Pensions Advocacy
Pensioners without a fully indexed government guaranteed pension plan are exposed to numerous problems, beside the corrosive effect of inflation over a lengthy retirement and the rapid disappearance of DB pension plans in general. Some of these exposures relate to pension rules or lack of them, that may have been appropriate when introduced, but require adjustment now. Advocacy for the changes necessary to fix problems may be required in a number of areas such as:
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nonexistent or inadequate pension insurance, in case the plan sponsor defaults
- lack of transparency on the funded status of pension plans (reporting requirements inadequate: frequency and discretion in parameters used for surplus/deficit calculation)
- in bankruptcy (reorganization or liquidation) pension plan deficits must line up with unsecured creditors
- pension/accounting rules discourage companies from overcontributing to plans (e.g. excess assets in plan are not “owned” by the sponsor, even though sponsor responsible for shortfall)
- commuted value not always fully transferable to an RRSP
- commuted value taken by an individual may not properly reflect underfunded status of the plan
So there are advocacy opportunities for legislative changes as well as new products that will be discussed in the future. Some examples in addition to those implied above include:
- pensioner paid private insurance coverage for credit event of the plan sponsor
- pension priority in case of plan sponsor bankruptcy
- changes to Pension Adjustment formula pro- and retro-actively to reflect the risk of underfunding
Pension Reform brief to be presented to the Ontario Expert Commission on Pensions on November 1, 2007- Problems and solutions for DB pension plans and a proposal for pension system revolution
Pension/Retirement Plan Reforms May 10, 2007 blog; summary of Pension Roundtable at 2007 CFA Conference and second submission to Ontario Expert Commission on Pensions
Changes Needed for Pensions- Make Your Voices Heard November 22, 2006 blog; summary of first submission to Ontario Expert Commission for Pensions
RetirementAction.com 