The Canadian Institute of Actuaries is urging Ontario to take an actuarial approach to its proposed changes for the pension benefits guarantee fund.
The province has proposed increasing the guarantee provided by the fund to $1,500 per month from $1,000. In a wider submission to the province’s Ministry of Finance on the proposed new funding rules for defined benefits plans, Sharon Giffen, president of the organization, noted the fund should be subject to more rigorous actuarial analysis.
The latest submission reiterates that concern, adding that the government’s proposal doesn’t include any detail as to any analysis undertaken to support the changes. “It would be important for plan sponsors, plan members and the public to have a more comprehensive review of the assessment structure if that was not already undertaken,” wrote Giffen.
Specifically, the organization notes that the analysis should address the severity and likelihood of claims on the fund. It believes the proposals seem somewhat simplistic on the surface and focus only on the severity of a claim. “We also have concerns about the appropriateness of the new component based on PBGF liabilities, as it does not appear to be related to the underlying risk,” the submission noted.
The Canadian Institute of Actuaries suggests the government form a group with a mandate to perform a more comprehensive analysis of the fund’s premium structure and to develop an approach more directly based on actuarial principles.
“We also recommend that any new assessment structure not be implemented until such an analysis has taken place,” wrote Giffen. ”If this analysis has been done, we would be very interested in seeing the details, so we could provide more comprehensive feedback.
“We agree that the PBGF represents an important protection for plan members, and as such, we think that transparency is essential.”