In a submission today to the Ontario Expert Commission on Pensions, the Canadian Institute of Actuaries outlined legislative and regulatory measures designed to reverse the decline of defined benefit pension plans and preserve them as a key part of Canada’s retirement income system.

“Ontario oversees most of the defined benefit pension plans in Canada, so it’s important that they take the leadership in putting these plans back on track,” Institute President James Murta said. “Our submission describes how the Ontario government can make legislative and regulatory changes that would safeguard the plans currently in place and encourage plan sponsors to start new plans.

“As actuaries, our professional view is that defined benefit pension plans are too important to the financial security of retired Ontarians and those planning to retire over the next decade, to allow their continued decline,” Murta said. “Ontario should not give up on defined benefit pension plans — it needs to fix them.”

The Institute presented a series of measures that would help assure benefit security for plan members, and predictable and fair funding for plan sponsors.

One key proposal is legislation that would permit the use of a Pension Security Trust that would be separate from, but complementary to, regular defined benefit pension plan funds. Plan sponsors could use the trust to increase funding levels and enhance benefit security for plan members. But if contributions were subsequently found not to be needed to fund benefits, they could be released back to the plan sponsor.

The Institute also called for adjustments in pension plan designs and workplace policies to adapt to the realities that plan members and retirees are working past age 65 and living longer.

“Moving forward on these measures would greatly improve the environment for defined benefit pension plans to the advantage of plan members, plan sponsors and retirees,” the Institute said.

“Our proposals on pension security trusts, target solvency margins and letters of credit, if implemented by the Ontario government, would largely eliminate the need for the Pension Benefits Guarantee Fund, which is currently in a deficit position of hundreds of millions of dollars,” Murta said.