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Member, Beacon International Group, Ltd.
Canadian defined benefit pension plans have continued to deteriorate, with deficit levels rising by $30 billion last year, according to a new report.
The shortfall levels of defined benefit plans in Canada reached an estimated $190 billion at the end of 2004, compared with $160 billion in 2003, according to a new report by the Toronto-based Certified General Accountants Assn. of Canada. About 59% of defined benefit plans in Canada have a deficit, unchanged from 2003, the report said.
The CGA blamed the shortfall increase on several factors, including adverse market conditions, shortcomings in the pension plan system and demographics.
Because of these factors, defined benefit plans have lost their appeal, and the CGA report encourages employers to consider the relative benefits of defined contribution plans as a safer long-term solution for their employees.
The pension plans included in this report represent about 30% of defined benefit plans in Canada.
"The State of Defined Pension Plans in Canada: an Update" can be found at www.cga-online.org.