Alterations and changes in Canadian defined benefit plan construction to keep those plans viable was the major focus for speakers at the Association of Canadian Pension Management conference.
Among the changes suggested at the conference, held Sept. 21-22 in Charlottetown, Prince Edward Island:
- Consolidation of DB plan investment management;
- Removal of the solvency funding requirement for corporate DB plans and moving to funding of plans based on a going-concern basis; and
- Looking at pension benefits in a broader sense, incorporating other income and benefit sources.
"The defined benefit model still works, but changes need to be made," said Allan Shapira, senior partner and managing director, Canada, at Aon Hewitt, Toronto. Wearing an "I heart DB" T-shirt, he quipped: "I have not seen anyone produce a 'I heart DC' shirt."
Mr. Shapira suggested that plans could follow the lead of Ontario, where the C$8 billion Colleges of Applied Arts and Technology, Toronto, assumed investment management responsibilities for smaller college plans in the province. The Toronto government also created the Investment Management Corp. of Ontario, to manage assets of smaller provincial plans.
He also pointed to the recently approved expansion of the C$287.6 billion Canada Pension Plan, Ottawa, as an example of sustaining and improving DB benefits.
"The CPP enhancement is a natural evolution of responsibility for retirement security from the private sector to governments," Mr. Shapira said. "What we need to ask is, 'Can we apply that model to the trades?'"