Harper Government Begins Consultations on a Potential Target Benefit Pension Plan Framework
New option would encourage employers to offer employees a workplace pension plan with a predictable pension in retirement
April 24, 2014 – Ottawa, Ontario – Department of Finance
Minister of State (Finance) Kevin Sorenson today announced the launch of extensive consultations on a potential federal framework for Target Benefit Plans, or TBPs. TBPs would be a new, voluntary, sustainable and flexible pension option available to federally regulated private sector and Crown corporation plan sponsors, employees and retirees under the Pension Benefits Standards Act, 1985. This would not impact the core public sector pension plans which are governed by statutes such as the Public Service Superannuation Act, the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act.
The proposed TBP framework is designed to help ensure that effective, sustainable pension options are available to Canadians who work in the federally regulated private sector or Crown corporations. This innovative approach is intended to preserve and increase the number of employers that can offer employees an affordable workplace pension plan that has a predictable pension in retirement. The voluntary nature of the proposed framework means that all parties would be involved in the decision as to whether or not to adopt a TBP, and have a say in the design elements of the plan if they do.
A consultation document providing background information and outlining the parameters of the proposed TBP framework is provided to serve as a focus for the consultations. Individuals interested in participating in the online portion of these consultations over the next 60 days are invited to do so through the link at the bottom of this news release. Given the technical nature of these proposals, the Government will also be engaging industry experts and stakeholders.
- There were 1,234 federally regulated pension plans in Canada in 2013.
- TBPs would promote plan viability through their ability to adjust benefits and contributions to ensure the target benefit is met, and deal with surplus or deficit situations.
- Because benefits are targeted and benefits and contributions adjustable, TBPs would not have a solvency funding requirement.
- The proposed framework would allow for the conversion of both defined benefit as well as defined contribution plans into TBPs, should all parties consent, and would be available to any new pension plan created in the future.
- The proposed joint governance structure would reflect the risk sharing nature of a TBP and ensure effective representation of employers, members and retirees.
- The proposed consultations will not consider changes to federal public sector pension plans, which are governed by their own respective legislation. The Government has already taken steps to ensure that federal public sector pension plans are more in line with the private sector.
"Under the leadership of Prime Minister Stephen Harper, our Government has taken a range of effective actions to strengthen Canada's retirement income system. Today's launch of extensive consultations on a Target Benefit Plan framework proposes a valuable new and innovative option for federally regulated private sector and Crown corporation pension plans. Now is the right time to explore the introduction of Target Benefit Plans."
- Kevin Sorenson , Minister of State (Finance)
- Consultation Paper: Pension Innovation for Canadians – The Target Benefit Plan
- Frequently Asked Questions on Proposed Target Benefit Plan (TBP) Framework
Office of the Minister of State (Finance)
Department of Finance