As Canada’s pension landscape evolves, regulators should focus on ensuring the sustainability of plans, says a new report from the C.D. Howe Institute.
The Toronto-based think tank says that the long-running shift away from defined benefit plans towards so-called “contingent” plans requires a regulatory approach designed to meet the needs of these sorts of plans, which tie members’ benefits to the financial status of the plans.
The report says that these contingent plans “will likely play an increasingly important role in delivering retirement benefits in the future.”
Given that these kinds of plans “offer a different promise than traditional defined-benefit plans” and different contracts with plan members, the report says that this “needs to be reflected in how they are managed, communicated and regulated.”
In particular, the report recommends that financing standards should be principles-based, with more prescriptive standards for governance and communication.