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Minister of Finance Jim Flaherty leaves the House of Commons following question period on Parliament Hill in Ottawa, Thursday, Oct. 8, 2009. (Sean Kilpatrick  / THE CANADIAN PRESS) Finance Minister Jim Flaherty smiles as he waits to appear before the Finance Committee on Parliament Hill in Ottawa, Tuesday October 27, 2009. (Adrian Wyld / THE CANADIAN PRESS)

Feds introduce greater protections for pensioners

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CTV News Video

CTV National News: Robert Fife on the reforms
The Harper government announced a number of new measures designed to provide protection to pensioners and address problems with under-funded pension plans at a number of companies.
CTV News Channel: BNN's Kim Parlee
Kim Parlee outlines how the government's pension reform will impact companies affected by the recession and how it will impact certain sectors of the markets.
Power Play: Finance Minister Jim Flaherty
The federal finance minster outlines the government's plans for pension reform and says it is still a work in progress and they are ensuring that it provides more security for Canadians but it does concern him that over 80 per cent of Canadians are without pensions.
Power Play: John McCallum and Wayne Marston
The Liberal finance critic says the government's pension plan has failed the country's top priorities both in the long and short term and all Canadians should have retirement security. NDP MP Wayne Marston agrees that the feds have fallen short of their promises on pension reform.
CTV News Channel: Ian Lee, Carleton University
A professor with Carleton University says the changes made by the government on pension plans are far reaching and do address some of the demands made by pension advocates and opposition parties.

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Minister of Finance Jim Flaherty leaves the House of Commons following question period on Parliament Hill in Ottawa, Thursday, Oct. 8, 2009. (Sean Kilpatrick  / THE CANADIAN PRESS) Finance Minister Jim Flaherty smiles as he waits to appear before the Finance Committee on Parliament Hill in Ottawa, Tuesday October 27, 2009. (Adrian Wyld / THE CANADIAN PRESS)

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Finance Minister Jim Flaherty smiles as he waits to appear before the Finance Committee on Parliament Hill in Ottawa, Tuesday October 27, 2009. (Adrian Wyld / THE CANADIAN PRESS)

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Date: Tue. Oct. 27 2009 3:25 PM ET

Finance Minister Jim Flaherty introduced a new pension reform package Tuesday that will include greater protection for pensioners, but will affect only a small number of them.

Flaherty introduced the new measures prior to his appearance at a house finance committee meeting on Tuesday afternoon.

The package calls for a number of reforms, including increasing the amount that plans can be overfunded from 10 per cent to 25 per cent to protect them from becoming underfunded during times of recession.

It will also require companies who shut down plans to pay out all benefits they owe their workers, rather than cancelling the plans with deficits.

And companies will no longer be allowed to take a contribution holiday unless the plan has a funding cushion of five per cent.

The reforms are designed to address problems, including dramatic pension shortfalls, that arose when the worldwide financial crisis hit last fall. Experts have estimated that pensions have become underfunded to the tune of $50 billion.

"These reforms will provide enhanced benefit security for workers and retirees while allowing pension plan sponsors to better manage their funding obligations as part of their overall business operations," Flaherty said in a news release.

Most of the reforms, except for the overfunding rules, will only apply to the 12 per cent of private sector pension plans in federally regulated industries, such as airlines and telecommunication companies.

The reforms don't cover the majority of pension plans that fall under provincial jurisdiction, nor do they address what happens when a company declares bankruptcy.

Workers at Nortel Networks, whose pension plan falls under provincial jurisdiction, fear they will lose their pensions as the company goes through bankruptcy proceedings and sells off its assets.

An unnamed government official told The Canadian Press that Flaherty will discuss more comprehensive reforms at a December meeting with provincial finance ministers in Whitehorse.

"This is a step in the process, it's an important step but it's not a panacea," the official said.

With files from The Canadian Press

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