A new report by the Certified General Accountants Association of Canada (CGA-Canada) reveals that 92% of private sector defined benefit (DB) pension plans are in a deficit position, more than double the number from five years ago.
The report, entitled Gauging the Path of Private Canadian Pensions: 2010 Update on the State of Defined Benefit and Defined Contribution Pension Plans reveals that pension funding deficits have climbed from $160 billion in 2003 to an estimated $350 billion in 2008 and continue to grow.
“Pension plans should not be allowed to metamorphose into empires of debt,” says Anthony Ariganello, president and CEO of CGA-Canada. “The recent events with national companies such as Nortel Networks, AbitibiBowater, Fraser Papers and CanWest have highlighted a need to better preserve pension plan solvency and improve member protection.”
The report calls for unsustainable DB plans and inadequate defined contribution (DC) plans to be replaced with hybrid models that draw upon the best elements of each.
Rock Lefebvre, vice-president of research and standards at CGA-Canada outlines problems with the taxation system, pointing out that current tax rules prejudice Canadians without employer-sponsored plans. Even if registered retirement savings plan (RRSP) limits are reached, he says, these Canadians cannot save as much for their retirement as Canadians who have employer-sponsored pension arrangements.
CGA-Canada’s suggested solution calls for the development of a new pension system that is sustainable, simple to administer and cost effective.
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Going long for charity
A new twist on fundraising was on offer at Toronto’s Fairmont Royal York Hotel on April 29 for the Down Syndrome Research Foundation’s Up the Down Market Dinner, where investors played with phony money for the real benefit of others.
The 14th annual dinner involved an investment-based game where participants begin with a make-believe portfolio of $1 million in stock and cash. Pre-recorded news reports on the fictitious companies provided by BNN were then played throughout the game, and investors made their allocation decisions accordingly.
According to DSRF executive director Dawn McKenna, the event raised $80,000 and saw Montreal-based money manager Jarislowsky Fraser walk away with the trophy for the fourth time. To date, the event has raised more than $3.2 million.
McKenna explains that the DSRF is unique amongst its peers due to the amount of research it does. “We’re the only ones who are doing the research and then utilizing the data to develop programs and services for this population,” she says.
The dinner event will also be held in Vancouver on September 28, Calgary on October 12 and Montreal November 16.