OTTAWA -- The Canadian Department of Finance is floating the idea of a federal pension benefit guarantee fund, but the move is not endorsed by many experts.
The department's aim, in issuing a recent discussion paper, is to find ways to secure the retirement benefits of employees, in the event of a corporate bankruptcy or insolvency. The department, in the paper, also asked for input from the retirement industry on how to strengthen the legislative and regulatory framework for defined benefit plans registered under the Pension Benefits Standards Act of 1985.
While private pension plans are voluntary, they must generally be registered either federally or provincially. Private pension plans established for employees working in areas that fall under federal jurisdiction are subject to the pension law. The act covers about 1,200 pension plans; 428 of the federal plans are defined benefit plans.
"There is a broad range of challenges facing federally registered defined benefit pension plans in Canada," says an official with the Department of Finance who asked not to be identified. "Recognizing that pension reform is a complex issue that requires input from many stakeholders, the department is releasing this discussion paper at the present time to give as many participants the opportunity to put forward their views.
"So, in brief, we want the pension legislation to stay current. It was last reviewed in the mid-1990s. It has been 10 years already, so it's time."
The official said comments would be accepted until Sept. 15; the department then expects to develop more specific proposals.