Guaranteeing pension plans is a bad idea (Guest commentary)

Legislation, regulation and litigation have brought DB pensions to the edge of a cliff
By William Robson
|Canadian HR Reporter|Last Updated: 12/06/2005

Pension policy in Canada needs a fresh look. Defined benefit (DB) pensions are in trouble — many are underfunded and exposed to the financial stresses of their sponsors. But some proposed fixes could make matters worse.

NDP leader Jack Layton has talked about pension protection as a condition for working with the Liberals. While we do not know what he has in mind, a federal pension-benefit guarantee agency — a deeper-pocketed version of Ontario’s Pension Benefits Guarantee Fund — is likely.

Such an agency, like counterparts in the United States and the United Kingdom, would backstop pension plans when sponsors go bankrupt. The agency would levy premiums on the plans and pay all or part of their benefits if a sponsor failed.