The following notes were taken at Forum 2017, the annual convention of CPBI (Canadian Pension and Benefits Institute) held June 5-7 at the Delta Hotel in Winnipeg with the theme: “Thriving In a Climate of Change”.
Presenter: Paul Lai Fatt, Partner, Morneau Shepell
Sustainability is simply about making adjustments.
-change the money coming in,
-change future benefits (e.g., water down benefits for future cohorts)
-change past benefits
If you do all of these, almost any DB plan can be sustainable. However, that does not mean the stakeholders will all be happy!
The fact is, pension plan members all have different expectations about what payments they will be required to make and what benefits they will receive, but in the real world, nothing is carved in stone.
Therefore, the key is “right process”, where you adequately explain the risks and changes to stakeholders. It is not about measuring risk, but planning for it.
There are still a few new DB plans coming online from time to time, but most plan sponsors are moving to Target Benefit Plans.