What have your lives been like since October when the panel was created?
Scott: For me, it’s been terrific. Way more work than we thought. Getting six people around a table to agree on things is a challenge at the best of times. But we just had two days of meetings in Victoria. It’s been an eye-opener in terms of the materials we reviewed and the dialogue that’s gone on. It’s been a real learning experience.
And Chris?
Chris: It’s definitely been an experience. One of the challenges with this sort of legislative review process is that there’s no one right way to do it. It’s like pension governance in that sense. It was really up to our panel to design a process within the scope of the mandate that the two governments gave us and within the time frame. So that’s been a challenge, to come up with a process that works for both the panel members themselves, to make sure that the work can actually get done on the timeline that we’ve committed to, as well as one that works for the pension community. So that’s been a challenge—to juggle those sorts of time frames with our day jobs because, at the end of the day, the governments in these two provinces, having chosen to go with an expert panel, knew that they were engaging six people who were there because of the experience and expertise they bring from their day jobs. They knew from the start that it was going to be a juggling act for all of us.
Tell me about the mandate and scope of the panel. Can you give me a sense of just how broad this scope is? I get a sense it’s quite a bit broader than what they’re doing in Ontario.
Scott: It’s quite a bit broader. We don’t have, for instance, the primary focus to review the defined benefit (DB) system in Ontario so ours would certainly include that, but we’re not restricted to that. We’ve been looking at ongoing practical issues, the affordability and feasibility issues, and how to make the legislation easier perhaps. But how do we increase coverage in these provinces? How do we make Alberta, B.C. attractive as places for investment? So we’re looking at the impacts of pension plans on the capital markets. Far wider mandate. On the one hand, you say, ‘Terrific, that’s great, we’re not so restricted.’ But it’s so wide that you’ve got to pinch yourself a little bit and say, ‘What’s realistic here?’
Chris: I think there was recognition by both governments that there was a real need, not just to tinker with the existing system but rather to go back to first principles and really look at why we have registered pension plans in these two provinces and across the country. And then to assess whether the legislation that’s been in place for the last 20 years or so in Alberta, and 15 or so in B.C., is really doing one, what it was intended to do and two, what it needs to do in the current environment. Obviously, things have changed both in the economy, in society and in pension plan operations themselves since the ’80s and early ’90s when that legislation was put in place. So there was a real need recognized by the governments, and certainly endorsed by the six of us on the panel, to go back and look at it. We tried to reflect that in our discussion paper, starting with some of those more fundamental concepts and then drilling down into the more detailed issues. And I suspect that, notwithstanding their mandate in Ontario, Mr. [Harry] Arthurs [Commissioner of the Ontario Expert Commission on Pensions] and the rest of his advisors have had to think along similar lines. I don’t think you can simply assess the DB system in isolation from the rest of the pension system and expect to come up with a new system going forward that takes it all into account.
The panel is really designed to go beyond what is already in place. How much leeway have you been told you’ve got here?
Scott: Well, they’ve been very hands off so far. Nobody’s told us we can’t go anywhere, other than what our appointment says. I don’t feel restrained in any way by our mandate. We are trying to look at everything.
Chris: That’s absolutely true from my perspective as well. We had some fairly frank discussions with the representatives from the two governments early on in our process, asking them those very questions. And they were very supportive of going right back to first principles and making sure that we’re getting this all right.
The six people on the panel are from very diverse backgrounds. What’s been the dynamic on the panel so far?
Scott: I would say it’s been very co-operative. We’ve had our issues. You get six people around a table on a topic such as pensions, you’re going to have divergent views. But by and large they’ve been extremely co-operative. We have had some issues to sort out as a group. I’d say we’re working in the right direction for the right reasons.
Chris: I can’t speak more highly of the other five members of the panel. They are all highly devoted to the issues, very engaged and bring top-notch input to virtually every issue we’ve touched on thus far.
What’s been the most contentious issue so far?
Chris: We’re not yet at a point where we’re nailing down with certainty all of the final components of our recommendations. We’re still fairly early on. But I think what we have seen emerge through our own internal discussions, as well as through the submissions that we’ve received to date, are a number of themes or common issues that are clearly of concern both to the panel members as well as to the pension community at large. They range from the obvious ones, like the whole interplay of surplus issues, funding issues and benefits security—that whole debate, to other things like governance issues, investment issues. It’s running the gamut that I think you would expect. But it’s also focusing in on what’s really important.
