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Bill S-253

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First Session, Forty-second Parliament,
64-65-66-67 Elizabeth II, 2015-2016-2017-2018
SENATE OF CANADA
BILL S-253
An Act to amend the Bankruptcy and Insolvency Act and other Acts and Regulations (pension plans)
FIRST READING, September 18, 2018
THE HONOURABLE SENATOR EGGLETON, P.‍C.
4211722


Summary
This enactment amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure that claims in respect of unfunded liabilities or solvency deficiencies of a pension plan are accorded priority in the event of bankruptcy proceedings.
This enactment also amends the Pension Benefits Standards Act, 1985 and the Pension Benefits Standards Regulations, 1985 to empower the Superintendent of Financial Institutions to determine that the funding of a pension plan is impaired and to prescribe measures to be taken by the employer in respect of the funding of such plan.
Available on the Senate of Canada website at the following address:
www.sencanada.ca/en


1st Session, 42nd Parliament,
64-65-66-67 Elizabeth II, 2015-2016-2017-2018
SENATE OF CANADA
BILL S-253
An Act to amend the Bankruptcy and Insolvency Act and other Acts and Regulations (pension plans)
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
R.‍‍S.‍‍, c. B-3; 1992, c. 27, s. 2

Bankruptcy and Insolvency Act

1(1)Subparagraph 60(1.‍‍5)‍(a)‍(ii) of the Bank­ruptcy and Insolvency Act is amended by adding the following after clause (A):
(A.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in sections 81.‍‍5 and 81.‍‍6 to liquidate an unfunded liability or a solvency deficiency,
(A.‍2)in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985,
(2)Subparagraph 60(1.‍‍5)‍(a)‍(iii) of the Act is amended by adding the following after clause (A):
(A.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in sections 81.‍‍5 and 81.‍‍6 to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament,
(A.‍2)an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament,
2(1)Paragraph 81.‍‍5(1)‍(b) of the Act is amended by adding the following after subparagraph (i):
(i.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in this section and section 81.‍‍6 to liquidate an unfunded liability or a solvency deficiency,
(i.‍2)in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985,
(2)Paragraph 81.‍‍5(1)‍(c) of the Act is amended by adding the following after subparagraph (i):
(i.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in this section and section 81.‍‍6 to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament,
(i.‍2)an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament,
3(1)Paragraph 81.‍‍6(1)‍(b) of the Act is amended by adding the following after subparagraph (i):
(i.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in section 81.‍‍5 and this section to liquidate an unfunded liability or a solvency deficiency,
(i.‍2)in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985,
(2)Paragraph 81.‍‍6(1)‍(c) of the Act is amended by adding the following after subparagraph (i):
(i.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in section 81.‍‍5 and this section to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament,
(i.‍2)an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament,
R.‍S.‍, c. C-36

Companies’ Creditors Arrangement Act

4(1)Subparagraph 6(6)‍(a)‍(ii) of the Companies’ Creditors Arrangement Act is amended by adding the following after clause (A):
(A.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that were required to be paid by the employer to the fund referred to in sections 81.‍‍5 and 81.‍‍6 of the Bankruptcy and Insolvency Act to liquidate an unfunded liability or a solvency deficiency,
(A.‍2)in respect of a prescribed pension plan that is terminated, an amount equal to the sum of all amounts that are required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985,
(2)Subparagraph 6(6)‍(a)‍(iii) of the Act is amended by adding the following after clause (A):
(A.‍1)an amount equal to the sum of all special payments, determined in accordance with section 9 of the Pension Benefits Standards Regulations, 1985, that would have been required to be paid by the employer to the fund referred to in sections 81.‍‍5 and 81.‍‍6 of the Bankruptcy and Insolvency Act to liquidate an unfunded liability or a solvency deficiency if the prescribed plan were regulated by an Act of Parliament,
(A.‍2)an amount equal to the sum of all amounts that would have been required to be paid to the fund by the employer under section 29 of the Pension Benefits Standards Act, 1985, if the prescribed plan that is terminated were regulated by an Act of Parliament,
R.‍S.‍, c. 32 (2nd Supp.‍)

