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 Quebec? Question 3: What’s next? 2
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 3
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 4
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) Note: The information presented is a high level summary which does not reflect various technical and transitional provisions. 5
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 • Note: The information presented is a high level summary which does not reflect various technical and transitional provisions. 6
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 7
What’s next? � Elements to be considered by stakeholders � Protection of accrued benefits � Governance � Respect of bargaining process � Complexity is expensive 8
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