Canada’s Pension System Needs Reform: Think-Tank

A prominent think-tank is calling on governments in Canada to strengthen the country’s public pension system.

The Canadian Centre for Policy Alternatives (CCPA) is calling on governments to further expand the country’s pension system, arguing that private companies are increasingly pushing retirement risks onto their workers in order to provide higher shareholder payouts.

The CCPA said it found that pension funding ratios for the roughly 90 firms on the S&P/TSX Composite Index that offer defined benefit pension plans have been flat since 2013, even as shareholder payments have risen sharply.

In 2017, the companies paid $16 billion in share buybacks and another $50 billion in dividends – about five times the value of their pension deficits of $12 billion, the report noted. The CCPA made several recommendations to strengthen private sector pension plans and retirement security for all Canadian workers.

Those recommendations include revising regulations to focus on firms’ financial strength rather than on the financial status of the pension plan; limiting dividends and share buybacks when a pension plan falls below a specific threshold; and enhancing the Canada Pension Plan, Old Age Security and the Guaranteed Income Supplement.