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Canadian Labour Congress. Department of Social and Economic Policy Bob Baldwin, National Director bbaldwin@clc-ctc.ca C4-PD. The Future of Defined-Benefit Pension Plans. Presentation to the Canadian Institute of Actuaries November 17-18, 2004 Montreal, Quebec. Role of Trade Unions.
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Canadian Labour Congress Department of Social and Economic Policy Bob Baldwin, National Director bbaldwin@clc-ctc.ca C4-PD www.clc-ctc.ca cope/sepb 225
The Future of Defined-Benefit Pension Plans Presentation to the Canadian Institute of Actuaries November 17-18, 2004 Montreal, Quebec
Role of Trade Unions • Bargain benefits • Serve as (joint) administrators • Policy advocates
Coverage and Preferences of Trade Unionists • Coverage overall (80 vs. 35) • small business (70 vs. 15) • Preference hierarchy • defined benefit • MEPP (contingent benefit) • defined contribution
Canada’s Recent Experience with DB and DC Plans • Important change in the relative size of DB and DC membership • Note: largely corporate sector • Note: context of overall decline in plans and decline in member/employed person ratio
Pressures Against DB Plans • Longer term • Regulatory (and tax environment) • International (policy) developments • Limitations of DB plans (as we know them) • Slack labour markets • Changing composition of employment • More recent • Surplus conflicts • DB financing problems
Mitigating Developments(current and prospective) • Union (plan member) pressure • Experience with DC • High administration costs • Unpredictable benefits and retirement ages • Problems recruiting older workers • New Hybrids • DC with DB guarantees • Explicit cost-sharing • CAP Guidelines (new world of DC?)
Hopeful DB Developments • Less irrational exuberance • Greater clarity about financing (risk-sharing) • Overcoming DB limitations
Conclusion • Rumours of DB death are probably exaggerated • Hybrids, including MEPPs, may become more important
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