Archived information is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Alastair Murdoch's Submission in Response to Finance Canada's Regulatory Framework for Federally Regulated Defined Benefit Pension Plans consultation:
I would be opposed to instituting a federally-sponsored pension-benefit guarantee fund for most of the reasons given in the list of drawbacks. I think it would allow employers to take a more cavalier attitude towards their funding responsibilities. The cost of the premiums would also encourage some employers to switch to defined contribution plans (not that this is necessarily a bad thing).
I think there is a perception that unions want their members to get a share of surpluses, even when its clear that they're the result of employer contributions, while expecting employers to be fully responsible for any deficits. And I suspect that this discourages some employers from creating surpluses.
I think pension plans should vest immediately. I think a growing economy requires a mobile labour force, and DBP tend to discourage mobility, and late vesting plans aggravate this problem. I gather this would also eliminate the question of partial plan terminations.
I don't think the solvency funding period should be extended past the current 5 years. As it is, any period appears to me to favour current workers over retired ones, and I'm not sure why that makes sense. In many cases, it's the excessive wage demands of current workers that have caused the employer to suffer financially, and so the current workers should take responsibility for the insolvency of the employer, rather than trying to push that back onto retired workers.
I agree that plan improvements should not further weaken an underfunded plan.
I agree that there should be full funding on termination. Again there is an obligation to retired members, who should not suffer because of current employer-employee disagreements.
Alastair Murdoch, CA, PhD