Scott: What has struck me is the ability of the group as a whole to be prepared to have their preconceived notions challenged by other panel members. We have a very open-dialogue approach. So that’s been a breath of fresh air.
Chris: It was striking to me in these last couple of days in Victoria that we would start on an issue, and I think we all thought we were at one viewpoint on, and then by the time we had talked our way through it, we had almost come around to a completely different perspective. It was very interesting. It’s quite a process to go through when you’re challenging those fundamental principles.
Scott: And I think we also had preconceived notions of one another’s views, just knowing where we each come from. I’ve seen people with views quite different than what you might think on certain areas and predictable views on others but, again, that’s to be expected, I suppose. I don’t think I’d anticipated the extent to which people have other views that you wouldn’t have thought about.
Submissions were due at the end of February. What’s your overall impression of them?
Scott: My impression so far is that we’ve been pleasantly surprised by the number of submissions (I think we’ve got 110 so far), the breadth and thoughtfulness that’s gone into a lot of them. People have worked really hard on some of these submissions. Some of them zero in on two or three issues and that’s it. They didn’t answer all of the questions, nor did we expect everybody to. But we’ve been really pleased with the response we’ve received so far.
Chris: Yes, absolutely. The quality of thought that has gone into them is extremely gratifying from our perspective of having put out a discussion paper with what was admittedly a reasonably tight deadline to hear back from people. As Scott said, some of the submitters have gone as far as to answer each and every question in our discussion paper. But we thought we had made it clear that if the constituent had really only one or two concerns, we wanted to hear those, too. We heard from a broad group of people who were zeroing in on one or two key points that affected their pension plan or their view of the pension world. But at the end of the day, the quality and, obviously, the considerable time and effort that went into putting those submissions together, is very impressive.
How broad were the stakeholders that did put forward submissions?
Chris: We’ve heard from everybody—from individuals who are members of pension plans, individuals who are retired members of pension plans, an entire stakeholder community within the multi-employer plan world that was very well represented. We’ve heard from individual unions, individual employers, law firms, actuarial firms, as well as industry associations. It really runs the whole gamut.
The submissions you get from individual pension plan members or retirees would take on a different tone than those from, say, actuarial firms.
Scott: Absolutely.
Chris: It’s obviously input that we as panel members need to hear. These plans that we’re trying to come up with a perfect system for, obviously, at the end of the day, impact people on the individual level. So we were very gratified to get that content as well, and not just from those you would expect within the professional firms or the industry organizations and labour organizations.
Scott: Right down to handwritten notes. Somebody just put it down on a piece of paper and dashed it off. And their views are clear.
Chris: That says to us that the message has gotten out, that this process is going on, which is key, as well as that these issues are important to a huge spectrum of society within Alberta and B.C.
Were there any surprises among the submissions? Do any in particular stand out?
Chris: The challenge that we tried to lay down in our discussion paper was just to say, ‘Look, we think we understand what the long-term positions are of most constituencies, but what we’re looking for is your help. We need help to come up with, as our paper says, practical, affordable and feasible solutions, to move the system forward.’ The entrenched positions have led to the status quo that we have today, and there’s a pretty clear recognition that the status quo isn’t good enough anymore. So a number of the submitters took that challenge and really gave us not only their views—because we expected and understood and appreciate those views—but then went the next step and said, ‘Here’s something we think you can do—recognizing some of the challenges of competing views—to address these issues.’
Anything you hadn’t heard before?
Scott: There are nuggets of ideas that we perhaps have been bouncing around in our heads prior to this appointment. We’ve all got our pet ideas. I think everybody had some of that. But there were a few ideas that you’ll read about that are, I think, rather novel. Whether we adopt them or not or recommend them, I don’t know yet. There was some significant thinking out of the box in terms of how you deliver the pension deal and how you administer it.
Are you at liberty at this point to give an example?
Scott: I’m a little reticent to get into that because again, it’s not on the website yet. Put it this way, there are constituents out there who are truly caring about the fact that we’ve got to increase coverage and make it easier for people to establish and, most important, maintain pension plans—whether they be DB or DC—and they are trying to come up with some ideas to help us make those recommendations that are politically feasible and certainly affordable. And that was a breath of fresh air, to know that these significant players are prepared to put their ideas on paper with potential fallout for some people.
