Shared-risk plans much more sustainable, but should be applied to entire public service
TORONTO, April 24, 2014 /CNW/ - The Canadian Federation of Independent Business (CFIB) supports federal government consultations on more sustainable pension plans for federally-regulated industries and crown corporations. However, CFIB is disappointed that the targeted benefit plans, which share risk between employers and employees, would not apply to the core public service, where this kind of plan is badly needed to address massive unfunded pension liabilities.
"With the private sector moving quickly away from traditional defined benefit pension plans, a shared risk model will be a terrific addition to Canada's pension landscape," said CFIB president Dan Kelly. "A shared risk plan could also help taxpayers get out from under massive unfunded pension liabilities, such as the $6.5 billion liability at Canada Post alone. We hope the federal government doesn't stop with Crown Corporations and considers moving the core civil service to a less costly shared risk pension plan."
Pension options like the targeted pension plan can allow organizations the flexibility to adapt plans when investment returns vary. This approach not only brings greater financial certainty for employers and taxpayers, it also offers increased stability for employees, who know that their pensions will continue to be fully funded. This differs from the defined benefit approach still broadly used in the public sector, in which fluctuations in investment returns regularly cause sizable funding shortfalls.
"Small business owners and their employees can only dream of the type of pensions offered in the public service and many crown corporations, so this is a small but important step in the right direction to bringing some fairness to Canada's pension system," added. "We hope the new plans will be used to reduce the risk to taxpayers of the billions in current unfunded pension liabilities for federal and crown corporation employees."
CFIB is Canada's largest association of small and medium-sized businesses with 109,000 members across every sector and region.
SOURCE Canadian Federation of Independent Business