On April 24 the Canadian Federal government announced that it would be seeking consultations with respect to creating a federal framework for Target Benefit Plans. According to the Government, target benefit plans would be a new, voluntary, sustainable and flexible pension option available to federally regulated private sector and Crown corporation plan sponsors, employees and retirees.
The idea of TBP’s has been gaining traction as “Traditional DB pension plans have difficulty adapting to people living longer and to a fragile global economic environment with relatively low interest rates. And DC plans are exposed to financial market volatility,” according to Minister of State for Finance Kevin Sorenson.
Along with the announcement the Federal government has released a consultation paper with requests for comment and consultations with respect to the various target benefit plan elements such as, administration and governance, funding policy, contributions, benefit structure, funding deficit recovery plan, funding surplus utilization plan, disclosure and communications, conversion of pension plans to Target Benefit Plans, portability and locking-in rules, individual termination, plan termination and windup, and application to multi-employer plans.
To see the full release please visit http://www.fin.gc.ca/n14/14-061-eng.asp
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