Old age and old stories

The CP reports on the difficulties now faced by many Canadian pension plans - and the question of what to do in response to those difficulties:

There were 84 troubled pension plans on (OSFI watchlist) at the end of last year, up from 75 plans listed in September 2005.

"Unless significant positive changes occur in the environment, we expect the financial strength of pension plans to deteriorate further and the number of plans on the watchlist to continue rising during 2006," say the documents...

The briefing material warns that 72 per cent of private pension plans were less than fully funded as of June 2005 - a dramatic jump over the 53 per cent of plans in the same fix just six months previously.

Keep in mind that June 2005 was in the middle of a continuous rise in corporate profits. But apparently those profits neither did much to help pension investments, nor caused private-sector employers to take the opportunity to keep their pension funds topped up.

And who will bear the brunt of the problems with existing pension plans? That depends on what the federal government decides. But judging from the article, it looks like the most likely targets are pensioners themselves, either through reduced benefits ordered by the OSFI, or through more lax funding standards which would put the pensions in even more jeopardy. Meanwhile, the idea of having employers account for the shortfall in their own investments by paying into an insurance fund appears to be a non-starter.

Which, as happens so often, seems likely to leave workers with the negative consequences of fault corporate planning. And unfortunately, it's tough to be optimistic that the parties with the ability to shape government policy will see such an outcome as a bad one.