?

Just want to–just maybe it's a–are you aware–just we, as a government, we did–to your comment about providing some other supports –not sure if you're aware that we, in our recent budget, just introduced rent control. So that's going to be something that will save residents –depending on what you look at it – about 1.7 per cent is generally for the most part what it has gone up over the last number of years. So there is some dollars and cents where people would be saving. Not sure if you're aware too that we also intro - duced during the pandemic support programs for individuals.

There's actually about 360,000 indivi - duals that got some sort of direct –kind of direct support–some being the Risk Recognition Program – not sure if some of your members were a part of that, depending on what income level you were but there was upwards of about just 79,000 people that got some sort of support; it's about $1,500. There's about 235,000 seniors that got a $200 cheque for some senior support, as well as the disabled community; you got a $200 cheque from the government.

And then, I guess, on a final point there was also a subsidy program that was similar to the risk recognition for people maybe that were lower -income that were working in personal-care homes that got a top -up on their salary; I think it was about a $5 top-up that ended up being about $1,000. So, just a question: Are you aware that 360,000 Manitobans of the 1.1 million people above the age of 15 got some sort of direct supports beyond kind of the tax relief measures, the 2020 tax relief that we provided as well as the education's tax reductions upwards of 50 per cent would be part of it.

So just want to know if you're aware of that? Mr. Chairperson: Mr. Ignacio, very quickly, because your time has–is running out. Mr. Ignacio: Thank you, Mr. Chair. Thank you, Mister–Honourable Mr. Fielding. Yes, I am aware of that and some of the items there about the budget, we're still reviewing that. I do appreciate the heroes appreciation, or–forgot the term there–but we have some members who actually benefited from that, not all our members. However, we're talking about the future here.

I think it's important that we take care of the future, not just for the current year or t he next couple years or even within –during the pandemic. So I'm more concerned about the future of those who have pro- vided services to the government. Mr. Chairperson: Thank you, Mr. Ignacio, for your presentation. The time for questions is over. I will now call on Michelle Gawronsky, president of Manitoba Government and General Employees' Union. I'd ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Floor Comment: I can do that. Good evening, everyone. Mr. Chairperson: Ms.

Gawronsky, go ahead with your presentation. Ms. Michelle Gawronsky (Manitoba Government and General Employees' Union): Thank you, Mr. Chairman, and good evening, honourable mem- bers. The Manitoba Government and General Employees' U nion represents over 32,000 working Manitobans. The MGEU members live and work throughout Manitoba in a wide variety of workplaces, including members employed directly by the Province of Manitoba, Crown corporations, universities and colleges, health -care facilities, social -service agencies, and arts and culture organizations, to

112 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 name a few. The majority of MGEU members are contributors to defined benefit pension plans such as the Civil Service Superannuation Fund, Healthcare Employees' Pension Plan, the Winnipeg Civic Employees' Benefits Plan and the Community Agencies Benefit Plan; while others are members of the defined contribution pension plans, such as home- care pension plan and group RRSP programs. * (18:30) Several years ago, the government released a report on pensions posing significant changes to pension regulation provisions in Manitoba.

The anxiety that this caused our members –Manitobans– was serious, and the sheer number of members who became engaged in the issue was astounding. The continued stability of pensions plans and the importance of secure retirement are extremely important to MGEU members. That's why the potential for any changes to provincial pension legis- lation and regulation currently being considered are met with concern from our membership. We believe members and retirees who have worked hard, dedicated their lives to public service and invested their own monies –pensions for many years deserve a secure retirement.

This is why I will repeat again: we oppose any move away from defined benefit pension plans which enable damaging changes to occur. We occur–we oppose any changes that could weaken the pensions that members have worked so hard for. We are seeing a growing trend in defined benefit pensions converting to defined contribution or hybrid models which jeopardize many of the positives that defined benefit plans provide to employees, communities and the economy.

Studies have shown that defined benefit pension plans, like the civil service superannuation plan, play a significant role in powering economies, supporting growth and creating confident consumers whose spending is vital to the health of our economies. Defined benefit pension recipients are less reliant upon federal and provincial supplementary benefits such as the Guaranteed Income Supplement and Manitoba 55 PLUS. Defined benefit pension plans are less costly to manage than the defined contribution or the hybrid pension plans such as target benefits and shared risk plans.

Secure and predictable pensions provi ded by defined benefit pension plans are even more important for women who tend have a longer life expectancy and are more likely to have gaps in their earnings due to leave of absence from the workplace such as maternity, parental leave and for raising children. One of the proposals in this bill presses the expansion of conditions permitting workers to unlock their pension benefits. Workers are generally better off if they leave their retirement income locked in until retirement, including those who

part icipate in a defined contribution pension plan. This is especially true with respect to the defined benefit pension plans. Unlocking retirement funds can be a risky venture, with statistics over the years identifying that a predominant number of workers who withdraw their funds at or prior to retirement and without significant financial expertise are exposed to inadequate retirement income in their later years. Defined benefit pension plans reduce the investment and longevity risk on behalf of members, allowing for a greater likelihood of income stability throughout retirement.

Easing unlocking restriction for pension plans without careful consideration and alignment with the plan's benefit objectives and funding model can serve to erode the very stabili ty that it was intended to provide to workers. This is certainly true when regulations permit large groups of members to remove their commuted values without due consideration of the individual and plan risks in doing so. We are unequivocal that any chang es to unlocking provisions would have to meet a high threshold for determining the existence of financial hardship.

Should amendments to the regulations be contemplated, it is essential that workers and labour have a meaningful role in defining financial hardship within the scope of unlocking pension funds. While we were relieved that the most severe changes proposed in the pension review have not been adopted in this legislation, we disagree with any changes that could directly or indirectly weaken the pension that our members and the public have worked hard for and have planned for their retirement. The Premier (Mr.

Pallister) made a commitment that he would not make any changes to public pension plans in Manitoba, and we expect this government to keep this commitment to MGEU members. These Manitobans who have dedicated their lives to public service and have deferred their wages deserve to retire with dignity. A defined benefit plan

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 113 is the most stable and secure pension system that must be maintained to ensure benefits into the future. Now, more than ever, when there is so much instability in the world, we need retirees to have a stable and secure income when they leave working life. They deserve to retire with respect and dignity. Thank you. Mr. Chairperson: Thank you for your presentation. Do members and committee have questions for the presenter? Mr. Fielding: Thank you, Michelle. Appreciate your call, and I'm guided towards this camera now.

I understand I was looking at the wrong camera, the virtual settings here. And so just, you know, I mean, just further to your point, Michelle, thank you for the comments. I appreciate that. But, you know, to be fair, that is why we established an expert panel on the commission, right, and–to address this. Just unpack a little bit more what you're talking about, the financial hardship. So, access to locked- in pension funds due to financial hardship will be permitted.

The conditions for a financial hardship unlock can be eviction for rent arrears; foreclosu re; medical, dental expenses not covered by other insurance government programs. And also an indi - vidual will be entitled to withdraw the amount of unpaid rent for mortgage payments in arrears and for things like prescription drugs and dental, that sorts.

The amount is based on prescription drug receipts, invoices on estimates of medical and dental treatment, estimates–invoices of estimates for reno - vations, for alterations, for an individual's main home due to medical reasons; so, let's say you've got to have your home changed. And you're able to do that once a year. So, it is–in fact, it is exactly the same parameters that the federal government has and most of the provinces with that being put in place.

I think there's enough, what I guess I would say, safeguards in place to make sure people aren't using it for other purposes that could lead to hardship later on down the line. It's– if you've got a medical issue or what have you, you provide the receipts. And I get a lot of calls from my office. I can be honest with you. This is the–probably the No. 1 issue with the pensions that I get, that people can't access–they need something for some particular reason. So, you know, just my comments. I want to thank you for your presentation. And I'll turn it back to you, Mr. Chair. Ms.

Gawronsky: Minister, with all due respect, when folks are retired or just before they're going to retire or if people are having dental problems or they're having problems with housing, I don't believe that their retirement funds should be what is used to make sure that these Manitobans feel secure living in Manitoba. I think there's got to be another way to make sure that these Manitobans are looked after without them having to take away from their actually hard-earned retirement packages.

I'd be very fearful that everything I've worked for could be gone because I have to renovate my house because I've had a stroke. I'm really hoping that this government would actually step up to help out any Manitoban that needs the help. There's many different avenues that they can go down. Unlocking and taking money out of their pensions is not the best way for them or for the pension plans or for anyone else in the future. Mr. Lindsey: Thank you, Ms.

