The pension crisis is widespread and likely to remain an issue for more than just a few years, according to a new survey.
The survey of 187 organizations by the Conference Board of Canada and Watson Wyatt Worldwide, found that 67 per cent of HR executives and 61 per cent of CFOs believe the pension crisis is here to stay, while only 19 per cent of CFOs think the crisis is unlikely to become permanent.
“CFOs are increasingly coming to the realization that the pension deficits of recent years have not yet turned around and they are less optimistic that plans will rebound any time soon,” said Gilles Rheaume, vice-president of policy, business and society for the Conference Board of Canada.
“With the potential of labour shortages looming in the near future, due to the aging workforce, organizations and governments will have to examine ways to meet these challenges.”
Forty-one per cent of respondents with defined benefit pension plans have either taken action over the past 24 months or intend to do so in the next 12 months. The amendments included:
• 50 per cent are increasing required employee contributions
• 39 per cent are reducing other benefits
• 27 per cent are reducing early retirement benefits
• 26 per cent are reducing the normal retirement benefit accrual rate
“Canadian organizations continue to divert funds from the other business activities into stabilizing their pension plans, increasing the urgency of managing pension risk for most CFOs and HR executives,” said Ian Markham, director of pension innovation for Watson Wyatt Canada.
The greatest challenge for HR executives is getting employees to pay attention to pensions issues while the costs of an aging workforce remains a thorn in the side for CFOs, the survey found.