Ottawa says target benefits still a priority despite budget omission – Benefits Canada

Mar 31, 2016

Although target-benefit pension plans were notably absent from the 2016 federal budget, in a recent Benefits Canada article by Yaldaz Sadakova, the Department of Finance maintains that target-benefit plans continue to be a priority for the government. The article presents experts’ views on the pros and cons of the government introducing the alternative pension plan structure and includes commentary from Jana Steele, a partner in Osler’s Pensions and Benefits Group and a proponent of target-benefit plans.

According to Steele, existing legislation needs to be amended: “Ideally, there would be a fulsome target-benefit regime in [the federal Pension Benefits Standards Act] to facilitate target-benefit plans for federally regulated employers.” She believes that existing tax rules should also be changed to account for target-benefit plans. Under the current rules, she explains, “you’re making a square peg fit in a round hole.”

On the other hand, according to groups like The Public Service Alliance of Canada, introducing target-benefit plans may encourage employers to shift out of their existing defined benefit plans – to the detriment of employees. Steele disagrees, arguing that employers abandoning their defined benefit plan should at least have an option other than a defined contribution plan: “Wouldn’t it be preferable from the point of view of plan members to have a target-benefit plan … as opposed to defined contribution because at least then you have the risk pooling that a target-benefit plan provides?” 

Read Yaldaz Sadakova’s full article Ottawa says target benefits still a priority despite budget omission at Benefits Canada, March 31, 3016.