Gawronsky, and, yes, I think you've made some pretty strong points there, that the minister has suggested a whole raft of reasons why somebody could unlock their pension funds, things that perhaps maybe a universal pharmacare program or other programs could alleviate some of those hardships. People that are living on minimum wage –you know, the government has allowed such miniscule increases in minimum wage that it's really forcing workers into a hard spot to decide that they have to take money out of their pension plan to try and survive today.

But it's going to leave them down the road without enough income to look after themselves. So do you think the extensive list of reasons that the minister read out, is that a strong enough safeguard to make sure that workers' pensions are protected? Or should there be a whole lot shorter list of exemptions and, really, stronger safeguards around making sure that workers aren't taking their pension out to meet obligations now that somehow should have been met under a different set of circumstances? * (18:40) Ms. Gawronsky: Thank you, Mr. Lindsey.

Yes, I agree that there needs to be stronger governance overtop of any time that they're going to– you know, for an undue hardship. If they're going to

114 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 call it as a hardship then that has to actually meet the standards. When you have a grocery list that long that people can shop through to start taking money out of their pension, that will just erode the pensions that much quicker. And if, as elderly –I see enough of them on the streets of Winnipeg now that don't have –that are homeless. We don't need to see any more than that. What we need to see is exactly what you're saying, a Pharmacare system that actually looks after our seniors.

They need to have their retirement income there to make sure that they have the house and they can have the house that they have today, to look after it. To–you know, if they have a stroke and they need to do an addition onto their house, then they lose their house in the end anyway, nothing has done them any good. So we need to protect those retirement funds that they have paid for through their working lives, and respect these people. Mr. Chairperson: Thank you for your presentation. Do members–thank you for your presentation. We'll now move on to the next presenter.

I will now a sk Jim Huggard, private citizen, and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. I understand that Mr. Jim Huggard is not present, so we'll now move on to the next presenter. I will now call on Molly McCracken, and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. I understand Molly McCracken is not present currently, so we'll drop her to the bottom of the list. I will call upon Mr. James Spencer, private citizen, and ask the moderator to invite them into the meeting.

Please unmute yourself and turn your video on. Mr. James Spencer is not present and he'll move to the bottom of the list. I will now call upon Don Mackinnon, private citizen, and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Floor Comment: Hello? Mr. Chairperson: Mr. Mackinnon, please proceed with your presentation. Mr. Don Mackinnon (Private Citizen): Thank you very much, Mr. Chairman, honourable ministers and members.

I'm a 69 -year old retiree with career - specific training, as well as a number of university degrees, including a BA in justice and law enforce - ment, a BA honours in political science, a juris doctor, and a masters degree in public administration, all of which I obtained in the mid-1980s. From the age of 18, I've either gone to school or worked without interruption over a long period of time. Most recently I was employed for nine and a half years by the Province of Manitoba as the director of planning at the Emergency Measures Organization. I was laid off in June of 2017.

I've asked to appear before this committee to be– very briefly on Bill 8, and in particular on

section 7 of the bill, more specifically 21.3.1(1) which regards–is regards to the withdrawal or transfer of a prescribed plan at or after age 65. I would like to begin with by applauding the government for introducing amendments to the existing pension legislation. I intend to restrict my presentation of proposed subsections 21.3.1(1) and (2), and only briefly refer to 21.3.2(1). If passed into law, these amendments will give retirees greater control over the use and management of their money in a prescribed plan or fund, such as a lift–or a LIF, r ather.

Nevertheless, I respectfully ask that the committee consider some minor changes that may enhance this bill. Read in conjunction with those parts of the existing act that are not amended or repealed in this bill, both proposed subsections 21.3.1(1) and 21.3.2(1), which addresses the issue of hardship, serve the purpose of giving prescribed plan owners greater control over the use and management of their own money, while still providing for protection of money in a prescribed plan and flexible investment strategies. However, in the proposed paragraphs 21.3.1 (

a) and (b), unlike

section 21.3.2(1), appear to limit a retiree 65 years and older to an all-or-nothing choice. In other words, under paragraph (a), the retiree must draw the entire amount out of the prescribed plan. No provision is made to withdraw part of the plan and leave the remainder –or, for the part of it in –in the event it is required in the future.

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 115 While the withdrawal of the entire balance may be appropriate for some, many retirees w ould just as soon draw out some portion to meet their short -term needs or pay down a debt and leave the balance in the prescribed plan where it can grow tax -free until it is withdrawn.

And a point I make is that right now, if you don't have any access –in some cases–to six-figures you're in a situation all too often where you may have short- term debts, particularly credit card debt, which is extremely expensive to carry, but it's necessary to use that credit card debt because you don't have access to the LIF. So the result is that your debt, in effect, is compounded when it could easily be eliminated simply by accessing some portion of money under the–in the LIF or in the prescribed plan.

The real problem with the existing legislation is not that a prescribed plan is inherently bad, rather that the limitation on maximum withdrawal is too rigid and often leaves retirees with inaccessible monies while they simultaneously struggle to pay for essentials or pay down high- interest debt such as the credit card debt I mentioned earlier.

This has been a particular problem during COVID where, with the exception of a small amount of money given by the provincial government in Manitoba, most seniors have had to bear the brunt of increased food costs, costs for masks and drugs, etc., etc., without any significant support. Respectfully, I think the objectives of the bill would be better met by clearly setting out that a retiree need not make an all-or-nothing choice; that a retiree 65 or older may withdraw the balance or part of the balance from a prescribed plan.

Therefore, my recommendation with respect to 21.3.1(1) is at the end of the phrase of the balance and add or a part of the balance into that provision. Similarly, in paragraph (b), again the same thing, transfer the balance and add or a part of the balance to clarify that you can leave the monies in a LIF or prescribed plan.

I think, to some extent, that is a nice choice, or at least it gives you a mid-point between no–making no changes, to leave funds locked i n forever where they may not be able to be used appropriately by the retiree–and of course each retiree's circumstances are different–versus allowing –or requiring, in fact –that all the monies be taken out at once. Obviously, that creates–in addition to the potential for tax implications–it also creates some other issues.

Some of these are dealt with in 21.3.1(2), but without having seen the proposed regulation–or, pardon me –in (b), rather, where it appears to permanent transfer of the balance to various i nvest- ment vehicles. But nowhere does it mention leaving part of the balance in the existing prescribed plan. And some of the other investment vehicles that are mentioned in paragraph two have problems with them. RRSPs particularly have both contribution limitations and age restrictions, and as a result, may not be available to some retirees.

So what I'm recommending, again, is that it be made very clear that the retiree, in taking money in portion out of the plan, is not required to take it all out but can leave some of it in a prescribed plan or LIF. That concludes what I would like to say to you folks tonight. Mr. Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Mr. Lindsey: Thank you very much for your presentation. You've obviously put some thought into it. It's unfortunate; I'm sorry to hear that you got laid off. That's never good news.

I guess my question is, recognizing that some people are really good at understanding how to invest and all of that, that taking money from a future pension and investing it for growth might be a good thing.

I've seen any number of workers that took money out of a pension and had to go back to work because their investment knowledge wasn't that good. * (18:50) Do you really think that at a younger age, in particular, a worker taking that money out to pay immediate bills, to pay for a mortgage, for a house that they probably couldn't afford anyway, does that not weaken their potential future ability to support themselves? Mr. Mackinnon: Let me put it to you this way.

If you had $100,000 in a bank account and you had control over, and somebody came along and said to you, I'm acting in your best interest; you can't have that $100,000; we're going to kee p it locked in, and we're going to allow you a maximum of $8,000 a year out of that money, what would you say to them? Would you say, yes, you're looking after my best interests, or would I –or would you say to them, you

116 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 know, I really wish you would just leave well enough alone and let me run my affairs the way I see fit. Mr. Lindsey: Thank you for that. I guess, for me, I wish I had $100,000 in a bank account somewhere; I don't, so. And, really, it all depends, I guess, like I said, some people are bett er equipped to manage their own money. Other people would see this, even at 65, being able to take all the money out of their pension and buy a house or do any number of other things that will leave them potentially unable to support themselves properly in the future.

So, do you not agree that there should be some controls on that? And I think you do because you've already said that it shouldn't be an all or nothing, that there should be the ability to leave some in there, so. Mr. Mackinnon: Personally, sir, I understand that. I think that LIFs have certain advantages, for example, as an investment vehicle. I would rather not take all of my money out of my LIF, but I certainly would like to have control over the amount of money that I do take out.

