The Pension Protection Act (Bill C-228) aims to protect workers' pensions in the event of company bankruptcy or restructuring. It amends the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act to give pension plans higher priority in the distribution of assets during bankruptcy proceedings. This means that claims for unfunded pension liabilities and unpaid group insurance premiums will be paid before other creditors.
The bill also amends the Pension Benefits Standards Act, 1985 to require the Superintendent of Financial Institutions to submit an annual report to the Minister on the solvency of pension plans. This report will include information on how well pension plans are meeting funding requirements and any corrective actions taken to address plans that are not meeting those requirements. The Minister must then table this report in Parliament.
There are transitional provisions that provide exceptions for employers and companies already participating in prescribed pension plans on the day before the Act comes into force. These exceptions last for four years after the Act comes into force, meaning the new rules will not immediately apply to them.
In short, this Act seeks to safeguard pension benefits for workers by improving their chances of receiving promised benefits when companies face financial difficulties and requiring more transparency of the funding status of pension plans.