Canada's actuaries tell governments that the reform of the Canadian pension
system needs to be deep
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,
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
To address these issues, the Institute's Retooling position calls for the following measures: 1. Putting pensions on the national agenda with the goal of creating a new environment that leads to maintaining and strengthening pension plans. 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 retirement benefits. 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 solvency margins. 8. Change the tax rules to allow plan sponsors to develop larger surpluses. 9. Pass legislation to protect underfunded pension benefits by according them treatment similar to that of unpaid salaries in bankruptcy and restructuring proceedings. 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
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.
actuaries.ca
For further information: For further information: Josée Racette, (613) 236-8196 ext.107
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