CANADA - Canada should reform its pension system by creating a hybrid model which resembles the one in place in the Netherlands, the Ontario Teachers' Pension Plan president and chief executive says.
He said the Dutch model - which is an amalgamation of pension funds, merging smaller and larger funds- allowed the smaller funds to share their investment risk and reap the benefits of alternative asset investments.
According to Leech, the system introduced in the Netherlands also brought ongoing sustainability by setting guaranteed pensions to a career-average compensation level, rather than a top-five-year average level, and without indexation.
In addition, employees can purchase additional credits through a DC overlay should they wish - which Leech said made the system a DB-DC hybrid.
He said: "It is our view at OTPP that there will never be a better time than right now for Canada to undertake similarly visionary pension reform."
In contrast, he said the Canadian defined benefits plans were being progressively terminated and replaced by defined contribution plans, which are "inadequate".
Leech quoted a report by the US National Institute on Retirement Security which found the overall cost to employers and their workers was 45% lower for DB plans than it was for DC plans.
He added: "The social costs that the private sector's shift to DC plans will impose in the future have not been widely acknowledged. Members of such plans will retire with inadequate retirement incomes.
"Their combined individual DC shortfalls will likely dwarf the valuation shortfalls of DB plans, possibly imposing obligations on future governments for further retirement income assistance."
Life expectancy in the UK saw no improvement between 2015 and 2017 as the number of people aged over 90 hit a record high, latest Office for National Statistics (ONS) data reveals.
Self-administered pension funds spent £14bn on payments to pensioners in Q2 2018, but only received £11.4bn of contributions (net of refunds), latest Office for National Statistics (ONS) data reveals.
The Pensions and Lifetime Savings Association (PLSA) has named the 17 members of its inaugural policy board after a competitive application process with 60 candidates.