Originally published on the Benefits Canada website on April 28th, 2010. To go to Benefits Canada Website please click here
Four of the most well known names in Canada’s retirement industry kicked off the inaugural Benefits & Pension Summit on Wednesday in Toronto, co-presented by Benefits Canada and the International Foundation of Employee Benefit Plans.
In the keynote address, actuary Malcolm Hamilton, pension expert Keith Ambachtsheer, CARP vice-president Susan Eng and Canadian Life and Health Insurance Association president Frank Swedlove presented their views on the future of the pension industry and what potential reforms may look like—from government intervention and income tax changes to inadequate savings and public versus private plans.
“There are inadequate savings among Canadians today,” explained Eng. “They don’t have a safe, reliable measure to engage in that savings. Government needs to have a role.”
According to Ambachtsheer, not only are Canadians saving insufficient amounts for retirement, the current defined benefit system in place has sustainability issues. “We have a regulatory regime that is about 20 years out of date,” he said. “We need to update it to reflect the 21st century.”
Malcolm Hamilton outlined what he sees as four issues weighing heavily on the pension industry at this time. One, the financial meltdown in 2008 left a hostile environment for running a pension plan, with record low interest rates and highly variable investment returns. “We can’t solve it by going to defined benefits or defined contribution,” he said. “We have to create institutions that are sufficiently resilient with the economic environment.”
Two, the role of the employer as the guarantor of pension plans is being rethought. “This is not a good role for employers. This isn’t a problem they can solve when they look at General Motors, [for example].”
Three, the role of the individual is receiving greater emphasis. Unfortunately, these individuals are naïve consumers who are badly advised, he argued.
And four, the public/private sector divide is widening. “The average per capita savings is triple in the public sector than what it is in the private sector, and there is no good reason for that,” he stated.
Watch for more coverage of the Benefits & Pension Summit on BenefitsCanada.com and in the June issue of Benefits Canada.
Keywords: pension reform