TORONTO--Fewer Canadian executives believe the country is experiencing a pension crisis compared with a year ago, but a noticeable number of companies are changing their defined benefit plan designs to reduce the volatility and cost of their plans.

While two-thirds of chief financial officers currently believe there is a pension funding crisis in Canada, the number of CFOs expressing this concern declined from last year's 80%, according to a joint survey by the Conference Board of Canada and Watson Wyatt Worldwide.

Meanwhile, 59% of top human resource executives in Canada believe a pension crisis exists, down from 78% in 2006, according to the survey released at the 2007 Pensions Summit: Striking the Right Balance, presented by the Conference Board of Canada May 10-11.

Representatives of the two organizations attributed easing concerns about a pension crisis to the improved funding of pension plans in Canada, but they also noted that plan sponsors remain concerned about the future.

"We're not out of the woods yet," said Gilles Rheaume, vp, public policy, for the Conference Board of Canada in Toronto. "There are still some issues that need to be resolved."

The greatest threat to private sector defined benefit plans is the cost of maintaining and funding such plans, seen as a major threat by 70% of respondents. The volatility of future funding contributions is seen as a major threat to defined benefit plans by 63% of respondents.

The inability of members to get investment returns that provide adequate benefits was cited as the top threat, by 61%, to the sustainability of private sector defined contribution plans, followed by possible employer liability for poor investment performance, at 49%.

Sponsors in Canada are changing their defined benefit plan designs to address concerns about volatility and costs. About 16% of DB plan sponsors said they have made design changes in the past two years and 25% said they plan to do so in the next year.

A "surprising" fact discovered by the survey is that the majority of DB plan changes would apply to both new hires and future service for current employees rather than only new hires, said Ian Markham, director, pension innovation for Watson Wyatt in Toronto.

"It's a lot easier to do it for the people who aren't with you yet," Mr. Markham said.

The most common design change planned for private sector plans is the conversion of future service benefits for some members to defined contribution arrangements, while the most common planned change for public sector plans is an increase in the employee contribution rate.

About 18% of publicly traded companies converted future benefits for all members to defined contribution plans in the past two years, while another 15% said they plan to do so in the next year. Only 5% of respondents, though, indicated that they have or plan to fully wind up their defined benefit plans.