1. Canadian Federation of Pensioners to Industry Canada Marketplace Framework Policy Branch May 28, 2013

2. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Agenda Canadian Federation of Pensioners DB plans: financial resource and risk Retirement income at risk Mitigating the risk Need for Reform Public Consultation and Review Process 1

3. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Canadian Federation of Pensioners Advocates on behalf of all Defined Benefit retirees to achieve fair and equitable pension security Members are retirees from major corporations including: Air Canada, Bell Canada, Chrysler Canada, General Motors Canada, Dupont/InvistaCanada, International Air Transport Association, Municipa lRetirees of Ontario, Nortel, Algoma, Stelco, Energy Professionals of Ontario Over 250,000 retiree members with extended reach to 600,000 Canadians in their families Ready access to 70% of members through e-mail 2

4. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Defined Benefit Pension Plans (DBPP) Greatest source of income for retirees Promised through lifetime of work But at risk if plans are underfunded Significant source of investment in Canada For domestic and non-domestic businesses Also, can be source of business risk Which can be shed through restructure/bankruptcy 3

5. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Pensioners Facing Pension Reductions or Loss 4 DBPP underfunding is common, and worsening Source: InfoPensions 08, November 2012, OSFI NEED ORiGINAL GRAPHIC.

6. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. DBPP Rensioner Risks are increasing 5 Pensioner Risk = Windup Shortfall 25% 20% 15% 10% 5% 0% 2007 2008 2009 2010 2011 ·Pensioner exposure to risk of pension loss increasing, and very significant Source: “Report on the Funding of Defined Benefit Pension Plans in Ontario”, 2008 though 2012, FSCO NEED Original GRAPHIC.

7. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Pensioners Risk Loss of Income - Ontario 6 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percent of Plans Underfunded ·9 of every 10 plans have a solvency deficiency ·Half are underfunded on a going concern basis ·Source: “Report on the Funding of Defined Benefit Pension Plans in Ontario”, 2008 though 2012, FSCO Going Concern Solvency SR<80% NEED Original GRAPHIC.

8. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Options to Correct Stronger funding rules would help So too would fixing the imbalance among creditors of company in trouble CCAA and BIA give no priority to pension amounts promised but not included in plan Among all investors, pensioners face the greatest of risks and severe loss with no recourse to recoup pension losses Pensioners have little to no ability to earn replacement income or rebuild savings when DBPP fail. 7

9. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Pensioner Protections in Canada Lag vs Progressive Countries Many nations provide priority via various mechanisms Corporate insolvency Preferred status – Secured/unsecured Separate private insurance Government insurance Source: Dr.Janis Sarra: A Comparative Study of 62 Jurisdictions 2008 8

10. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. International Initiatives Pension Trust Fund Treatment When Sponsor Insolvent 9 Country G8/OECD Sponsor Specific Fund Priority for Fund Arrears Priority for Underfunded Fund Guarantee/Insured/State FranceNo (Industry)Not Required Industry Insurance GermanyNo (Industry)UnsecuredNot RequiredIndustry Insurance JapanYesUnsecuredSecured (Priority) U.K.YesUp to 12 months prior BIA Unsecured U.S.YesN.A.UnsecuredLimited to $48K CanadaYesUp to $2000, Remainder Unsecured Unsecured NorwayYesSecured State Guarantee (Capped) SwedenYesSecured Insurance SwitzerlandYesSecured Insurance

11. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Scope of Retiree Quality & Security of Life Quality/ Security of Life (1-5) Groups Having Major Impact 5 4Employer/Unions 3Parents/Gov’t / Education 2ParentsPension/ Government 1 Longevit y (Years) 0-1010-2020-3030- 40 40- 50 50-6060- 70 70- 80 80+ 10

12. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Reforms needed for CCAA and BIA Acts Fairness calls for a rebalancing of the promised security needed by pensioners, with the security of Hedge /Venture Funds, Debt Holders, Bond Holders, Unsecured Lenders There is an unsubstantiated concern that providing higher security status to underfunded Pension Plans would increase cost of debt or hinder access to capital Has the government undertaken any study which would inform its BIA/CCAA reform in this regard? 11

13. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. CCAA and BIA Reforms Pension and Bankruptcy Legislation Lack Consistency PBSA requires terminated Pension Funds be fully solvent (5 years) (Pension Security) CCAA leaves Pension Funding at discretion of CCAA Courts (Discretion No Pension Security) BIA places Pension Solvency at level of unsecured creditor (No Pension Security). Reform is needed to allow CCAA and BIA to deliver on the objectives of the Pension Benefits Standards Act Help senior members of the Canadian community realize the security they have been promised by their employers 12

14. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. CCAA/BIA Review Opportunity BIA/CCAA are in process of 5 year review. Opportunity exists to engage interested parties in review of Legislation and make submissions. Effective Processes to assure fair and consistant participation Coordinated task force of interested parties. Appoint Deputy Minister to request and obtain submissions, as well as hold nationwide community meetings Engage Parliamentary Committees to take depositions from interested parties. Publish results and request comments Based on any or all of the above Share Government Analysis Prepare draft Legislation which would be commented on by interested parties. 13

15. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Need to Move Aggressively Now Industry Canada must move now. Assist Retirees to Obtain Fair and Equitable Treatment in their Twilight Years Develop process to identify critical issues. Consult on solutions to critical issue Draft and implement appropriate legislation and regulations to redress inequality in the treatment of senior citizens. 14

16. CONFIDENTIAL. © 2013 Tirna Partners Inc. All rights reserved. Need a Summary of points and Ask 15