OLIVER: A new proposal to bring greater financial security to Canada’s seniors

Canada has weathered the global economic crisis with relative success and is in a strong position for future prosperity.

Nevertheless, many challenges still lie ahead. Canada has an aging population and our citizens are living longer lives. This is placing stress on our traditional system of defined benefit plans, while defined contributions plans are held hostage to the volatility of financial markets. This is why our government has started consultations on Targeted Benefit Plans, to help provide greater security in uncertain and volatile times.

It would be available only to federally regulated private sector and crown corporation pension plans.

TBPs would promote plan viability by being able to adjust benefits and contributions to ensure the target benefit is met and, at the same time, deal with surpluses or deficits. In effect, employers and employees would assure that contributions are organized so that risk is shared and payouts to retirees are based on the funds available in the pooled plan.

By providing predictable benefits in both strong and weak economic climates, this third option to defined benefits and defined contribution plans will address long-term sustainability at affordable rates for both employers and employees. Flexibility is also a crucial aspect, as our proposal will allow for conversions of traditional plans into TBPs if all parties grant their consent. Further, TBPs will be voluntary, with everyone involved having clear roles in the decision over its adoption and a voice in how the plan is designed.

This is our latest step to bolster the Canadian economy. Along with Pooled Registered Pension Plans, our enrichment of Old Age Security and our Tax-Free Savings Account, Canadians will enjoy greater financial security for years to come.

We are now seeking feedback on our proposal from Canadians so we can ensure our framework is both effective and responsive. Over the next two months we will be consulting with industry experts, stakeholders, and Canadians. I encourage you all to contribute in this process and help strengthen our system for generations to come.

[align=right]— Joe Oliver, MP for Eglinton-Lawrence, is Minister of Finance
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