Ottawa is preparing to announce a proposal to create yet another new pension scheme designed to occupy a middle ground between defined-benefit plans, generally favoured by workers, and defined-contribution plans favoured by employers.
The announcement for a so-called target benefit plan, or shared-risk plan, would apply to Crown corporations and federally regulated workers is being sold as a proposal for "affordable and sustainable" lifetime pensions.
Government sources say Kevin Sorenson, minister of state for finance, will call for public consultations on the scheme in a speech at the Economic Club of Canada in Toronto on Thursday.
Details are scare, but target-benefit plans are generally advertised as capable of adjusting the funding-benefits formula to account for bad times, such as the recent economic crisis that put many defined-benefit plans in jeopardy.
C.D. Howe Institute president Bill Robson says there is a wide number of permutations that can be written into the plans, including limiting indexing as has occurred under the Ontario teacher's plan, all the way to lowering actual benefits once a plan's funding level falls below a pre-proscribed threshold.
As well, the plans could allow for a portion of benefits to be guaranteed and a portion based on investment returns.
Ottawa has announced several recent reforms to its public-service pension plan, including hiking contributions, but has kept benefits, which are fully indexed for inflation, largely untouched.
