Canada Passes Pension Bankruptcy Protection Bill

Bill will make plan members top priority when a company becomes insolvent.



Canada’s parliament has passed a bill that will give defined benefit pension plans “super priority” among creditors if the company sponsoring a plan goes bankrupt. The bill now goes to Canada’s governor general for royal assent, which has not been withheld in modern history, to make it law.

“An Act to amend the Bankruptcy and Insolvency Act,” the Companies’ Creditors Arrangement Act, Bill C-228, ensures that “claims in respect of unfunded liabilities or solvency deficiencies of pension plans and claims relating to the cessation of an employer’s participation in group insurance plans are paid in priority in the event of bankruptcy proceedings.”

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Bill C-228, which was passed by the House of Commons and the Senate, puts defined benefit plan members ahead of secured and unsecured creditors in respect to unfunded obligations. Under the bill, priority goes to the unfunded pension liability of private sector, single-employer, defined benefit pensions when a company becomes insolvent. The company will have to declare bankruptcy and either give priority to pension payout or transfer funds into the pension plan to make it solvent. The bill will also require a public annual report on the solvency of the pension fund prepared by the fund manager.

“This landmark legislation will protect millions of Canadians who rely on defined benefit pensions for their financial security in retirement,” Michael Powell, president of the Canadian Federation of Pensioners, said in a release. 

“Had C-228 been the law, the pensioners of Sears, Nortel, Groupe Capitales Médias, White Birch, and others would not have lost a third or more of their pensions,” the Canadian Federation of Pensioners’s release stated.

However, a statement from the Pension Investment Association of Canada last month “strongly disagree[d] that the super-priority approach proposed in Bill C-228 is the appropriate method to achieve pension security,” adding that it “could have significant impacts on pensions and businesses, and pose a threat to the sustainability of defined benefit pension plans.” 

In November 2022, the Association of Canadian Pension Management released an an open letter stating that the bill “has numerous flaws and has serious consequences for existing private sector DB plans.”

According to the ACPM, the bill would lead to the termination of many plans “due to increased costs and the burden of borrowing faced by plan sponsors.”

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Australia’s Future Fund Names David Bluff Head of Private Equity

Bluff joins sovereign wealth fund after 14 years at The Carlyle Group.




The Future Fund, Australia’s A$196.1 billion ($132.4 billion) sovereign wealth fund, has named David Bluff as its head of private equity.

 

Bluff, who will report to Alicia Gregory, one of the fund’s three deputy CIOs, was most recently a partner and managing director at investment firm The Carlyle Group before retiring in June 2022. He spent 14 years at Carlyle, where he was head of Australia and New Zealand and a member of the firm’s Asia Pacific leadership team.

 

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“We are delighted to appoint David to the role of Head of Private Equity,” Gregory said in a release. “He has deep investment experience across private markets globally and is a well-respected leader in our industry. David joins an experienced team overseeing a significant, global portfolio of private equity investments.”

 

Prior to joining Carlyle, Bluff worked at U.K.-based brewing company SABMiller, where he was responsible for acquisitions in Europe and the Americas. Before that, he was an analyst with J.P. Morgan’s mergers and acquisitions teams in Australia and the U.K. He earned a degree in commerce and law from the University of Queensland.

 

“It’s a privilege to join the Future Fund team and to participate in such a large and diverse portfolio at a time of significant change in global financial markets,” Bluff said in the release.

 

The Future Fund also hired Sarah Azzi to join its private equity team as a director. Azzi previously was an investment director at Anacacia Capital and was a member of Mercer’s private markets team covering global managers.

 

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