Defined benefit plans running $160-billion shortfall: study

Accountants call for clarification of surplus ownership, new standards to encourage firms to inject more cash into DB plans
||Last Updated: 08/16/2004

Nearly 60 per cent of all defined benefit pension plans in Canada are now running deficits that will require $160 billion to cover the total shortfall, according to a new study by the Certified General Accountants Association of Canada (CGA-Canada).

The study of 847 defined benefit plans points to a looming social and economic crisis for Canada’s defined benefits pension plan holders and plan sponsors if the situation is not addressed. The study warns that pensioners may have their benefits sharply reduced, and that inadequately funded pension plans may go bankrupt. Shortfalls will also negatively impact corporate financial results and share prices, CGA-Canada said.

“The Canadian pension landscape is changing,” said Anthony Ariganello, president and CEO of CGA-Canada. “Where previously many large and well-established employers provided generous pension plans and employees fully expected to receive their benefits as a matter of course, we are now faced with a fluid and shifting environment.”