This presentation looks at the issues facing various pension plans across Canada as well as looks to see if people are saving for retirement

1. CANADA PENSIONS:
CRISIS OR NOT
BY: PAUL YOUNG CPA, CGA
DATE: DECEMBER 29, 2018

2. PAUL YOUNG - BIO
• CPA, CGA
• Academia (PF1, FA4 and MS2)
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – Emerging Technology
• SME – Financial Solutions
• SME – Business Process Change
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. INTRODUCTION
• This presentation looks at the issues facing various pension plans across
Canada as well as looks to see if people are saving for retirement

4. AGENDA
• TSX Market Returns
• What is C27
• Pension Plans
• Issues with Pensions / Government

5. WHAT IS C27
Source - http://www.moneysense.ca/save/retirement/pensions/defined-benefit-pension-plans-due-change/
Bill C-27 is an Act to amend the long-standing Pension Benefits Standards Act.
Those in favour of pure Defined Benefit (DB) pension plans have criticized Bill C-
27, saying it would allow federally regulated employers to replace DB plans, which
provide a guaranteed retirement income for life with no risk, with Target Benefit
Plans (TBPs) which are also generous pensions but because they count on
employees taking on some risk, final retirement guaranteed payments may not be
as iron-glad.
Source - https://canadiandimension.com/articles/view/bill-c-27-pension-reform-an-
unprecedented-attack-on-all

6. MARKET RETURNS / EQUITY - TSX
Source – BMO - Economics

7. PENSIONS PLANS
Source - https://www.fraserinstitute.org/sites/default/files/comparing-government-and-private-sector-compensation-in-Canada-2016.pdf

8. GOVERNMENT PENSIONS
Source - http://o.canada.com/news/auditor-general-government-should-re-
examine-design-of-pension-plans-to-ensure-sustainability
Public servants are working fewer years and living longer in retirement on their pensions
– in fact, about 27 years longer – than when the plans were created more than 40 years
ago. The report found that a further increase in life expectancy over time, of between
one to three years, could boost the plans’ actuarial obligations by between $4.2 billion
and $11.7 billion.
At the same time, the plan has faced the volatility of the market since the 2008 financial
crisis and low interest rates, increasing the cost of pension obligations.
The plans have a major impact on Canada’s debt and deficit. The three plans have
liabilities totalling $152 billion, the second-biggest liability after Canada’s market debt.

9. LIBERALS AND PUBLIC SECTOR
Source - https://www.liberal.ca/wp-content/uploads/2015/10/New-plan-for-a-strong-middle-class.pdf

10. WHAT IS DIFFERENCE BETWEEN TBP, DB AND
DC PLANS
Source - http://www.moneysense.ca/save/retirement/pensions/defined-benefit-pension-plans-due-change/
TBPs can place explicit limits on the volatility of employer contributions. So if a funding deficit
arises in a TBP (because of underfunding, or lower-than-expected investment returns, say), part or
all of it can be compensated for by reducing accrued benefits to employees whereas a traditional
DB plan would require the entire deficit to be funded by increased contributions on the part of the
employer—the federal government (and by extension, the taxpayer).
Less desirable than either DB or TBP plans are DC plans, which are mostly self-directed by the
employees who own them. (If you have a pension with your employer you likely have one of these.)
That means that contributions are completely fixed and mostly paid by the plan holder, and there’s
a lot of uncertainty as to what retirement income payouts will be because that depends entirely on
the way you managed and invested your DC pension money over time.

11. BLOG – NDP AND PENSIONS
• Seriously? What joke? Do you even grasp how
pension funding works?
• Pensions have rules (GAAP)
• What party wants to hike taxes and keep
carbon tax? That would be NDP!
• I do not see Teachers asking the govt to cut
their matching, why?
•
• https://www.slideshare.net/paulyoungcga/pensi
ons-world-and-canada-analysis-july-2017

