Canada. A new paradigm for pension plans
The single-employer pension plan model is dying. We do not need to mourn its demise, but we do need to replace it.
In a recent report published by the C.D. Howe Institute, we promote the implementation of new private-sector pension plans in Canada based on a better governance model. Rather than being sponsored by single employers, the new plans would be sponsored by multiple employers and governed by independent management boards that include representation from all stakeholders. Scale is of the essence. These new plans could be either of a target-benefit pension plan variety (TBPP) or of a collective defined-contribution pension plan type (CDCP)
The names sound complicated, but the essential elements aren’t.
A TBPP and a CDCP have much in common. They both allow multiple employers to participate. They both share resources on behalf of all plan members, thereby reducing expenses. They have similar governance structures. They have similar administrative and investment needs and solutions. They have the same overall primary goal: to provide good lifetime pensions. In this paradigm, that is all the pension plan does. It provides lifetime pensions. It is not part of another entity, it exists for its own purpose.
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