Lots of talk, consultations and research – and the promise of more of the same – in the run up to the May 2010 meeting of Finance Ministers. The one major announcement is the $500 million grant to the Pension Benefits Guarantee Fund for 2009/2010 to cover claims in the near future.
The PBGF is funded by the employer sponsors of pension plans and pays up to $1,000 per month for pensioners if the pension funds are insufficient to pay current benefits. While intended to be self-financing, the PBGF has been insufficient to meet the claims. The Province has made loans since 2004 and with some repayments, the outstanding loans stand at $275 million as at March 31, 2009.
To ensure the PBGF has sufficient funds to cover claims in the near future, the government is providing a $500 million grant to the PBGF in 2009-2010.
That helps people who already have workplace pensions but for people without workplace pensions, no action.
Consistent with the theme of budgets of late, all the government’s recent activities are listed – again. But nothing new is proposed. The technical amendments announced late last year were turned into Bill 236 – CARP is slated to make a submission on the Bill next week at the Standing Committee on Finance.
Those amendments will affect existing workplace pensions and will mostly improve the protection of the pension funds and pensioners.
There are musings about providing additional temporary deficiency funding relief for public sector [and broader public sector] pension plans and a re-announcement of funding relief measures made available to private sector pension plans. As a result of taking up the offer to extend the deficiency funding period, over a quarter of the DB pension plans that had filed actuarial reports received over $650 million in temporary cash-flow relief.
The province should be commended for engaging noted pension expert Bob Baldwin who provided research that the provincial ministers have by and large endorsed to acknowledge that something must be done to help people save for their own retirement. If that does not sound like much, remember that the federal government engaged an expert who told them that the status quo was just fine.
So the province will endorse the federal consultations [yet again] that have just been announced, conduct more consultations but it’s not clear how, and calls again for a pension summit.
Keywords: pension reform