I consider myself to be–and most people my age are grown -ups; they may not always make good decisions, but since they've lived their lives, they ought to be able to better control their own resources without a stranger from afar telling what they can and can't do because they perceive there to be a greater good. Mr. Fielding: Thanks, Don, for your presentation. Appreciate it. Well thought out and as well as well documented. To your point, No. 1, that wasn't presented by the commission. Now, that being said, you can have further decisions being made.

I guess that's something that could be considered in regulations. Your point, it's a valid point, right, that amount. It doesn't stop you from putting it in another vehicle, right, for retro savings, you know, anyt hing similar to that. So there is some options if there's ability to look at this in regulations; that's something I guess we could consider. I do agree with you, right, at the end of the day, you know, if you're 65 years of age and you have means and yo u like to kind of keep your money or invest it somewhere else, doesn't necessarily mean you're going to spend it elsewhere.

At some point, it is your money, and we think that it makes entire sense to have access to it. So I want to thank you for your presentation, and, you know, we're looking for some flexibility with this, so thank you very much for your presentation. Mr. Mackinnon: Thank you very much, Mr. Minister. Mr. Chairperson: Are there any other questions? Mr. Dougald Lamont (St. Boniface): I a ppreciate your presentation, especially the idea of a sliding scale. The one thing I'm interested in is if there were other options –I mean, sometimes I think of this as breaking into a pension as being an option of last resort.

If there were better servi ces, like, or if you could get access to debt relief or debt eradication for things like high- interest debt for seniors, would that be something you'd also be interested in? Just, is that something that you'd be interested or that you would think as an alt ernate to sort of breaking into your pension? Mr. Mackinnon: Not personally, I wouldn't. I mean, I–there's already various programs for debt relief, including bankruptcy and proposals and whatnot. For most of us, especially at my age, you would think of that as something like a last resort.

If we incur an obligation, most of us feel duty bound to pay it if it's at all possible to do it. But I find it particularly frustrating that I have to struggle to pay my rent, buy food and buy medication; while all of this is going on I have $100,000 sitting in a LIF that I can't touch. Mr. Chairperson: Thank you for your presentation. This concludes this presenter. I will now call on Martin McInnis and ask the moderator to invite them into the meeting. Mr. McInni s, please proceed with your pre - sentation. [interjection] Mr. McInnis, please proceed with your presentation. Mr.

Martin McInnis (Co -operative Super- annuation Society Pension Plan): Okay. Thank you. You can hear me? Mr. Chairperson: Yes, we can hear you . Please proceed. Mr. McInnis: Okay. Thank you very much, Mr. Chair and honourable committee members, for the opportunity to present this evening.

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 117 I'd also like to extend my thanks to the legislative staff who provided me their assistance in preparing to present this evening. I represent the Co -operative Superannuation Society Pension Plan, or CSS for short, one of the oldest and largest defined contribution pension plans in Canada. It's been in operation since 1939. We have over $5 billion in members' assets under management and serve 313 co-operative and credit union employ- ers across Canada and over 51,000 current and past employees.

Our pension plan is administered by a not- for-profit pension society. As of December 31st, 2020, there were over 10,000 active, inactive, and retired employee mem - bers in our pension plan whose province of employ - ment is or was Manitoba. And there are over 70 Manitoba co-operative and credit union employers participating in the CSS pension plan. Many of these employers were recently recognized in Manitoba's Top Employers 2021 competition. CSS is a multi -jurisdiction defined contribution plan.

That said, we're in a unique position to offer information and insights to legislators and regulators across Canada to consider when legislation is being updated or amended. CSS views itself as a partner for legislators and regulators and other stakeholders in the Canadian pension ecosystem. We therefore actively engage in participating in initiatives that can lead to improving the probability of pension plan members achieving financial security in retirement.

An example of this is our response to the Manitoba Department of Finance's consultation paper of January 10th, 2018, with respect to the review of The Pension Benefits Act. Our response to the con- sultation was written, of course, with our plan–our Manitoba plan members in mind. We have a fiduciary responsibility and relationship with these folks and will therefore always act in their best interests. However, as I noted earlier, we view ourselves as a partner of the Canadian pension ecosystem.

This leads us to speak up when we see opportunities to make changes that would positively affect our own members, but more generally, all defined contribution pension plan members. And this was our motivation for responding to The Pension Benefits Act consultation in 2018. The most recent data available from Statistics Canada shows there are approximately 64,000 active defined contribution pension plan members in Manitoba. So what w e're talking about eventually affects a lot more Manitoba citizens than just the 10,000 we happen to serve in our own plan.

Membership in defined contribution plans con- tinues to grow in Canada and in Manitoba, and we continue to see more defined contribution pension plans offering retirement income [inaudible] options directly from within the plan, as our plan does. The amendments of Bill 8, we believe, will lead to more Manitoban defined contribution pension plan members taking advantage of the unlocki ng provisions, which will lead to the issue we've raised becoming more prevalent.

The issue we raised in our response to the consultation was question 13 in the consultation paper, which asked whether other reforms for the locking-in provisions in the PB A should be con- sidered. In our response we shared our experience working with plan members who funds are governed under Manitoba jurisdiction, as well as other Canadian jurisdictions.

And to summarize our experience, the unlocking provisions in the Mani toba act and regulations are different than other jurisdictions in Canada, and in our view, they lead to unnecessary complexity, significant inconvenience and potential financial harm to defined contribution plan members who wish to avail themselves of the act's unlocking provisions while managing their retirement income from their accumulated pension funds from within the pension plan.

Now, the majority of our members, and I know this to be the case with other defined contribution pension plans in Canada we provide retirement income options –the majority of those members choose to stay with their plan in and draw their retirement income from the plan rather than transfer - ring to a financial institution. And there are several reasons for this. * (19:00) The first is the administration and investment management expenses incurred by plan members can be significantly less in the pension plan than what is incurred in the retail financial marketplace.

Second, the members are familiar with the plan's investments, and in many cases have a multi -decade relationship established with the plan. And third, the member maintains a fiduciary relationship and all the protections that affords the member with the pension

118 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 plan, which is not achievable if they transfer out to a financial institution. My objective this evening is not to make a plea to modify Bill 8. The original consultation paper asked for comments on whether other reforms to the locking-in provisions of the PBA should be considered. We appreciate that the information that we provided in our response to that question was considered, and we appreciate that the amendments that are included in Bill 8 are substantial, and those who have worked on them should be commended for getting them to this stage.

The Pens ion Benefits Act will be better because of it. I am here because I believe we missed an opportunity to make a change to the PBA that has the potential to positively impact tens of thousands of Manitoba citizens, now and in the future, who are defined contribution pension plan members. I appreciate that the act is reviewed every five years, and will be reviewed again in 2023, so my primary objective this evening is to strongly encour - age you to consider the unlocking issue in your consultations when the act is next reviewed.

One closing comment: we have not had the luxury of being able to review the draft regulations for The Pension Benefits Act amendments included in Bill 8. But nonetheless, because the issue we've raised relates to the use of prescrib ed products in the un- locking process, we wonder –assuming there is a desire to resolve this issue as soon as is practical –if the issue we are raising could not effectively be dealt with in the regulations to the act. If considered appropriate and desired, we would be more than happy to participate in any way we can.

Thank you once again for the opportunity to address you this evening. Mr. Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Mr. Lindsey: Just–thank you for taking time out to come and present to us. Certainly, I've heard what you've had to say. Now, your group that you represent, if I'm not mistaken, is primarily defined contribution pension plans, as opposed to defined benefit.

So, do you think that substantial differences in the two plans where, in the defined benefit plan, if too many people withdraw their funds from that plan, the plan then can no longer meet the obligations of the defined benefit,

whereas with your type of plan there is no real obligation to meet a defined benefit –it merely talks about the amount of money you put in, not the amount of money you get out? So, would you agree that those two plans are substantially different and this particular bill will make defined benefit plans worse off, not better off? Mr. McInnis: Thank you for the question. I'll maybe preface by saying that I'm not an expert in defined benefit plans, only defined contribution, so I don't think I can really speak to the question about the impact on defined benefit plan through member withdrawal. Mr.

Chairperson: Are there any other questions for the floor? Seeing none, we will now –I will now call on Mr. Robert Moroz, and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Mr. Moroz, please proceed with your presen - tation. Mr. Robert Moroz (Manitoba Association of Health Care Professionals): Well, good evening, and thank you. I'll wait for an indication that I'm not being heard, but I'll assume that I am.

