The Association of Canadian Pension Management releases detailed Target
Benefit Plans paper.
TORONTO, June 4, 2012 /CNW/ - Governments and stakeholders need to
embrace a wide range of innovative solutions if Canada's pension and
retirement income system is to remain viable. "Too many Canadians do
not have adequate access to efficient and effective plans to help them
prepare for their retirement," says Association of Canadian Pension
Management (ACPM) President Chris Brown, "and it is up to governments
and stakeholders to confront this issue directly. In our view, the
private sector must step up and play its part."
With this reality in mind, the ACPM is releasing its Target Benefit
Plans (TBP) paper* which outlines an innovative approach designed to
increase workplace pension plan coverage options for Canadians. This
announcement follows the ACPM's Institutional Defined Contribution (DC)
Pension Plan (released December 2010). These innovations stem from
the ACPM's Five-Point Plan** to improve retirement income coverage in Canada.
"Having options for accumulating retirement income is critical to
Canadians," said Mr. Brown. "We believe that viable and secure
workplace pension plans remain the best solution for a large portion of
Canada's workforce in providing for their retirement needs. Our Target
Benefit Plan paper puts forward an innovative concept, building upon
input from numerous stakeholders, that we believe will provide another
option for employers and employees to address the current shortfall in
retirement income planning."
The Target Benefit Plan (TBP) design could, at a minimum, help to manage
the market and interest rate volatility behind recent workplace pension
plan developments. Target Benefit Plans could help rekindle employer
interest in defined benefit-type models, offer greater benefits to
employees, help achieve public policy objectives of government and
benefit capital markets. Target Benefit Plans, as one of a number of
retirement income options, would give Canada one of the most
comprehensive pension systems in the world.
While Canada's three pillar*** retirement income system continues to be
ranked as one of the best in the world, it is critical that workplace
plans and individual retirement savings (the so called "third pillar")
be enhanced. This is widely recognized as one of the most effective
ways to enable more Canadians to provide for their retirements.
To that end, the ACPM has been a strong supporter of the Pooled
Registered Pension Plan (PRPP), proposed by the federal government,
which we hope will soon be implemented. ACPM has also campaigned, and
will continue to do so, for adjustments to certain pension rules
governing defined benefit (DB) plans in order to ensure their future
viability. The next step to improving the retirement income scenario is
ACPM's Target Benefit Plan paper. This document identifies contributing
factors to declining employer sponsored pension plans and proposes an
innovative additional option for employer and employee consideration.
"Planning for one's retirement can be both challenging and complex,"
said Mr. Brown. "It is incumbent on both governments and the private
sector to provide a wide range of options tailored to the circumstances
and needs of a wide range of individuals in planning for their
retirements. This requires innovative solutions that make it as easy
as possible for Canadians to save for their retirements. Target
Benefit Plans are one such solution."
The support for Target Benefit Plans is growing. On April 30, 2012,
British Columbia introduced Bill 38, Pension Benefits Standards Act, for first reading. A key element of Bill 38 is the inclusion of Target
Benefit Plans. Prince Edward Island has recently initiated Bill 41, Pension Benefits Act, which allows TBPs as well. Most recently, New Brunswick has
introduced Bill 63 which contains the concept of a "shared risk plan".
Similar legislation is expected in other provinces in the near future.
The ACPM Target Benefits Plan paper could assist governments in
designing additional innovative workplace registered pension plan
options for employers and employees. "Target Benefit Plans are intended
to add to, not replace, existing single employer Defined Benefit (DB)
plans, as well as traditional Defined Contribution (DC) plans or new
plan types like the Pooled Registered Pension Plan," affirms Mr. Brown.
"In a Target Benefit Plan, contributions and benefits are fixed
according to a pre-determined formula (as in DB plans). Employers are
not required to make additional contributions, and benefits are
adjustable up or down should future conditions impact the amount of
funding in the plan."
The ACPM believes that Target Benefit Plans, if properly designed and
implemented, can have features that may make them more appealing to
employers and employees than some other retirement income arrangements
and encourages governments to consider TBPs as a valuable retirement
The Association of Canadian Pension Management (ACPM) is the informed
voice of Canadian pension plan sponsors, administrators and their
allied service providers. Our members represent over 400 pension plans
consisting of more than three million plan members, with assets under
management in excess of $330 billion.
(*) ACPM Target Benefit Plan Paper
(**) Improving Retirement Income Coverage in Canada - The ACPM Five
(***) Canada's three pillars are Pillars One & Two - OAS, GIS & Canada
Pension Plan/ Quebec Pension Plan (CPP/QPP); and Pillar Three,
workplace plans and individual savings
SOURCE Association of Canadian Pension Management
For further information:
Ric Marrero, Director of Marketing and Communications, ACPM
416-964-1260, Ext. 223 or 416-523-9518 (cell) or firstname.lastname@example.org