Canadian Pension Plans Face Maze of Changes From Pension Commission, Accounting Institute

Hook, Elizabeth
November 1986
Risk Management (00355593);Nov86, Vol. 33 Issue 11, p75
Trade Publication
This article reports that a wave of reform in Canada's pension system and accounting rules is threatening to create massive changes for Canadian pension plans over the next few years as of November 1986. And hand-in-glove with those changes is the enormous potential for unfunded liabilities for employers, according to Greg Kaiser of the Great-West Life Insurance Co. in Winnipeg, Manitoba. In a mini-seminar on the subject, Kaiser outlined the changes and how they will affect the two types of pension plans used: defined benefit and defined contribution. Under defined benefit plans, the emphasis is on the ultimate benefit, which is based on either the salary just prior to retirement or the career average salary, or is a flat amount determined independent of salary. The employer must continue fund the plan, regardless of changes in circumstances. Canadian pension reforms, according top Kaiser, are making defined benefit plans more complex and difficult to administer and communicate to employees. New accounting rules and questions regarding ownership of surplus, for example, greatly affect defined benefit plans yet have little effect on defined contribution plans. As a result, the majority of Canada's employers are now favoring defined contribution plans.


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