The discount rates used by Canadian pension plans have declined for the fourth consecutive year.
The past few years for the pension industry have been difficult, to put it mildly. But for the Top 100 pension plans, things are starting to look up. Pension assets have cracked the $800-billion mark for the first time ever and are closing in on $900 billion. Assets climbed nearly 10%, with a number of plans reporting double-digit increases. And there was just one plan that reported a decline in assets, compared with 26 in 2011.
Pension plans have had a trying time over the last few years. Stocks have taken investors for a ride, and a low interest rate environment is the new normal. Following is a review of the themes and issues we’ve covered since 2008 in this web-exclusive article.
Chrysler will freeze its salaried employee DB plans effective Dec. 31, 2014.
The increase in the number of cash balance plans in the United States has jumped nearly 500% over the last decade, according to a report.
Why John Poos needs to think a few strokes ahead to get the career he deserves
Given the complexity and variety of different services involved in maintaining a DC plan—and the sophisticated jargon that is used by service providers to market their services— it’s no wonder participants and plan sponsors are confused about who is getting paid and for what service. The increased scrutiny on plan fees, especially for DC plans, gives pause for thought on whether plan sponsors and participants pay too much for their retirement plans.
A shorter menu of investment options is often better than a longer one, according to a study.
The first DB to DC pension plan conversion I was involved in took place in 1986. Back then, a DC pension plan was called a money purchase pension plan, which nomenclature remains in the Income Tax Act relating to such plans. In 1986, upon retirement under a money purchase pension plan retirement income was provided by way of a life annuity purchased from the value of the pension account balance, hence “money purchase.”
The 2008 economic crisis and its lasting aftermath have significantly influenced the dynamics of collective bargaining in both the public and private sectors in Canada. As a result, employers are taking a hard look at the long-term sustainability of their DB pension plans and searching for alternatives to the status quo.