So, I'd like to begin by thanking the committee and the Chair for the opportunity to speak to the significant changes that are being proposed to The Pension Benefits Act, changes that would signi- ficantly impact our members and put their retirement security at risk, security that governments, workers and their unions have worked collaboratively over the years to achieve. By way of introduction, my name is Bob Moroz. I'm president of the Manitoba Association of Health Care Professionals, better known by our acronym of MAHCP.

For over 50 years, MAHCP has been representing allied health professionals in Manitoba's professional, technical and paramedical sector. Today, we represent over 6,500 members in over 190 different classifi - cations, serving Manitobans in hundreds of health- care and social services across the province, including hospitals, labs, in our ambulances, personal -care homes and in the community. Now I've carefully read over the submission from the Manitoba Federation of La bour regarding

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 119 the proposed changes in Bill 8. I can say without hesitation that MAHCP agrees with all the positions laid out in the MFL's excellent, comprehensive submission. And I would like to add our voice in calling for specific improvements to the bill currently before this committee. I do want to elaborate on some specific points from the perspective of our 6,500 allied health members across this province. Firstly, I want to emphasize just how important the benefit of this current retirement system is for our members.

Anything that puts the solvency of our system at risk or that potentially changes the fundamental nature of the benefit to be received, as this bill does, will be met with profound skepticism and even outright fear by health -care prof essionals, who are already deeply concerned about a range of issues related to their jobs, including safety, working conditions and so much more. I also understand that the changes being sold are using high-level terms like flexibility and choice and perhaps even freedom.

Now, I can see that some might be swayed by the allure of such high- minded ideals, but I would also agree with the Manitoba Federation of Labour that the reality of these proposed changes is actually much different than the initial sales pitch might be suggesting. The risk to individuals and to the entire plans themselves being posed by these changes are very, very real. And, again, thankfully the MFL has put forward some very reasonable and workable solutions that might help mitigate those risks. I'm not going to go into great detail, as you can read them for yourself and you've heard from Mr.

Rebeck earlier this evening, as well. But they do include the following points: No. 1, we must keep the solvency requirement for pension plans where it is, at 100 per cent, with some flexibility to address emergent and urgent and momentary needs that some plans may face and any changes subject to approval by plan members. We must work with other provinces and territories and with the federal government to create a Canada- wide mandatory pension insurance program that promises –to ensure that promises, pardon me, to workers are kept. Then, again, I will reiterate what many have said already this evening.

We must eliminate or mitigate provisions that would make it easier for workers to unlock funds intended for retirement, except in extreme financial hardship. The proposed changes would open up our members to a level of risk that they're not necessarily well equipped to navigate. And it also opens up o ur retirement funds to financial services industry that would profit off their hard- earned retirement funds, while offering zero guaran - tees in return, the significant likelihood that many members would be worse off due to these changes and that the plan itself would be put at risk for the rest of us.

When Premier Pallister was asked recently about the biggest challenge his government faced in crafting the recently introduced budget, his answer was simple: uncertainty. Uncertainty is not new due to the pandemic. We have been living it for a very long time, in reality, at the policy level, and it's even more a reality for hard -working health- care professionals who can't count on much these days but sure as heck are accountant–are counting on a secure retirement at the end of all those tough years at the end of a career serving Manitobans.

Why would we introduce yet more uncertainty into their lives at any time, but especially at this particular moment? And yet that's what this bill does. I will urge you t o follow all of the sensible and realistic recommendations put forward by the Manitoba Federation of Labour and others who've spoken tonight to ensure that health-care professionals can count on the secure retirement that they have been promised–and it is a promise. * (19:10) Thank you. Mr. Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Mr. Lindsey: Thank you, Mr.

Moroz, for your pre - sentation, and certainly you've brought up some pretty good points. Would it be fair to say that some of the uncertainty that particularly your members are feeling is things like Bill 28, that's frozen the–your members' wages for how many years, seen lay-offs in the public sector? Is it not a self -fulfilling prophecy that more people are feeling the need to withdraw money from a pension simply because of the actions of this government in restricting their ability to earn a good living at this point in time?

120 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 Mr. Moroz: Well, thank you for that question, Mr. Lindsey. Yes, there can be no doubt that the members of MAHCP and all health-care workers and all workers across the province have faced unprecedented challenges. We've gone through more than a year now of the pandemic. You mentioned bill 28. It is absolute ly top of mind for so many members who've –we've been without a collective agreement and any changes to our work arrangements and collective agreements for three and four years.

So yes, that's what–exactly what I meant when I talked about the question of uncertainty, the question of, you know, does this government care about how hard it is that our members are working and showing up to work every single day. We've struggled to see evidence of that over the last year in allied health and then technical professionals without a doubt. And now that we're talking about affecting the pension of those of us who've been on that front line of the pandemic.

It's remarkably stressful, an enormous stress on our members at a time where we should be supporting them as opposed to, you know, attacking the pension. Mr. Lindsey: Thank you for that. Just–I know your members constitute mainly what your concern is, but let's talk briefly about workers that may be earning minimum -wage-type jobs but maybe do have access to a defined benefit pension. We heard from a previous presenter, who was a pension expert, but he was a pension expert with defined contributions and wasn't willing to comment on defined benefit plans because he didn't feel he had sufficient knowledge.

So, do you think the average worker in Manitoba has sufficient knowledge to be able to make some of the really long -term solutions that would be required in this unlocking and taking funds out for the whole raft of reasons that the minister laid out earlier? Mr. Moroz: I think it would be very difficult for the majority of Manitobans to make that wise decision in the end. We know we see increasing debt across the spectrum, whether you're a health-care professional or whether you're somebody who's working at a minimum wage that is certainly well below a living wage at this point in time.

So to offer the temptation under the guise of freedom and choice to unlock your retirement funds is possibly far too tempting for somebody to refuse without really understanding w hat the long- term impact of that withdrawal of those funds will be for the remainder of your life as you go through retirement. So, freedom and choice is one thing. Certainly, there's a lot of Manitobans who are not necessarily thinking that long term. And the younger you are, the more difficult it is. And the lower your wage and the lower your annual salary is, the less you're thinking about that retirement, as well.

So absolutely, I'm really, really concerned about every single Manitoban, not just my members. An injury to one is an injury to all; I live by that every day. Mr. Chairperson: Are there any other questions? Mr. Lamont: Thank you very much, Mr. Moroz. We share your concerns. There's an old saying that freedom for the pike means death for the minnows.

But can you just, if you can, share –do you have any stories from your –for your members, members who've faced or, who've been facing an issue like this, where it comes to–or, they're concerned about having to break out their pension at a time that they didn't expect to? Mr. Chairperson: Mr. Moroz, your time is actually up. But, is there leave of the committee for him to respond? [Agreed] Mr.

Moroz: I don't have an enormous amount of stories, but I do speak to–with a lot of our members on a regular basis, and every single one of them who is probably more than 25 or 30 years old is concerned about their retirement. So to–the specific answer of your question is–do I know of people who've had to try and access? I've known of people who have wa nted to leave the profession early and have wanted to access that retirement fund and–for various reasons. The answer remains the same.

I'm concerned that it's an easy way out, and sometimes the easy way out is like going down to the payday loan provider , and you don't know what you're getting into. And it's troubling. And we need to educate them. We need to make sure that those people understand the impact of what it is that they're about to do, that they have the freedom to do.

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 121 Mr. Chairperson: The time for questioning is over. I will now call on Jeff Traeger of UFCW, Local 832, and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Mr. Moroz, please proceed with your presen - tation. Excuse me, so–my apo logies. Mr. Traeger, please proceed with your presentation. Mr.

Jeff Traeger (United Food and Commercial Workers, Local 832): The United Food and Commercial Workers , Local 832, is Manitoba's largest private sector union, with more than 19,000 workers workin g in a diverse collection of workplaces. We have represented Manitoba workers for more than 83 years, and a significant part of that representation has been to negotiate pension plans for workers in the private sector. This has ensured that our members h ave the dignity and financial ability – stability in retirement that they earned during their working life.

And, by negotiating pension benefits for our members, we also set the standard for employers in the private sector, whose workers are not represented by a union, thus ensuring that many workers in Manitoba will have a pension and be able to retire with a similar standard of living that they were accustomed to in their working life. In recent years, we have seen many employers come to the bargaining table seeking relief from the cost of continuing to provide their workers with their existing plans, even when those employers are still profitable.

