TORONTO, Nov. 3 /CNW Telbec/ - Canada's actuaries call for fundamental public policy measures by politicians and regulators to combat the erosion in Canada's pension system and to safeguard the financial security of millions of Canadians when they retire.
Noting the dire circumstances already faced by Canada's pension system, and the fact that the current economic crisis has made a bad situation even worse, the Canadian Institute of Actuaries has released a 10-point action plan designed to retool the system for the future.
"A healthy pension system is critical to the country. Millions of Canadians are not saving enough for their independent retirement, and those who are have seen the value of their savings melt away in the current financial crisis. Large funding deficits have emerged in a number of plans and pensioners and workers with firms that are facing bankruptcy are coping with having their pension benefits being reduced. The Canadian pension system needs to be retooled, and now," said the Institute's president, Robert Howard. "Our plan contains measures that help balance the concerns of pensioners, plan sponsors, politicians and others who are concerned with overhauling a system in need of major repairs."
Earlier today, Howard announced the Institute's 10-point position, titled, "Retooling Canada's Ailing Pension System Now, For The Future," during a speech to the Economic Club of Canada. The document observes that Canada's patchwork of regulations, legal decisions, tax rules, changes to accounting standards and other factors have all contributed to today's grim pension environment. Layer on these the impact of the current economic crisis on pensioners, plan sponsors and those planning for their retirement, and the case for governments implementing fundamental change becomes abundantly clear.
To address these issues, the Institute's Retooling position calls for the
1. Putting pensions on the national agenda with the goal of creating a
new environment that leads to maintaining and strengthening pension
2. Regulators should develop a principles-based approach to the
supervision and monitoring of pension plans.
3. Disincentives to working past a fixed age in our current retirement
system should be examined and rectified. Canadians should be able to
continue to work part-time past retirement while collecting partial
4. Canadians need better information, at an earlier age, to help them
understand the risk factors associated with retirement and how to
manage those risks effectively.
5. Pass legislation to allow employers to set up 100 percent
employer-funded Pension Security Trusts that would be separate from,
but complementary to, regular defined benefit pension plan funds.
6. Pass legislation to require each defined benefit plan to build up a
Target Solvency Margin.
7. Establish a task force, with representation from the profession and
pension regulators, to develop guidance on appropriate levels of
8. Change the tax rules to allow plan sponsors to develop larger
9. Pass legislation to protect underfunded pension benefits by according
them treatment similar to that of unpaid salaries in bankruptcy and
10. On a going-forward basis, legislation should be modified to better
handle the determination of benefits when the unfunded plan of a
bankrupt employer is wound up.
Says Mr. Howard, "Last week, the Federal government announced its intent to implement our recommendation about allowing larger pension surpluses. We are pleased with this development, but it is not enough. Had all of our proposals been in place prior to the recent crisis, pension funds would have been less threatened and some relief measures may not have been necessary. As well, the risk of members' pensions being cut back would have been reduced."
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
For further information: For further information: Josée Racette, (613) 236-8196 ext.107