Gauging the Path of Private Canadian Pensions: 2010 Update on the State of Defined Benefit and Defined Contribution Pension Plans
AbstractThe issue of under-funded defined benefit (DB) pension plans has become one of the most perplexing financial issues facing business executives, legislators and Canadian pensioners who are or will in the future be reliant on pension income as an important component of their overall retirement incomes. In 2004, CGA-Canada issued a comprehensive paper on defined benefit pension plans titled “Addressing the Pensions Dilemma in Canada”. The goal of that release was to advance understanding of DB pension plans and to impart a reasonable estimate of the standing of DB pension plans at December 31, 2003. In 2009, this analysis was further advanced by examining the funding status of private DB pension plans at December 31, 2008. The results of the analysis show that funding deficits have intensified with funding ratios eroding to unsustainable levels. The vast majority (92%) of private DB pension plans were in a deficit position as at December 31, 2008. The average funding ratio has decreased from 112% to 77% on a ‘without indexation’ basis and from 71% to 57% on a ‘with indexation’ basis. The aggregate funding shortfall is expected to exceed $350 billion.
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Bibliographic InfoPaper provided by Certified General Accountants Association of Canada in its series Working Papers with number 100402.
Length: 66 pages
Date of creation: Apr 2010
Date of revision:
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Web page: http://www.cga-canada.org
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defined benefit pension plan; defined contribution pension plan; funding postion of pension plans; household savings; retirement savings; retirement income; household finance; pension accounting;
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