How do you as co-chairs and as a panel take all these disparate perspectives, positions and recommendations to come up with a recommendation for a suitable path for reform?
Chris: What we’ve been doing thus far is trying to identify the key or core themes. And then we are very ably assisted by representatives from the Ministries of Finance in both Alberta and B.C. They have been an invaluable resource to us in synthesizing the unending information that was available before this process even got started, trying to distill down the competing views and at least lay out for us what the options are to be considered. And then the panel is going through a process—and it’s ongoing—of looking at all those competing views, synthesizing what’s in our submissions and then debating it internally. What we’re trying to accomplish through that process at this stage of our proceedings is to give us a basis on which to, going forward, engage some of the people who have made the submissions and help us to go into meetings with them prepared to debate some of the key issues, and really have people challenge their own assumptions. At the end of the day, we hope we can distill it all down and try to come up with something that meets the standard of practical, affordable and feasible that our mandate has given to us.
Scott: I would concur with all of that. It is a process. We are challenging each of us to, in many respects, answer some of the questions we posed to the constituents and asking ourselves, ‘How would we answer it?’ That process has been invaluable as well because we do that across the table and challenge one another’s conclusions. Why do you come to that conclusion? What’s the impact of that change on other aspects of the pension system?
Chris: It’s been an incredibly interesting process for the six of us internally to turn around and try to answer for ourselves those questions that we put in that discussion paper to elicit answers from the pension community. It’s one thing to come up with the questions, but we didn’t think it was fair if we didn’t take a crack at them on our own. That, then, gives us a baseline from which to consider the submissions made.
You’re also reviewing the pension systems and standards of two different provinces. How much more challenging does that make it?
Scott: It adds a level of complexity, obviously. These two Acts are more similar than they are dissimilar. That’s not too bad. It’s been very helpful to have representatives from each respective Ministry of Finance in the room. They’re knowledgeable people both on policy and detail on pensions. The challenge now, of course, will be to reconcile, to the extent that we can, the two Acts. Harmonize. It’s certainly been a challenge. But we haven’t spent a lot of time on the specific details yet of the two Acts. We’re not quite there yet.
Chris: I think we envisioned that before this process is done we’ll do more of that. We want to get a baseline of what we think of the fundamental issues. One of the things we’re envisioning, though, is comparing and contrasting the two Acts on each particular point, seeing how it’s dealt with in the two provinces and then, from the harmonization perspective, trying to decide whether one or the other is better, or whether something entirely new is more appropriate to address the particular issue. It’s our goal to come up with recommendations of equal application to the two provinces. And we think we can get there.
In terms of the submissions, are there any no-brainers, things that everybody agrees on?
Scott: I’d be careful in saying there are no no-brainers. Everything we’ve looked at, you make an assumption that it can be fixed. The minute you say that, you have to think about its impact on another area of pension reform or pension standard. There are some things that come to mind. But I haven’t had a no-brainer yet.
Chris: It was striking to me that in these common themes that are coming through in the submissions, on certain issues, there may be 90% or 95% of people saying, ‘Take this view.’ And then there’s always going to be one or two or however many small number saying, ‘Wait a minute, you need to think about this.’ I’d agree with Scott that nothing in this area seems to be a no-brainer. There are clearly majority views on certain points that are coming through loud and clear. But I don’t think on very many points at all, there’s uniformity of thought at the 100% level. A number of the submissions point out day-to-day administrative headaches created by the legislation, and some of those may be the types of things that are reasonably easy to resolve in the short term. And certainly we’re going to be taking a look at those in addition to the broader issues.
Currently you’ve got consultation meetings on your agenda. Are they of a public nature or are they going back to some who submitted to clarify and debate?
Scott: Very much the latter. We will be meeting with as many submitters as we need to. That was part of what we were doing in Victoria—identifying groups from all the constituents that we just listed and follow up, particularly on ideas they had, questions they had, challenge them as well on some of their conclusions so that we both understand it and they walk us through their thought process. That will be happening as soon as possible in Edmonton, Calgary and Vancouver.
How are things progressing in terms of the overall process? Are you still on track to report this fall?
Scott: That’s our goal.
Chris: One of the reasons that open public consultations weren’t particularly practicable was the condensed timeline. But we think we can achieve what we need to achieve through these consultation meetings. That will then leave us sufficient time—from some time in June through August—to get our thoughts together and get it all down on paper. And then by September, hopefully, we’ll be into tweaking some final drafts with a view to getting it to the Ministers of Finance by the end of September.