Pension Benefits Standards Act, 1985

5Section 9 of the Pension Benefits Standards Act, 1985 is amended by adding the following after subsection (3):
Funding impaired
(4)Subject to the regulations, the Superintendent may determine that the funding of a pension plan is impaired.
Measures
(5) If the Superintendent determines that the funding of a pension plan is impaired, the Superintendent shall
(a)advise the employer in writing of the determination and of the prescribed measures that the employer is to take in respect of the funding of the plan; and
(b)direct the administrator of the plan to inform the members, former members and any other persons entitled to pension benefits under the plan, in the form and manner specified by the Superintendent, of the determination and the prescribed measures that the employer is to take in respect of the funding of the plan.
6Subsection 39(1) of the Act is amended by adding the following after paragraph (k.‍2):
(k.‍3)respecting the determination under subsection 9(4) that the funding of a pension plan is impaired, including the information that is to be disclosed in relation to that determination and any measures that are to be taken to rectify the impairment;
SOR/87-19

Pension Benefits Standards Regulations, 1985

7The Pension Benefits Standards Regulations, 1985 are amended by adding the following after section 8:
8.1(1)The Superintendent shall, based on the information provided under this section, consider whether it is in the best interests of a plan to make a determination, under subsection 9(4) of the Act, that the funding of the plan is impaired.
(2)An employer shall inform the Superintendent in writing, or in the form and manner, if any, that the Superintendent directs, of any proposed or actual decision of the employer, transaction or event, including the repurchase of shares of the employer or the payment of dividends to shareholders of the employer, that would result in the solvency deficiency of a plan exceeding the amount by which A exceeds B where
A
is the employer’s retained earnings; and
B
is any unsecured debt of the employer, not including debt relating to a solvency deficiency of the plan.
(3)An employer shall provide the information required under subsection (2) to the Superintendent within five business days after the day on which the employer becomes aware of a proposed or actual decision of the employer, transaction or event.
(4)An employer shall provide to the Superintendent, within the time and in the manner specified in the request, any other information requested by the Superintendent for the purpose of this section.
(5)An employer who is not the administrator of its pension plan shall provide the information referred to in subsection (2) to the administrator at the same time as it provided to the Superintendent.
8.2(1)The administrator of a plan shall, within 30 days after the day on which the employer provides information to the Superintendent under subsection 8.1(2), give notice of that disclosure, in writing or in the form and manner, if any, that the Superintendent directs, to the members, former members and any other persons entitled to pension benefits under the plan.
(2)The administrator shall provide to the Superintendent a copy of any notice given under subsection (1) along with proof of the date of delivery.
8Section 9 of the Regulations is amended by adding the following after subsection (4):
(4.1)Despite subsection (4), if the Superintendent has determined, based on information received under section 8.1, that the funding of a plan is impaired, and has notified the employer of that determination in writing, the plan shall, within 30 days from the date of the notification, be funded as follows:
(a)by a solvency special payment equal to the amount by which the solvency deficiency exceeds the amount of going concern special payments that are payable during the plan year; and
(b)if there is an additional solvency deficiency referred to in subsection (12), by an additional annual solvency special payment, payable from the effective date of the amendment and equal to the amount by which the additional solvency deficiency exceeds the going concern special payment in respect of the unfunded liability emerging from the amendment to the plan.
(4.2)The Superintendent may extend the period within which the funding required under subsection (4.1) is to be paid or establish a payment schedule if the Superintendent is satisfied that doing so would be in the interests of the plan members’ pension benefit security or continued employment.
Published under authority of the Senate of Canada



explanatory notes

Bankruptcy and Insolvency Act
Clauses 1 to 3:New.
Companies’ Creditors Arrangement Act
Clause 4:New.
Pension Benefits Standards Act, 1985
Clauses 5 and 6:New.
Pension Benefits Standards Regulations, 1985
Clauses 7 and 8:New.

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