The clear trend among plan sponsors is towards closure or conversion of defined benefit pension (DB) plans, a trend that is stronger in Ontario than in the rest of the country, according to a survey by the Pension Investment Association of Canada (PIAC).
In Ontario, 30.6% of plans sponsors say they have considered or are now in the process of considering closing their DB plan compared to 17.8% in Canada. Also, one-third of Ontario plan sponsors have or are now considering moving their DB plan to a defined contribution (DC) plan compared to 24.7% of Canadian plan sponsors. And 44.4% of plan sponsors in Ontario say no change is being considered, compared with 53.4% in Canada. (Note: some numbers add up to greater than 100% as some plan sponsors are considering more than one option.)
Of the Ontario respondents, 50% of private sector plan sponsors are considering closing their DB plans while 0% of public sector plan sponsors are. Only 27.3% of private sector plan sponsors are not considering any change to their DB plan. Two-thirds of public sector plan sponsors are not considering any change while 13.3% are considering moving to a DC plan and 33.3% are considering reductions in future benefits.
Of those who are seriously considering changes, 52.9% of Canadian plan sponsors and 65% of Ontario plan sponsors have already made the decision while the remainder see such a decision being made in the next one to three years.
There were 79 plan sponsors that responded to the survey. Asset size of respondents ranged from less than $500 million (11.4%) to more than $5 billion (22.8%). Of the 79 plan sponsors, 45.6% were in the public or non-profit while the rest were in the private sector.
The majority of plan sponsors (88.6%) provide DB plans, 32.9% provide defined contribution (DC) plans, 15.2% provide group RRSPs and 13.9% provide hybrid plans. (Note: some plan sponsors provide more than one type of plan to employees.)
In Ontario, 39 plans responded, representing virtually all of PIAC’s membership in that province. Of these, 35.9% were in the public or non-profit sector while the remainder were in the private sector. The majority of plan sponsors in Ontario (87.2%) provide DB plans, 41.0% provide DC plans, 20.5% provide group RRSPs and 20.5% provide hybrid plans.
To see more of the results from PIAC’s website, click here.
To comment on this story, email craig.sebastiano@rci.rogers.com.