Scott: We may be naive in saying, ‘Yes, we’re going to meet our deadline,’ but we have every intention of doing so.
Chris: Nothing has happened thus far in the process that would lead us to the conclusion that it’s not doable.
Have you been in contact with the other Expert Panels in Ontario and Nova Scotia?
Scott: We met with Harry Arthurs early on in the process. We spoke with him a second time a couple of weeks ago, and we have plans to meet with him and his advisors in April to compare notes and learn from one another. Nova Scotia, we’ve reached out to them, [but] we haven’t actually spoken with them. They’re very early stage.
Chris: It was interesting to meet with Mr. Arthurs back in the very beginning of our process. Obviously, he was well down the track in his by that stage. And it was very valuable, from our view, to get his perspectives on the process that he’s going through. It certainly gave us some nuggets of insight that we’ve incorporated into our process. At the end of the day, our mandate is obviously specific to Alberta and B.C., but we can’t, in this country at this point in time, expect that we can resolve these issues in isolation from one another and expect to have the type of nationwide system that everyone would like to see someday. So there’s certainly recognition that some dialogue is appropriate.
So we can’t expect harmonization any time soon?
Scott: Well, that’s up to governments across this land. As you know, from looking back at reforms in Ontario and elsewhere, this is not an easy thing to agree on. The constitutional challenge alone between provinces and the federal government in this area is one that is sacred territory for some, perhaps, more than others. We’ve been very lucky in many respects to be able to read and digest a lot of the material that’s coming out of Ontario—I’m sure you’re aware of all the academic papers that were produced. We’re grateful that Ontario had the budget and the time to engage these academics because, again, there’s some wonderful material in there. We are reading the Ontario submissions as well. Some of them, of course, are more valuable than others because they’re very specific to the DB world, but that’s been, I think, a real eye-opener for the panel. As we read, we’ll phone one another and say, ‘Have you read so-and-so’s paper?’ Then we talk about it.
It’s one thing to make recommendations; it’s another thing to have them implemented. How confident are you that the governments of Alberta and B.C. will heed your recommendations?
Scott: In fact, that is one of the questions I had when I was approached on whether I wanted to join this panel. I asked the question, ‘How motivated are they?’ I don’t want to spend 10 months of my life on a project that’s a political exercise. The assurances we’ve received so far have been consistently supportive of taking what we do seriously.
Chris: I think so long as we come up with solutions or recommendations that are balanced and are reasonable, I think the government understands and appreciates that they appointed industry experts for a reason. This isn’t a political process, it’s intended to get at what the community wants and needs in order to see the pension system improve and flourish. I have certainly been led to believe that these two provinces are willing to be leaders in the country in that regard.
What is going to be your biggest obstacle between now and the fall?
Chris: Ultimately, it’s simply getting through the mountain of information that has been presented and is otherwise available to us and synthesizing it into cogent recommendations. Not an easy process by any stretch of the imagination, and I wouldn’t want anyone out there to think that it is. There are lots of divergent viewpoints and we’ve taken up the challenge. But, at the end of the day, it is a challenge. I think that will be the biggest obstacle, but we’re committed to getting there.
Scott: I would concur with that. Again, there are so many issues to address that our challenge will be sorting out those that need the most attention sooner and recognizing those that are perhaps more medium to long term, and still addressing them, but being realistic about what can happen in a reasonably shorter period of time. That’s the big challenge in my mind, getting the immediate stuff onto the table and recognizing that some of the other issues are going to take time.
Chris: We see there being shorter- and longer-term issues to be dealt with here. And to the extent we can come up with some short-term recommendations that make people’s lives easier in the short run and help preserve the system, so much the better. Then the longer-term issues, obviously, may require further discussion and debate down the road. We hope to come up with brilliant final answers, but who knows? At least if we can address some of the practical issues in the short term and then encourage the governments to deal with the longer-term issues, I think we’ll have succeeded in our efforts.
Submissions are available online at http://www.ab-bc-pensionreview.ca/.
Don Bisch is editor of Benefits Canada and Brooke Smith is associate editor of Benefits Canada. don.bisch@rci.rogers.com; brooke.smith@rci.rogers.com
For a PDF of the original article that appeared in the magazine, click here.
