But, by now, reality has probably started to set in. You’re likely thinking about all those promises you made during the campaign and wondering how you’re going to deliver on those commitments with a minority government.
If that’s not enough to keep your mind occupied, I’m afraid there’s another issue that didn’t make it into the evening news sound bites during the 56-day campaign—an issue that should give you cause for concern. It’s only fair to bring it to your attention.
You may want to sit down for this.
Why? Canada’s private pension system is in trouble. Many employersponsored pension plans are significantly underfunded. According to the Office of the Superintendent of Financial Institutions, an estimated 72% of federally regulated defined benefit(DB) plans were less than fully funded as of June 2005. And funding shortfalls for large private-sector DB plans climbed to $29 billion in 2004, according to a report last November from the Certified General Accountants Association of Canada. These liabilities are driving many employers to collapse their DB plans or restrict new entrants.
In some cases, underfunded pension plans are even bankrupting the companies that offer them. Just days before you were elected, an Ontario Supreme Court judge ruled that the common shares of Stelco Inc.—formerly Canada’s largest steelmaker—are worthless. It was the latest development in more than two years of restructuring since a massive pension deficit drove the company into bankruptcy.
And with all the press this issue has been getting over the past few years, the public is starting to take notice. According to a survey late last year by the Conference Board of Canada, four in five Canadians are concerned that a pension underfunding crisis exists in this country. The public could get cranky if it fears its retirement savings are at risk.
Fortunately, there is some good news. A lot of people—really smart people—have already given a great deal of thought to this dilemma. The Association of Canadian Pension Management, the Pension Investment Association of Canada and the Canadian Association of Pension Supervisory Authorities have all put forward recommendations about how to fix the problem. Even the federal department of finance held consultations with the pension industry about what to do.
Now that most of the legwork’s already been done, it’s up to you to take the lead on moving some of the recommendations forward. I’d suggest you act soon. Otherwise those curtains might not be up for very long.