(November 25, 2009) – Canadian plan sponsors are worried about the future of the defined benefit retirement system but, curiously, also have faith that the True North’s pension system is more robust than other countries.
According to a recent RBC Dexia poll, 89% of Canadian defined benefit (DB) pension plan sponsors are average or poorly positioned to meet their liabilities. The two largest concerns for those polled were investment risk—with 41% listing this as their major qualm—and insufficient returns (36%). Following these, interest rate risks were the primary concerns of 13% polled, while just 8% cited operational risk.
When asked about future challenges, 48% cited aligning assets with liabilities as their greatest, followed closely by investment returns (38%). Just 7% cited accounting variations as their largest challenge for 2010, while 4% claimed that understanding novel financial instruments was likely to be the largest impediment in the new year.
However, despite turmoil and worries, 72% of Canadian pension plans still think of themselves as equal to or better than the global pension system; only 8% saw themselves as inferior to their global peers.
Pension reform is likely to be a prominent topic when Conservative Finance Minister Jim Flaherty meets with his provincial counterparts in December.
The pool included responses from 370 Canadian pension plans, with 18% controlling assets of more than $1 billion. The poll is available for download here .
To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>