2005:03 Defined Benefits Pension Plans at Risk
Whereas:
A study by the Certified General Accountants Association of Canada asserts that almost 60% of defined benefits pension plans in Canada are in a deficit position and will require an additional $160 billion to cover pension plans’ current deficits and provide for future indexation of accrued benefits; and
Whereas:
The burden of this liability could push sponsors of the most seriously underfunded plans into bankruptcy, leaving the affected employees with sharply reduced benefits; and
Whereas:
Education of employers is needed in order to understand their obligations under employee pension plans, and education of employees is needed to help them understand what it is realistic to expect from a pension plan; and
Whereas:
The distribution of pension plan surpluses is contested by employers and employees and is thus not likely to encourage employers to inject extra cash into these plans beyond the minimum legislated; and
Whereas:
The Certified General Accountants Association of Canada has declared that there is still time to improve the sustainability of defined benefits pension plans; therefore, be it
Resolved:
That the National Council of Women of Canada (NCWC) adopt as policy that legislation and regulations ensure the sustainability of defined benefits pension plans; and
Resolved:
That the National Council of Women of Canada (NCWC) urge the Government of Canada to implement, as a matter of urgency, protection for defined benefit pension plans to ensure their sustainability; and
a. Strengthen the regulatory environment in order to require sponsors of employee pension plans to make additional payments in order to ensure sustainability;
b. Provide education to employers and employees (particularly their unions) to assist them to understand how employee-sponsored pension plans work;
c. Implement the changes necessary to bring about a simple regulatory environment, greater accounting transparency, and clearer responsibility;
d. Hold pension plan sponsors more closely responsible for investment decisions, subjecting estimated return on investment to a reality check and highlighting pension plan liabilities in corporate financial reports;
e. Take measures to clarify the ownership of pension surpluses and institute measures to encourage employers to invest in employee pension plans; and
Ensure that employee pension plans are set up as separate funds, not under the control of the company, and are therefore, protected from bankruptcy proceedings.