By Lisa Barron
The Canadian government's proposal for its new hybrid pension plan
is receiving mixed reviews, with some pension experts in favor and labor groups opposed.
Kevin Sorensen, the federal minister of state for finance, unveiled the Target Benefit Plans during a keynote address to the Economic Club of Canada on Thursday, reported the Toronto Star.
"Target Benefit Plans are a new, innovative proposal that will help support affordable and sustainable pensions for Canadians," he said.
Under TBPs, employees would get a minimum level of guaranteed benefits with an option to add on and contributions that are set within a specified range. Both could be adjusted in time based on market conditions and the plan's performance.
The voluntary plan would be open to those who work for Crown corporations or federally regulated businesses such as banks or transportation companies.
Many pension experts said Ottawa's proposal is a positive response to the fact that many companies are shifting from defined benefit (DB) plans to defined contribution (DC) plans, according to the Globe and Mail.
Claude Lamoreux, former CEO of the Ontario Teachers' Pension Plan, told the newspaper he supports the government's move as a way of making traditional pension plans more sustainable.
"Retirees have to participate in the risk. The risk is not just decreasing the benefit—a lot of times if you have really good years, you're going to have more money than you know what to do with. So it's symmetrical, you could increase the benefit too," he said.
But advocates for an expanded Canada Pension Plan, which the Conservative government rejected because of concerns that higher payroll premiums would hurt the economy, condemned Thursday's announcement.
"It's astonishing to us when the solution is right in front of them," Ken Georgetti, the president of the Canadian Labor Congress, told the Globe and Mail.
"People need certainty in retirement, not risk. It's encouraging the move away from [defined benefit] plans and that's just not good leadership," he said.
The government is looking for feedback on the proposal from the public for the next 60 days.
Originally published on BenefitsPro.com