As bad as the economy gets, people can at least say they’ve got their pensions to fall back on.
Well, not so fast.
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Some employers are able to opt out of their pension promises, and there’s nothing stopping them, according to the final report of the province’s Pension Review Panel.
“We have an odd framework where some employers don’t have to fully fund their promises. To us, that doesn’t make any sense whatsoever,” said report co-author Bill Black.
“If you get down to the regulatory nitty-gritty, I could show you all kinds of things that are just dumb.”
He said employers can cancel employee benefits if plans go into debt, and they don’t have to tie pension benefits to inflation, even if they said they would.
The report calls for a new, consistent regulatory system to be put in place as quickly as possible.
“If we go through to the end of the year 2009 and nothing has been done, then there will be some very great difficulties for pension plans,” said Black, former president of Maritime Life.
“It’s going to be just impossible for employers to maintain their required funding.”
Whether that happens, though, is still up in the air. Labour and Workforce Development Minister Mark Parent said fall is the soonest government could prepare legislation.
Employers funding their pension promises should be mandatory, according to the report. To get to that point, there would be some “transitional relief.” The plan also offers employers more flexibility. Currently, plans that are in debt need to be fixed within five years. The report suggests extending that to 10, to help cope with the recession.
The government will take some time to study the plan before a deciding on a course of action.