While they argue that pension plans are a burden for them, we strongly suspect they are truly seeking to reduce the cost of providing a pension to increase their profitability. Some of those changes they sought are currently restricted or limited by legislation, and we are strongly opposed to any change that makes it possible for employers to weaken their pension plans or renege on their promise to workers, many of whom gave the majority of their working lives in the service of a single employer.

In fact, we have been consistently in favour of and lobbied various governments of the day to provide more worki ng Manitobans and their families with greater retirement security by enhancing the legislation that governs pension plans in this province. UFCW also lobbied for national programs, like Old Age Security and Guaranteed Income Supplement, and improvements to the Canada Pension Plan. And in our opinion, Manitoba's provin- cial government should be pressing the federal government to strengthen retirement security further for all Manitobans and, indeed, all Canadians.

UFCW members in Manitoba who work in jobs that pay at the lower end of the scale, such as workers in retail grocery, assisted living and security, have pensions that are reflective of their rate of pay. Because most of these workers are part -time, their pensions in and of themselves do not provide enough income in retirement to sustain them and can only do so when considered in conjunction with the benefits that governments provide.

This puts additional pressure on government programs that could in many cases be relieved through stronger pension commit ments made by employers that can easily afford them, like Loblaws or Sobeys, to use a retail grocery example. * (19:20) While negotiations are certainly a tool for workers to improve those pension plans, legislation is the best tool to protect them. The problem with Bill 8 and with reducing the solvency requirement, is that it doesn't add protection to workers' pension; it reduces those protections. And it doesn't bolster retirement security for Manitobans; it weakens that security.

UFCW was pleased to see government back away from some of the changes being considered around universal participation in workplace plans and target benefit conversions. However, there remain aspects of the proposed legislation that are deeply concerning to our orga nization and to our members that have a workplace pension plan; unfortunately, not all do. But I was disappointed to hear earlier the govern- ment is considering reducing the solvency require - ment.

One of the key components of pension legislation in any province is solvency: mathematical calculation of assets over liabilities in the event of a windup. The correct requirement for pension plans to meet is 100 per cent, and that ensures that in the event the plan did have to wind up, each and every plan member would be paid the value of what they had been promised by the plan. Working people see their annual statement and plan their retirement for themselves and others they

122 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 are responsible for, based on what that number is. To suddenly say they are now going to get less means that they will have to retire with less than they planned, reduce their standard of living, or it may prevent them from being able to retire at all, if they haven't already. And if they have, they will reduce their income at a time in the ir life when they have little or no opportunity to recoup the lost income, and they risk becoming a statistic for senior poverty.

If government reduces solvency requirements from 100 per cent to 85 per cent –and in our own experience, employers will fund only the minimal amount that they are required to by law–this will mean many plans will become underfunded within a year of this rule being changed, and the first time a pension plan winds up, workers will see their promised pensions reduced by 15 per cent.

While that may be sustainable for many who have generous pension plans based on high rates of pay and full-time hours, it is not sustainable to average Manitobans and their families, and UFCW strongly opposes any reduction in the solvency requirements. Furthermore, we are unclear on what problem is corrected by making such a change, if not simply to allow some employers to divert the money they promised to their workers' pensions into more profitable directions. Our second concern with Bill 8 is the component that makes it easier for workers to unlock their pension money at or before their retirement.

In extremely rare cases of hardship, a case can be made that it may be a benefit for some to be able to access retirement funds. In most cases, however, we believe that to allow plan members to do so in any fashion without having to prove a hardship is a recipe for disaster. In some cases, legislation protects people from themselves. Having pension funds locked to plan members is one of those cases.

As we understand, this bill that would allow plan members to access their pension money under three conditions: 50 per cent transfer at age 55 into a registered retirement fund; at any age, unlock all or part of the money on grounds of hardship; and after 65, they can unlock 100 per cent. For the average worker, pension plans remove the risk and complication of retirement planning by providing a steady and reliable source of income during retirement.

If workers unlock their retirement funds from their pension plan and use the money in ways other than towards effective retirement planning, they will very likely find themselves in retirement with little or no money at all and heavily in need of support. The fact is that most people simply don't have the skills to effectively manage their money for a potentially long retirement, and by allowing them the option to do this, government would be effectively allowing them to put their own future at risk.

Again, while we have some sympathy for Manitobans suffering from extreme hardship, we can see no problem this legislation solves except to take liability away from governments and employers and put it squarely in the hands of working Manitobans. And even in the case of hardship, there should be clearly defined guideli nes as to what constitutes a hardship before any funds can be unlocked.

In closing, I would urge this government to reconsider the amendment around unlocking and the reduction of the solvency requirement in the context of ensuring that pension money is there for people in their retirement when it was always meant to be. Thank you. Mr. Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Mr. Fielding: Thank you, Mr. Traeger. I appreciate your comments and your questions.

I'll put more as a comment to –you know, I do disagree with some elements that you're saying here in terms of it, but I do appreciate you coming out and making a presentation. It's our belief that there is situations where people do need to lock–for a number of reasons, unlock some of their pensions. Right now, the current legislation allows you lock 50 per cent at age 55, but also there's situations where people may need some money for maybe a dental or health issue. That's exactly the same. In fact, we use the exact same criteria that the federal government did in other provinces.

There isn't a word, a lick of difference between what we're doing and other provinces and the federal government allows their employees. So we do believe that it is–makes a lot of sense to do it as such, but I do want to thank you for your presentation here today. Mr. Traeger: With all due respect, just because other provinces are doing it doesn't necessarily mean it's the right thing to do.

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 123 And, yes, I guess that would be my only comment on that, other than when your unlock pension funds to pay a dental bill, I think you're robbing Peter to pay Paul. Mr. Lindsey: Thank you for your presentation tonight, Mr. Traeger. It's –I appreciate the fact that you've come out. And I guess it –the minister's comments kind of remind me of a saying that my mother had: If everybody else jumped off a cliff, would you follow them? And it seems to be that's the mentality of this minister when it comes to this.

So, just how many of your members do you think really have the necessary expertise in understanding exactly all the ins and outs of pensions and investments, or do they take that money and turn to some other money manager that claims to be looking after their best interests? Mr. Traeger: Well, first of all, your mother must have known mine, because she told me the same thing. But secondly, I would say a very low percentage of our members. Of course, I don't want to offend any of them; there are some that look after their money quite well and get the expertise they need to do–make effective investment choices.

But the vast majority of those rely on the pension plan that they belong to, potentially their employer or in some cases their union, to be that expert in the investment field on their behalf. Mr. Lamont: Thank you very much, Mr. Traeger. Yes, my father was president of the Investment Dealers Association and, after that, he ended up suing RBC Dominion Securities for the fact that they were– there was somebody doing a bunch of not -very-good things with somebody's pension, and helped to get it back for them.

Yes, I just –if you can, so much of what –with respect to the minister –so much of what he's talking about is something that basically should be covered by government, whether it's Pharmacare or emer - gency funds. Sometimes, you know, government is described as an insurance company with an army. So, I guess the question I actually have is: is the difficulty that you're–what sort of difficulties are your members facing approaching retirement? And clearly they're–they would be facing challenges with pensions, especially with the cost of living rising.

If you could just –have any stories about challenges that your members have faced and you could share them, I'd appreciate it. Mr. Traeger: Yes. Absolutely, our members face many challenges every day because of the rising cost of living and because, as I said earlier, their pension plans are based on what is largely part-time work at a relatively lower rate of p ay than what the average in the province would be.

So they're trying to manage to maintain a lifestyle for themselves and their families without necessarily being able to rely a hundred per cent on the pension that they've contributed to, in some cases for 30 or 35 years.

A recent story that comes to mind is that we had one of our members retire working in a retail grocery store, spent about three years trying to make a go at it at retirement, could not and now has returned to work as a part -timer in the same grocery store –and, of course, lost 35 years of seniority, so they're back at the very bottom of the list, struggling to get hours and struggling to make their way back up the pay scale to earn the same as they were earning before. So it's a sad stor y and, unfortunately, it's not the only one. Mr. Chairperson: The time for questions is over. I will now call on Mr.

Warren Luky of USW , Local 6166, and ask the moderator to invite them into the meeting. * (19:30) Please unmute yourself and turn your video on. I understand Warren Luky is not here, so he'll move to the bottom of the list. I will now call upon Mr. Mike Sutherland of the Manitoba Nurses Union and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Mr. Mike Sutherland (Manitoba Nurses Union): Yes. Good evening. Thank you, Mr. Chairperson, and thank you, honourable members of the committee.

