The Coming Pension Crisis

story_images_money-crisisA new survey of Canadian businesses finds that fears of a pension crisis are on the rise as plan sponsors worry about the effects of market volatility on their portfolios.

A survey of 115 companies that sponsor plans by consulting firm Towers Watson says pension worries are rising among both defined benefit and defined contribution plan sponsors.

About 65% of those employers who offer defined benefit plans–which guarantee a minimum level of retirement income, partly from employers–say they believe Canada is experiencing a pension crisis.

That compares to 56% of those respondents in 2011.

About half of defined benefit plan respondents say they are planning to change their investment strategies to de-risk their portfolios from exposure to volatile markets.

Experts have predicted a tough time for defined pension plans in 2012 as a result of lower returns on investments and rock bottom interest rates, which increase liabilities for plans.