With enhancements to the Canada Pension Plan (CPP) on the horizon, this year’s federal budget completely ignores the primary private sector retirement savings plans such as RRSPs, TFSAs and RRIFs — but it does signal that the security of private sector pensions remains a concern.
Budget 2018 notes that the government intends to introduce legislation to implement the provisions of an agreement reached with the provinces in late 2017 for a variety of tweaks to the CPP rules — such as increasing the death benefit — that are slated to come into effect in 2019. Yet, the private-sector savings side of the equation is largely absent from Tuesday’s budget.
That said, the government does signal a concern with private-sector pensions. In particular, the government is worried about the fallout when big companies with large unfunded pension liabilities go under.
When this happens, “workers and pensioners, who have paid into pension plans over their careers, are faced with unexpected financial losses that impact their retirement security,” the budget documents state.
Of course, workers and pensioners aren’t the only victims of large corporate failures; the government acknowledges that corporate bankruptcies also affect other creditors, including small businesses and lenders.
Ultimately, given these competing interests, the government says it’s “committed to finding a balanced way forward.” To that end, it plans to seek feedback from pensioners, workers, and companies on a policy approach to retirement security in these circumstances.
In addition, the budget indicates that the government is planning public consultations on a possible regime to address the issue of handling unclaimed pension balances, which may lead to legislative and regulatory amendments.