In relation to the Manitoba Nurses Union, we currently represent over 12,000 nurses in our pro- vince, and MNU has always advocated for strong, employer-supported, defined benefit pension plans that will provide not only our members with the security they need in retirement, but for all workers. It is for this reason that we wish to share our thoughts on The Pension Benefits Amendment Act.

124 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 We have several concerns with this legislation. One area of concern for us are the provisions that would allow for the unlocking of pensions in full at age 65 or for reasons of financial hardship. Another concern of ours relates to the creation of the solvency reserve accounts, and finally, we would encourage government to avoid the shortfall with respect to solvency requirements, moving them down from 100 to 85 per cent.

As you've already heard, very few workers have the depths of financial and investment knowledge needed to manage their savings and retirement funds in the manner that would be needed to ensure the same financial outcomes as those resulting from defined benefit pension plans. Therefore, to us, it seems imprudent to introduce new provisions into our pension legislation that would allow workers to unlock or remove their retirement funds from such pensions. Unfortunately, The Pension Benefits Amendment Act provides two new ways for workers to access and remove these funds prior to, or at, retirement.

The first of these provisions can be found in sections 21.3.1. This

section makes it possible for those who are 65 years of age to fully unlock and withdraw as a lump sum the full amount of pension owed to them. While this would seemingly provide the worker with greater freedom to do as they see fit with their retirement savings, it runs the very real risk of putting them in a position where bad investments could lead to a significant loss of retirement savings and the loss of financial security that they would otherwise have had under the pension plan at a particularly vulnerable time.

How will we ensure that aggressive financial planners and financial institutions will not view this change in the legislation as an opportunity to grow sales and organize their tactics accordingly? It doesn't seem far -fetched to imagine financial institutions pressuring clients who are 65 years of age or older to unlock their defined benefit pensions and transfer those funds into accounts that they will manage. The predatory sales approach of some investment firms and financial institutions are well known.

Allowing workers to withdraw their pension funds in full at age 65 seems far less likely to benefit workers and far more lik ely to benefit those financial actors who will willingly seek and accept those funds for investment. Pension plans are designed for the benefit of the workers and are not driven by ulterior profit motives. Retirement savings being left in pension plans is a far more likely manner to produce better financial outcomes for workers than those that would result from unlocking and privately investing these funds.

We are also concerned with the inclusion of the provisions in the act –sections 21.3.2(1) and 21.3.2(2)–that would allow for workers at any age to withdraw funds from the plans on the basis of financial hardship. While the specific grounds for making such withdraws will be determined through regulation, it is nonetheless concerning to see that plan members will be able to make partial or full withdrawals from their plans while they're still working. This could obviously prevent them, in part or in full, from attaining the same level of financial security in retirement as they should under such plans.

The definition of financial hardship will need to be carefully crafted and very restricted in order to avoid just any kind of financial challenge becoming the grounds for which we're all in the compromising of workers' retirement savings. We suggest a broad consultation with unions must occur when such regulatory decisions are made so that long-term interests of workers can be heard and considered. Many people will face financial challenges in some form or other during their working lives, and there will be a temptation to utilize those funds.

But many of these challenges are not grave enough to justify compromising, perhaps in entirety, one's retirement situation. We are particularly concerned with revisions allowing workers to make more than one appli cation to withdraw funds on the grounds of financial hardship. As previously indicated, the

section that states a person is entitled to make more than one application relating to the same prescribed plan in a year only if each application is based on a dif ferent ground of financial hardship. If these types of withdrawals should only be done in grave exceptional situations of hardship, then why is the provision written to allow for multiple withdrawals over time and for different types of hardship? We find these provisions concerning and again hope to have input into the regulatory development that outlines the types of hardship to be considered as grounds for withdrawal. We also urge the government

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 125 to consider making amendments that would allow workers who do withdraw the funds due to financial hardship to have the option to buy back into these plans at the level they would have been at had they not withdrawn the funds. Another aspect of this bill that we are concerned about is the creation of the solvency reserve accounts. In particular, we are concerned that there perhaps is a notion that there–or an ability of employers being able to withdraw surplus funds from the reserve accounts.

If this occurs, it essentially means withdrawing some of the surplus f rom the plan, and we remain firmly of the opinion, particularly subsequent to the disasters we've seen with respect to the market crash in 2008, that surplus funds accrued on–in pension funds deposited into the pension plan ought to remain in the plan. The gain should stay with the workers and contribute to the long-term health of the plan.

Again, we request that robust consultation that includes the unions that represent workers be under - taken in the development of regulations around the mechanism of with drawal of surplus from solvency reserve accounts. Finally, we feel it is necessary to voice our opposition with respect to any notion of reduction in the requirements to reduce the funding of the solvency of the plans from 100 per cent to a lesser amount.

This decision, if it is made, would be disappointing because overall, we were–100 per cent funding certainly best guarantees the going forward and good health, both short and long term of the plan.

The potential for workers to get anything less than what they've been promised is unacceptable and while it is unlikely that the plan like the Healthcare Employees' Pension Plan, which nurses participate in, would suddenly dissolve and workers would be left with less than what had been promised, it is none - theless troubling to see any movement toward lower funding requirements that jeopardize the overall health of the plan. In conclusion, we would like to remind the com - mittee that pension plans are promises to workers: promises of a secure and dignified retire ment.

Legislative amendments that make room for un- locking of funds, removal of fund surpluses or the lessening of funding requirements chip away at those promises. Many of the changes being made in the act are simply not in the best interests of workers. Thank you. Those are my comments. Mr. Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Mr. Lindsey: Thank you very much for your presentation, and you've touched on a couple of things that others haven't brought up yet tonight. One of them is the solvency reserve accounts.

It reminds me, back in the '80s when Conrad Black decided to raid pension plans, and really, that was the beginning of the unravelling of some of these plans, where employers couldn't get their hands on the extra money in the plan that the plan generated, so they just quit putting money in the plan until the plans were actually underfunded. Is that a similar scenario which you can foresee happening with this solvency reserve account, where employers will get their hands on money that quite rightfully belongs to the employees and should be in the plan to make sure that the plan is sustainable going forward? Mr.

Sutherland: Yes, especially in concert with the reduction in the solvency requirement percentage, I think it's–it has some very dire potential consequences in future because as we've–we know that in the '80s and subsequent to, there was certainly some surpluses in the plan, but many plans subsequent to that and with employer contribution holidays, et cetera, were ill - prepared to withstand the significant consequences of the market crash in 2008.

And so, as a result of those situations, any sort of mechanism that allows for funds that should be dedicated toward the long- term health of the plan being diverted to some other initiative–independent of the plan and independent of maintaining the good health of the plan–I think undermines the overall security and allows for things like claiming that plans are too expensive or too costly, by virtue of sort of a gradual erosion over time.

And that, to me, is a significant concern, because we firmly believe that defined benefit plans are a robust and secure mechanism of ensuring dignity and financial security for workers in the future and in retirement and not compelling things like unanti - cipated scenarios that require workers to go back into the workforce by virtue of trying to mitigate signi - ficant financial hardship. * (19:40)

126 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 Mr. Lindsey: You touched very briefly in your presentation about the financial hardship aspect that may allow workers at any age to start unlocking funds. Do you think that list should be a really short list that has got a high threshold to meet? Or should it be, like, a complete laundry list of anyth ing you could possibly think of that would allow a worker to start unlocking funds? Mr. Sutherland: I have significant concerns, not only in relation to a long list but also in relation to multiple applications for a variety of reasons.

At the end of the day, the pension, it really is a covenant to ensure that one has the financial wherewithal to proceed into retirement with dignity and financial security. And certainly there are going to be times that I think we're all tested with financial hardship from t ime to time, and there will be a strong temptation.

And I think for those who are not very well educated with their pensions or financial security in future may make short-term decisions that could have very significant and severe long -term consequences that are even worse than perhaps the consequences of dealing with the particular financial hardship in the – when it arrives at a younger age. I think older folks are just less able to do the things that they were able to do in terms of entering the workforce. You know, as a general rule, folks want to enjoy the–their golden years, so to speak, and have planned for that.

