While there is a strong commitment to DB plans in the public sector, a survey finds that many Canadian plan sponsors are looking at ways to make costs more manageable.

The Canadian findings of Aon Hewitt’s 2013 Global Pension Risk Survey show that 71% of public sector plans are considering additional member contributions.

Also, about one-third are looking to reduce ancillary/discretionary benefits or reduce/eliminate indexing.

The private sector plans are more likely to make fundamental changes to member benefits.

Seventy-five percent of plans where the sponsor is publicly traded have already closed at least one plan to new members, and 15% are looking to freeze their plan in the near future.

There is considerable interest in finding out more about target benefit plans, with 43% expressing curiosity. However, the company says legislation is still outstanding in most jurisdictions.

Plans sponsors are also looking at other ways to manage risk. Thirty-seven percent say low-risk targets are part of their long-term strategy, 40% are interested in hedging risk related to interest rates, and 22% are planning to increase allocation to long bonds to better match their plan’s liabilities.

It’s also apparent that sponsors aren’t only mindful of the need for long-term planning but that plans are also focused on achieving established and measurable goals.

Seventy-eight percent of DB plan sponsors are monitoring pension plan assets and liabilities on a regular basis. And 84% of plan sponsors say they have a long-term plan in place.

“Successful plan management can no longer be considered a passive exercise,” says Will da Silva, senior partner, Canadian retirement consulting, at Aon Hewitt. “Active pension plan management, with a focus on how the assets and liabilities interact, is key with individualized strategies, including de-risking practices, becoming ‘the new normal’ for Canadian plan sponsors.”

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Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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