OTTAWA, Oct. 28 /CNW Telbec/ - In yesterday's announcement of pension reform proposals, Finance Minister Jim Flaherty has begun to address a broad range of important issues, but in the opinion of the Canadian Institute of Actuaries, he needs to dig deeper into the elements that will strengthen the legislative framework to solve fundamental pension funding problems and secure benefits for pensioners and plan members. As well, steps need to be taken to create a more positive environment that would encourage employers to set up or maintain Defined Benefit pension plans.
For example, raising the pension surplus threshold from 10 per-cent to 25 per-cent is an important piece of the puzzle. However, it is doubtful that plan sponsors will take advantage of this opportunity unless there is a mechanism in place that would enable sponsors to have greater access to funds not needed once adequate benefit security is provided.
If the Minister's proposals had included legislation that would allow employers to set up 100 per-cent employer-funded Pension Security Trusts, separate from, but complementary to, the regular Defined Benefit pension fund, plan sponsors would have been encouraged to fund their plans above minimum levels, thereby improving the security of benefits for pensioners and plan members. Without this measure, raising the surplus threshold simply will not have much impact.
We applaud Minister Flaherty for his leadership in announcing the pension reform measures yesterday. We are especially pleased to see that the first-ever meeting of Ministers of Finance and Ministers Responsible for Pensions is planned for December, with a goal "to ensure that all Canadian governments have a common understanding of the strengths and challenges facing the retirement income system in Canada."
On November 3rd, Robert Howard, President of the Canadian Institute of Actuaries, will be launching the profession's new pension position, "Retooling Canada's Pension System Now, For The Future," at a meeting of the Economic Club of Canada in Toronto. The Institute's thinking and recommendations for deeper pension reform will be made public.
The Canadian Institute of Actuaries is the national organization of the actuarial profession. The Institute is dedicated to serving the public through the provision, by the profession, of actuarial services and advice of the highest quality. In fact, the Institute holds the duty of the profession to the public above the needs of the profession and its members.
Actuaries employ their specialized knowledge of the mathematics of finance, statistics and risk theory on problems faced by pension plans, government regulators, insurance companies (both Life and Property/Casualty), social programs and individuals.
SOURCE Canadian Institute of Actuaries
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