The Harper government is looking at overhauling tax law to encourage bigger pension-fund surpluses, as part of a series of reforms to the country’s crumbling pension regime to be introduced this fall.
Concerned over plan deficits, the government since January has been consulting companies and other players in the pension industry on proposed changes. A bill is expected to be introduced by December, said Ted Menzies, parliamentary secretary to Finance Minister Jim Flaherty and Ottawa’s point man on pensions.
Ottawa and the provinces face increasing pressure to modernize a fragmented pension system that is seeing thousands of retirees stranded with shredded pensions as the downturn has pushed more companies into bankruptcy protection. The impact of the recession has exacerbated the straining pensions of many companies with aging work forces and growing numbers of retirees, and has left private-sector pensions underfunded by an estimated $50-billion.
“These people were promised a pension … They thought they had a pension,” Mr. Menzies said. “If there’s a way we can – within our jurisdiction – make that more assured for those people, then we’d better do it.”
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It’ll be interesting to see how they approach this. Perhaps they’ll make a percentage of the pension funds tax-exempt?
All well and good, but also very much overdue. But, I am curious to know if new rules on pensions will apply to the federal government which, in the past, has dipped into the Canadian Forces Pension Fund to support its spending programs. It has also used the EI fund for the same purpose, although that is another issue.