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Federal government completes "target benefit pension plan" consultations

Topics: - Pensions
Jurisdiction: - Canada/Federal

The federal government issued the news release below yesterday (June 25, 2014) regarding the target benefit pension plan consultations that it commenced in late April 2014.

Target benefit pension plans - also known as shared risk plans - represent an alternative to defined benefit or defined contribution pension plans.  Several provinces have already passed legislation providing for target benefit pension plans, but in many cases that legislation is not yet in force.

Harper Government Completes Public Target Benefit Plan Consultations

June 25, 2014 - Toronto, Ontario - Department of Finance Canada Minister of State (Finance) Kevin Sorenson today held a roundtable meeting with pension experts and stakeholders to conclude 60-day public consultations on establishing a federal framework for Target Benefit Plans, or TBPs. TBPs would be a new, voluntary, sustainable and flexible pension option for federally regulated private sector and Crown corporation plan sponsors, employees and retirees under the Pension Benefits Standards Act, 1985.

Over the course of consultations, the Government received extensive feedback on a proposed TBP framework that 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 Government will now use this input to draft a legislative framework.

Quick Facts

 *   There are currently 1,234 federally regulated pension plans in Canada.

 *   TBPs would promote plan sustainability through their ability to adjust benefits and contributions to help ensure the target benefit is met, and better deal with surplus or deficit situations.

 *   Because benefits are targeted and there is flexibility to adjust contributions and benefits, 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. All parties would also have a say in the design elements of the plan.

 *   A TBP 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 consultations did not consider changes to federal 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 Government has already taken steps to ensure that federal public sector pension plans are more in line with the private sector.

Quotes

"I would like to thank the pension experts and stakeholders I met with today, and all Canadians who submitted their views on the proposed framework for Target Benefit Plans. Their input will help ensure an effective final framework that is responsive to the needs of all. I look forward to bringing forward a Target Benefit Plan framework that is a real option for federally regulated private sector and Crown corporations looking to offer their employees a pension they can count on in retirement."

- Kevin Sorenson, Minister of State
(Finance)