Achieving much-needed reforms to workplace pension plans will require creating a national forum of regulators and stakeholders, according to a recent study by the C.D. Howe Institute.
Seeking Certainty in Uncertain Times: A Review of Recent Government-Sponsored Studies on the Regulation of Canadian Pension Plans
, pension experts Bob Baldwin and Brian FitzGerald review the findings of three provincial inquiries into the problems of workplace pension plans and make recommendations for reform.
The need for reform of the regulation and design of workplace pensions for Canadians sparked three major provincial reviews by Ontario, Alberta and British Columbia, and Nova Scotia between November 2008 and January 2009. The provincial inquiries were motivated by such issues as declining coverage, the financial problems of defined-benefit plans, the emergence of hybrid alternative plan designs, the lack of harmonization and a common legal framework, and unresolved legal and regulatory issues.
It's time to fix the problems of workplace pension plans, the authors point out. While Canadians with incomes below half the average wage are generally well served by government plans (CPP/QPP), those with moderate and higher earnings depend on workplace plans and/or personal savings to avoid substantial drops in their living standards in retirement years, note the authors. The Ontario report suggests letting large pension plans and funds offer investment and administrative services to small organizations and individuals, and raises the possibility that a proposed provincial pension agency would do likewise. The Alberta-British Columbia and Nova Scotia reports propose new provincial pension plans with differing opt-in and opt-out features. The authors believe these ideas deserve serious consideration.
Other important areas of reform include delineating the difference between "promised" and "target" benefits; making funding rules more consistent; and regulatory and governance changes.
for the study.