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Pension Plan Funding Challenges
Three simple questions… Question 1: Which challenges? Question 2: What has been done in Quebec? Question 3: What’s next?
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BC Pension Leadership Forum The Pension Policy Agenda for Canada - - PowerPoint PPT Presentation
BC Pension Leadership Forum The Pension Policy Agenda for Canada - - PowerPoint PPT Presentation
BC Pension Leadership Forum The Pension Policy Agenda for Canada Maurice Parent, FCIA FSA Partner February 22, 2018 Pension Plan Funding Challenges Three simple questions Question 1: Which challenges? Question 2: What has been done in
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Which challenges?
Low interest rates Significant solvency deficits Volatility of contributions Minimum funding and benefit security trade-off Level of cost and risk sharing Equity Governance
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What has been done in Quebec?
New legislation for all types of plans
- Municipal sector
- University sector
- Multi-employer plans
- Target benefit plans (pulp and paper industry only)
- Private sector
- Member-funded pension plans
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What has been done in Quebec?
- Changes to accrued benefits:
Municipal sector: Active members assumed 45% to 50% of their accrued going-concern deficit and elimination of automatic indexation University sector: Reduction required under certain circumstances MEPPs: Reduction if negotiated contributions below minimum funding requirement All sectors: Termination of employment benefit equal to solvency commuted value multiplied by solvency ratio (optional in some cases)
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Note: The information presented is a high level summary which does not reflect various technical and transitional provisions.
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What has been done in Quebec?
Changes to funding requirements:
Elimination of requirement to fund solvency deficit Funding based on GC plus an explicit PfAD (between 5% and 20%) GC deficit paid over 10 years in private sector Municipal and university sectors:
- Service cost and future deficits shared 50/50
- Limit set on current service cost
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Note: The information presented is a high level summary which does not reflect various technical and transitional provisions.
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What’s next?
Legislation for TBPs (except BC and AB) Pension reforms in most provinces Revision of multi-jurisdictional agreement Mandatory adoption of a funding policy for all pension plans in Quebec Possible changes to commuted value basis determined by CIA for TBPs
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What’s next?
Elements to be considered by stakeholders
Protection of accrued benefits Governance Respect of bargaining process Complexity is expensive
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