And so, you know, in relation to these types of scenarios, a lot of younger workers, certainly, I think don't appreciate the value of havi ng a pension and a secure financial footing to accompany them into retirement, into their later years. And so for us, those two pathways, in terms of multiple reasons as well as multiple applications, are particularly disconcerting. Mr. Lindsey: Just a quick question. Do you think working people in this province would be further ahead if they were allowed to negotiate proper free wage increases that would meet their financial needs?

Or are they further ahead to start robbing from their pensions because the government won't let them negotiate? Mr. Sutherland: Well, certainly, I'm –by virtue of my position, I'm a very robust believer in free, fair and balanced collective bargaining where the rights of workers are in balance with the rights of the employers.

I think wage -constraint legislation cer - tainly puts a significant amount of pressure for people to look elsewhere rather than obtaining fair value for their work and puts pressure on things like savings and other vehicles that ought not be used in rela tion to these types of scenarios to perhaps fix short -term problems or short-term distress.

So, for me, I think that the most robust way to ensure that we as a society move forward in a fair fashion that allows working families to do well is to allow free, fair and unfettered collective bargaining that has a balance with respect to the environment that we're entering into on behalf of workers. Mr. Chairperson: The time for questions is over. Just to let you know that there is an additional speaker regis tered to speak to Bill 8. It'll be Paul McKie of Unifor. We will hear from him after this next presenter.

I will now call on Matt McLean of the Canadian Union of Public Employees and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Mr. McLean, please proceed with your presen- tation. Mr. Matt McLean (Canadian Union of Public Employees): My name is Matt McLean. I'm here today to speak on behalf of the Canadian Union of Public Employees. CUPE is Canada's lar gest union with over 700,000 members across Canada. We are also the largest union in Manitoba and we represent 37,000 people here.

CUPE members work in health -care facilities, personal-care homes, school divisions, provide municipal services, social services, work in child-care centres, with public utilities, work in libraries and family emergency services. As a union, CUPE has always made negotiating workplace pensions a top priority. In Manitoba, we are proud to report that over 92 per cent of CUPE members have a pension plan in their workplace, and another 7 per cent have a workplace RRSP plan or other form of retirement savings.

These pensions were earned at the bargaining table and at times on picket lines, and these pensions are paid with members sacrificing wages and other benefits that they may have otherwise negotiated. For many of our members, their pension plan promise is their most valuable asset, even amongst those of our members who are homeowners. For workers, a good workplace pension pla n is the

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 127 difference between retiring with dignity and immise - rating poverty in old age. As such, we value the legislative framework under which pension plans are governed in Manitoba. And we want to see strong legislation to ensure the workers' pensions are protected for when they need them. When the Pension Commission report was first released a few years ago, CUPE had some very serious concerns. We provided feedback to govern- ment and met with the minister of Finance at the time, Mr. Friesen, to outline our concerns.

We know that other unions, pension plans and pension experts also submitted responses that shared many of our thoughts. We are pleased to see that, for the most part, government heard our concerns and acted accord - ingly. When asked for our feedback on the consultation paper and the recommendations to reform the PBA, CUPE's first priority was that the government should not make any changes to the legislation which would allow for existing pension promises to be retroactively taken away from plan members and beneficiaries.

We were pleased to see that the legislation brought forward does not contain provisions allowing for the retroactive conversion of defined pension–benefit pension plans to less secure types of plans. Such conversions as flo ated in the Pension Commission's review would have allowed employers to replace guaranteed income for retirees with a hope and a prayer. We are glad government did not go in this direction. CUPE is also pleased that government decided to maintain existing rules around universal participation in workplace pension plans.

Making pension plan participation optional would have been disastrous for the long-term financial security of working people in this province. However, we do have some serious concerns with changes that will allow workers to unlock their retirement savings, in whole or in part, prior to retire- ment. First, it's important to say up front that workers are almost always better off leaving their retirement savings locked-in full until retirement.

We have long known this and it is the reason that government encourages retirement savings by providing RRSPs and pension plans special tax status that exempts taxes on the original income placed in retirement vehicles and shelters these funds from b eing taxed during decades of accumulation. These special tax consi - derations are granted under the understanding that these funds will be used to support an individual throughout their entire retirement. Allowing the complete unlocking of these funds under mines a special tax status that these funds are provided with from the start.

While we acknowledge that there may be moments of severe financial hardships that would warrant some unlocking of retirement funds, these should be rare and only in an extreme–and in extreme conditions should they be used as a last resort. Now, most workers who do unlock their funds are unlikely to every make up the lost retirement savings and could end up leaving these workers living in poverty during their years of retirement.

We would recommend the government do the following: first, work with labour and community experts to develop clear 'glidelines' for what qualifies as a crisis that will permit unlocking of funds; second, place a cap–place a low cap on what is to be unlocked; third, provide workers with a clear path to buy back any lost time and requalify for future benefits; and four, governments should work with groups such as SEED Winnipeg and Community Financial Counselling Services who could help develop finan- cial literacy resources for workers who are consi - dering unlocking their funds.

Finally, we need to speak out against changes that would allow workers to unlock 100 per cent of their pension savings at the age of 65 and place the funds in private savings vehicles. By doing so, government is putting people at risk of losing significant amounts of their savings due to a market decline or a recession at a time in their life when individuals are the –least ability to recover. * (19:50) Now, given the nature of the world today and the stock market, you know, things are –today but might not be good tomorrow.

Does this government really believe it's wise to encourage people to give up the safety and security of a pension plan to take market risks on by themselves? Further, we would add that the unlocking of pension savings results in significant loss of retirement savings in the forms of fees. Canadians famously pay the highest mutual fund fees in the world; these fees often exceed 2 per cent annually, while well -managed pension plans, on the other hand, are a much better deal. For example, the

128 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 administrative and fund management costs of the Healthcare Employees' Pension Plan was approxi - mately 0.6 per cent of the fund's assets in 2019. Now, why would this governme nt take actions that may encourage Manitobans to shift their retirement savings from safe, secure and low -cost pensions to higher risk, unsecured and higher fee private registered investments? This government's recent actions clearly de - monstrate that it understands the importance of both these points.

On the one hand, this government moved ahead with legislation that discouraged pension funds in the superannuation fund from being withdrawn and moved into private investments. On the other hand, you know, additionally, you've asked the various public pension plans in Manitoba to work together to try and find ways to bring down the already low investment fees that are taken on by pensions in this promise. And these fees that the pension plans currently charge the plans are already a small fraction of those borne by workers who purchase mutual funds for –in the personal retirement savings funds.

So, we only ask that this government follow their own example and not take action to encourage Manitobans to move their retirement assets out of the pension plan and into high- cost personal retirement funds. So, in conclusion, I'd just like to thank the govern- ment for taking the time to hear our submission, and to thank the government for consulting with CUPE and the rest of the labour community and for listening to some of our top-line concerns.

The refusal to move ahead with the Pension Commission's proposal around target plans as well as optional membership was warmly welcomed by CUPE and our members, and, in particular, you've our thanks for not moving ahead with plan types that would allow the retroactive conversion of defined DB plans and to risky target plans. However, there are improvements that could be made to Bill 8 that would make Manitoba's pensions even stronger. And, as always, we remain committed to working with government to build a stronger pension plan here in Manitoba so that all workers can retire with dignity. Thank you. Mr.

Chairperson: Thank you for your presentation. Do members of the committee have questions for the presenter? Mr. Fielding: Thanks, Matt, for your presentation. Just probably one question, but it's kind of all related. Do you think that maybe you're under - estimating your members, in terms of, you know, their ability–obviously, it is their money, there is some flexibility. I mean, I get a lot of calls to my office for people that really need to withdraw some of the funds because of financial hardship.

Knowing the fact that pretty much every govern- ment around, every provincial government–whether it be Alberta, BC, Nova Scotia, Ontario, the federal government–does exactly the same thing that this provincial government's looking to do, do you think that maybe you're off base with some of the needs of your members? Mr. McLean: When it comes to unlocking funds, what I would say is this. No individual can beat huge market forces, right?

You could be the best investor in the world, and if there's a 30 per cent decline in the New York Stock Exchange and the Toronto Stock Exchange, you're going to lose 30 per cent of your investment, your retirement savings, right? There are forces at work that no individual can combat on their own. So I think it's an unfair question to suggest that our –you know, we might be under - estimating our individuals. It's not a fair thing to ask of people to be able to put up with that kind of risk. Mr. Lindsey: Thank you for your presentation, Mr. McLean, and thank you for being here as late as you are.

