Pension reform will be the defining issue of the next federal election and the next decade as Canadians demand changes to rules that hinder saving for retirement, says the CEO of one of Canada’s largest pension fund managers.
Jim Leech, chief executive of the Ontario Teachers’ Pension Plan, said Thursday the confluence of an aging population and the financial crisis have turned the fate of pension plans and the retirees who depend on them into front-page news.
“As Tommy Douglas and national medicare defined public debate in the ’60s, pension reform could be the defining issue of the first decade of this century,” Leech said in a speech to the Empire Club of Canada.
Leech said he is troubled by the private sector’s move from defined-benefit plans, which guarantee employees steady income after retirement, to defined-contribution plans, which base benefits on investment returns.
Under current federal pension rules, defined-benefit plans must have enough money to pay retirement benefits to all members of the plan into the future. Many companies that offer these plans are under pressure to make up overwhelming shortfalls through higher contributions after the financial crisis caused plans’ assets to plunge.