The federal framework, as it has been presented so far, could enable the reduction of accrued defined-benefits and the elimination of defined-benefit liabilities – simply put, this may enable employers with defined benefit plans to transition out of those plans in favour of target plans, with plan members’ consent. Details on the consent requirements are slim right now. The retirement income security of people who have already retired could be impacted.
Some provinces have already implemented target benefit plans. New Brunswick recently implemented them for their public sector; Quebec has made them available to some industries, such as the pulp and paper sector; and other provinces, such as Alberta, are moving towards them.
The federal government’s move to target benefit plans is aimed at federally-regulated employers and Crown corporations — for now. If they are successful, the stage would be set for significant pension reform in Canada, across all sectors and orders of government.
Over the coming weeks, Federal Retirees will keep you up-to-date with a full analysis on Bill C-27. Be sure to sign up for our email updates using the form below to get more news on federal target benefit pension plans and what they could mean to you as we learn more.