| By: |
Kamalesh Gosalia (Certified General Accountants Association of Canada);
Elena Simonova (Certified General Accountants Association of Canada);
Rock Lefebvre (Certified General Accountants Association of Canada) |
| Abstract: |
The issue of under-funded defined benefit (DB) pension plans has become one of
the most perplexing financial issues facing business executives, legislators
and Canadian pensioners who are or will in the future be reliant on pension
income as an important component of their overall retirement incomes. In 2004,
CGA-Canada issued a comprehensive paper on defined benefit pension plans
titled “Addressing the Pensions Dilemma in Canada”. The goal of that release
was to advance understanding of DB pension plans and to impart a reasonable
estimate of the standing of DB pension plans at December 31, 2003. In 2009,
this analysis was further advanced by examining the funding status of private
DB pension plans at December 31, 2008. The results of the analysis show that
funding deficits have intensified with funding ratios eroding to unsustainable
levels. The vast majority (92%) of private DB pension plans were in a deficit
position as at December 31, 2008. The average funding ratio has decreased from
112% to 77% on a ‘without indexation’ basis and from 71% to 57% on a ‘with
indexation’ basis. The aggregate funding shortfall is expected to exceed $350
billion. |
| Keywords: |
defined benefit pension plan, defined contribution pension plan, funding postion of pension plans, household savings, retirement savings, retirement income, household finance, pension accounting |
| JEL: |
D14 E21 E22 G23 G28 G11 G12 |
| Date: |
2010–04 |
| URL: |
http://d.repec.org/n?u=RePEc:cga:wpaper:100402&r=age |