The minister continually suggests that we're underestimating Manitobans' ability to understand complex financial dealings. Do you have any sense of how many of your members have taken any kind of education when it comes to investing, pensions and all that kind of stuff? Or are they, chances are, go ing to depend on the advice of someone else, an investment banker or a mutual fund or something like that? Mr. McLean: I mean, I couldn't tell you exactly how many people have taken advanced education in these sorts of areas. I mean, I would guess it wouldn't be very many.

I think the typical member, if their retirement funds weren't invested in pension plans, they would be invested, you know, likely, you know, maybe at their local credit union or more likely in a

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 129 savings account, maybe some bonds, you know. But they would definitely be relying on other people. What I would say is that we hear far more often from our members who don't have pension plans that they desperately want to be in one than we ever do from members in pension plans telling us they don't want to be in one. Mr. Lindsey: Thank you, and that's something that I think the minister needed to hear; that there's more people wanting in than there is wanting out.

I guess I–the only other question I would have is: Do you think there should be an extensive list of reasons why people would be able to take money out repeatedly from a pension plan? Or should that list be really restrictive and a hard test to meet? Mr. McLean: Yes, I think that we should be looking at a short list. I've heard various things tonight from the Honourable Minister Fielding about things that might qualify, including individuals going to the United States for health care.

I would suggest that this government should be looking to ensure that all health-care services are insured and provided in Manitoba rather than seeing pension plans as a potential vehicle for paying for health care. So, yes, I would say we should be looking at a very short list only for the most extreme circumstances. Mr. Lamont: Thank you very much for this presen - tation. For anyone who's talking about whether people are qualified to do investments, there was a company called Long-Term Capital Management in the 1990s.

It was created by two Nobel Prize- winning econo- mists and it needed a bail -out in the hundreds of billions of dollars from the federal reserve. And those were Nobel Prize- winning economists. So, lots of really smart people can make horrific mistakes and, in fact, create them. The one question I had actually relates to this–the one–I agree one hundred per cent, lots of this breaking out is not–shouldn't be happening. These are costs that should be covered one way or another by an emergency fund, ideally publicly. But is there –if we were to try to achieve a compromise, would there be a, like, a cap?

Like, let's say, would you allow –would it be feasible for–let's say you have an individual who has a particularly large pension fund that they can break into and get a part of, would that make–would that be– if you had a cap for–or, a threshold above that, people could break it out and below that they would get help. Sort of a means test. I'm just throwing it out there as a possibility. Mr. Chairperson: The time for questions is actually over. So we will now proceed on to our next presenter. Our next presenter is Mr. Paul McKie of Unifor. I will now call on Mr.

Paul McKie and ask the moderator to invite them into the meeting. Please unmute yourself and turn your video on. Mr. McKie, please proceed with your presen - tation. Mr. Paul McK ie ( Unifor): Thank you very much, everyone. And just to correct for the record my last name is pronounced McKie. Good evening. I'm here tonight representing Unifor, the largest private sector union in Canada. Our 315,000 members work coast to coast to coast in all sectors of the economy.

We represent about 12,000 Manitoba workers, including those in industries and companies with whom we have bargained a pension plan to ensure a secure retirement for Unifor members. * (20:00) I'm area director for Manitoba and Saskatchewan, as well as a servicing representative for Manitoba in charge of 16 collective agreements. For the past four years, I've also been chair and trustee of the Unifor Multi Employer Pension Plan, a national target benefit pension plan that's registered in British Columbia. I should note at the outset that we support the recommendations of our friends at the MFL.

Their report before you raises similar concerns that Unifor has on this legislation. After hearing the many excellent reports to the committee tonight, I almost feel like I should just say this is a really bad, bad idea, and don't do it, but I will continue with my presentation. I am certainly aware that certain actuarial and pension adminis trative companies, on behalf of employers' pension plans, have lobbied this govern- ment for years asking for solvency relief. It's certainly not too late to press the pause button and sit down with

130 LEGISLATIVE ASSEMBLY OF MANITOBA April 12, 2021 all the parties to come to a conclusion that satisfies everyone. Unifor's chief concerns have been those of others you've heard from this evening: (1) moving to a solvency rule that's less than 100 per cent, and (2) the changes for unlocking pension funds. We understand that COVID-19 has hit companies hard, including those that have pension plans for their employees. But temporary measures can be done without creating permanent change to Manitoba's pension landscape.

We were initially pleased to see the government seemed to have moved off its position of having an 85 per cent solvency rule in the bill. We are now greatly disappointed to hear that you're moving towards that 85 per cent through regulation. This does not help working Manitobans. We acknowledge that certain jurisdictions like Ontario or Nova Scotia did move to the 80 per cent – 85 per cent solvency rule. However, other juris - dictions, when moving to a rule, have offsetting provisions to protect workers' pension.

For instance, in BC, for one, uses a provision for adverse deviation, commonly called PF AD, which adds a layer of protection for the risk of a plan. We were concerned that–when we saw our earlier versions of this bill, which reduced solvency and had a solvency reserve account when most jurisdictions choose one or the other, but not both. We thought it was a positive move to see the lower solvency number off the table. I see it's back on the table and that we were wrong about that. And I don't understand why you're going for both measures.

Now, in the past, the Manitoba government has used temporary solutions to get through tough times. You did this to a paper mill that I serviced, the Canadian Kraft Paper mill in The Pas, formerly owned by Tolko. At least twice in the past 15 years, the Manitoba government offered temporary pension relief to the mill owners on the solvency payments that were required to be made. This was done most recently in 2016 to give new owners of the mill a breather for three years.

I note that this is on top of the averaging relief the Manitoba government offered the pension plans during the 2000s, when solvency payments could be averaged over 10 years rather than the standardized five, as long as more than one third of workers and retires and the plan did not object. Yet, even with protections in place, I've seen workers suffer when pension plans fail. I used to service a now long-bankrupt printing company called Datamark that, at the time of closure, was paying out a pension that was 50 cents on the dollar.

Loosening the rules we already have would make those types of situations more commonplace, endangering the pensions of Manitoba families. Again, when Ontario reduces solvency, they also had the Pension Benefits Guarantee Fund. That partially aids workers whose pension have been affected by insolvency. Remember, too, that pensions are not a gift from an employer. Most plans are in companies where a union represents workers. We've heard other speakers talk about the race away from DB plans to DC. That's certainly happened in non- union places.

It's even happened in the union sphere, but where you'll see the largest number of DB plans is in a unionized work environment. The money paid into pension plans by workers are deferred wages, ones which workers have already earned and are owed upon retirement. This is eve n true if this is a plan only funded by employer con- tributions. Workers forgo certain wage increases for those pension benefits. That is done on the promise the money will be there for a secure retirement.

We echo the call from the MFL for a Canada- wide mandatory pension insurance system so that people who've paid into a workplace pension plan are not robbed of their retirement security when companies go bankrupt. We are also concerned that the language on the SRA is vague and that details will follo w in regulation. When you are playing around with the future income of future Manitoba seniors, we need to see those rules upfront. Such rules also need to include the rules for plan sponsors withdrawing surplus from the SRA.

Unifor would like to see broad consultation with diverse communities on the SRA, and at a minimum we say there should be no withdrawal of surplus from an SRA by a plan sponsor without member and retiree consent. So now, let's look at the unlocking portion of this legislation. This is the part of the legislation that we frankly see no other purpose for than lining the pockets of the private investment industry. We've heard other speakers tonight talking about this. This is an attack on pension security without any obvious merit for the workers, nor is there any countervailing balance. If there are hardship cases

April 12, 2021 LEGISLATIVE ASSEMBLY OF MANITOBA 131 during our pandemic times, maybe instead there are temporary measures that can be carefully scrutinized instead of a blanket approach changing the legislation for all time. Again, we urge consultation with a diverse segment of the population. As written, the bill allows a worker to unlock 100 per cent of their pension savings at the age of 65.

This enhances the potential for fiscal retirement disaster because it puts worker s at risk of losing significant amounts of their savings in the case of market decline or recession at a time in their life when they're not going to be able to recover. Your own pension superintendent recognizes the risks in unlocking in the document on the Manitoba government website. I quote: Manitobans should be wary about possible illegal schemes being offered for unlocking locked- in money. The ads for these

Document details

Collection	Manitoba — Debates (Hansard)
Citation	42-3-la5
Type	hansard
Volume / chapter	42nd 3rd hansardpdf la5.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	a8e607e94899c66498b90f3564e1e72a3bd701a1

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