12. BLOG - PENSIONS
• https://www.cpacanada.ca/-/media/site/business-and-accounting-resources/docs/aspe-briefing-section-3462-
employee-future-benefits-a-focus-on-defined-benefit-plans-november-
2014.pdf?la=en&hash=52A1B18BCA458C959F7AEBE574CCB8DAE4C027F9
• I have been through audits and you haven’t Pension Funds are tested. The bankruptcy laws need to be
changed
• Pensions plans can be revised, especially if there issues with funding. i.e. cutting back payments. cost to
borrow against pension assets
• That is your opinion on GM, right? Pensions funds are held in trust. Companies going through restructuring
can put a freeze on pension funding as part of their restructuring. Sears plan had its mistakes, especially the
appointed trustees should not allow bonuses to be paid out
• Private sector in the 1990s moved away from DB to DC plans as the companies were saying the DB were to
risky.
• Govt pensions continue to be review as part of their solvency. I cover that in my presentation -

13. CPP HIKES • Businesses said CPP Hikes were to high -
https://www.cfib-fcei.ca/en/advocacy/cpp-
canada-pension-plan or
https://www.ctvnews.ca/politics/cpp-deal-
bad-for-small-business-canadian-chamber-
of-commerce-1.2956059
• People are saving for retirements -
https://www.cbc.ca/news/business/census-
canadian-saving-1.4287219
• TFSA benefited low to middle class Cdns -
https://business.financialpost.com/personal
-finance/tfsa/exclusive-canadians-maxing-
out-their-tfsas-from-all-walks-of-life
• CPP hikes were done on purpose so that
CPPIB had more funds to invest with
infrastructure projects across Canada
• CPP hikes do not help people already on
CPP or OAS or Income Supplement

14. LISA RAITT VS JUSTIN TRUDEAU CPP
Source - https://twitter.com/lraitt/status/1078842026676781056

15. ARE PEOPLE SAVING FOR RETIREMENT
• Here are my comments to LPC/NDP https://www.canadianmanufacturing.com/human-resources/canada-sole-member-g7-not-
raising-retirement-age-adding-big-costs-report-204743/
• Harper had it right when it came to pushing out the retirement age to 67.
• http://www.msn.com/en-ca/money/other/proposed-cpp-changes-would-hike-premiums-starting-in-2019/vi-AAhnSmb (This is rich
coming from Morneau as he was the former CEO of Morneau Shapell that focused on Pension Plans)
• Morneau - http://www.plant.ca/general/with-the-federal-budget-tabled-morneau-prepares-to-refocus-on-cpp-expansion-
157272/?utm_source=CPLT&utm_medium=email&utm_campaign=CPLT-EN03292016
• Justin Trudeau - http://www.thestar.com/news/canada/2015/06/25/justin-trudeau-pension-plan-could-eliminate-need-for-ontario-
version.html
• Scott Brison comments - http://news.nationalpost.com/full-comment/scott-brison-more-infrastructure-stronger-economy
• John McCallum comments - http://www.cbc.ca/player/News/Politics/ID/2668016113/
• OAS/NDP - https://www.youtube.com/watch?v=32bySE5UMw4
• It is funny how people read the by-lines, but never actually look at the programs and/or asked the question to why people are
not doing more for their retirement. Here are examples of programs including the trends. JT talks about retirement, but has
never once said how he will fund the changes to OAS or CPP, why?
Summary / CPPIB
• Liberals dropped the TFSA to 5,000 - https://business.financialpost.com/personal-finance/tfsa/exclusive-
canadians-maxing-out-their-tfsas-from-all-walks-of-life
• Trudeau also has made statements that CPPIB will be encourage to invest in infrastructure projects -
https://www.theglobeandmail.com/report-on-business/cppib-head-cautious-on-canadian-
infrastructure/article32617837/
• Transit systems are subsidized - https://www.slideshare.net/paulyoungcga/canada-transit-analysis-for-
october-2018
People are saving for retirement
https://www.cbc.ca/news/business/c
ensus-canadian-saving-1.4287219
Government policies and Issues

16. SOLUTIONS
• All new government employees should be moved to defined contribution plans.
• This would eliminate pensions being based on your five best years
• Defined Benefit plans should be slowly rolled into Defined Contribution plans as part of union
negotiations.
• Guarantee Income Supplements needs to expanded to include more people
• Government matching pension should be topped at 4%
• MP life-time pensions should be replaced with defined contribution plans including matching up
to 4%
• CPP Hikes should only be tied to inflation.