CANADA - The head of the Canada Pension Plan Investment Board (CPPIB) said the country's pension system needs to be reformed and suggested creating a mandatory supplemental pension plan to complement existing arrangements.
In a speech this week, David Denison said the federal government should consider reforms including a mandatory supplemental plan, uniform federal and provincial regulations and regional defined contribution plans.
In a speech at the 16th annual International Conference of Social Securities Actuaries and Statisticians, Denison said Canada needs to move now to ensure the pension system provides sufficient income in retirement.
He said: "We have already established 11 million working Canadians - or about two-thirds of Canada's working population - have no workplace pension coverage at all. Clearly, the current system isn't working as anticipated."
He added: "In this hybrid approach, there would still be flexibility for individual companies to create pension arrangements tailored to their specific objectives as well as for individuals to make choices according to their own goals and preferences."
CPPIB spokesman Joel Kranc said if a new plan were to be created, it would be up to policy makers to decide if the CPPIB would manage it.
The CPPIB is responsible for providing a replacement income of 25% of the national wage, but employees are responsible for building up the rest of their nest eggs though personal savings and company plans.
Federal and provincial governments are already exploring ways to reform the system that separately include the elements of Denison's plan.
Proposals have been floated to enact uniform pension regulations for provincial and federal plans and to provide regional and federal defined contribution plans that would automatically enrol the employee but provide the opportunity to opt out. The possibility of expanding the CPP has also been discussed.
Other pension heads have weighed in on the reform debate.
In May, Jim Leech, president of the Ontario Teachers Pension Plan said Canada should create a system similar to the one in the Netherlands, that incorporates defined benefit and defined contribution elements. (Global Pensions; May 20, 2009)
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