Look into your pension plan todayArticle By: Gordon Pape
Canada’s private pension industry is in a crisis mode. Any doubts about that were dispelled in June when a study prepared for the Association of Canadian Pension Management estimated that our pension plans face a shortfall in assets of $225 billion. In real terms, this means that, unless something is done, many employer-union-association plans will not have adequate resources to meet their financial commitments to retirees.
Equity losses suffered during the bear market are partly to blame. Combined with low interest rates, which depressed yields on fixed-income securities, plan managers have found themselves unable to generate the investment returns needed to meet actuarial requirements.
Federal and provincial regulators are keeping a close watch on the situation and demanding plan sponsors top up deficient plans where necessary. However, if a company doesn’t have the money, there’s a real problem. One of the factors that drove Air Canada to seek creditor protection was an order that it make up a shortfall of more than $1 billion in its plan. With business crumbling, the cash-strapped airline was unable to comply.
This leaves plan members in a difficult position since they have no direct control over the situation. However, you aren’t completely helpless. Here are some steps to take if you have concerns.
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