Are pension plan changes inevitable?
Many DB pension plans (both public and private sector) will require some changes if they are to continue to be able to offer reasonable pension benefits to members. However, as a plan member / union representative, it’s critical for you to understand why this is the case, and to voice your concerns and alternative ideas for any solutions under consideration.
Are shared risk plans the only solution?
Shared risk plans (SRPs), or target benefit plans (TBPs) more generally, are not the only solution. The most appropriate option will depend on the desired outcomes, the risk tolerance of the stakeholders and the specific financial circumstances. Once an understanding of the desired outcomes has been established, all possible avenues for achieving those outcomes should be considered before making any plan changes.
In fact, TBPs are currently only an option in Alberta, British Columbia and New Brunswick, pending legislative changes in other parts of the country. Members and their unions may want to become more knowledgeable about TBPs now, before legislation is enacted, in order to be able to provide input. Morneau Shepell can provide the necessary education and training.