A New Paradigm for the Wind-Up of Registered Pension Plans in Ontario

In my view, the current requirement to settle all benefits determined at wind-up on an immediate liquidation basis is extremely expensive and is therefore detrimental to most of the stakeholders in the pension industry. Current regulations favour appointed administrators and insurers rather than plan members. The attached article discusses a new wind-up regime that would provide better outcomes for members, plan sponsors, regulators and the Pension Benefits Guarantee Fund.

A New Paradigm for Pension Plan Wind-ups

An Improved Application of the Variable Annuity

The attached paper describes my recommended changes to the traditional variable annuity concept which would allow the new variable annuity payouts to be more stable (a needed change from traditional variable annuities) and allow the management of the longevity risk within the variable annuity.  With these improvements, the variable annuity would become an effective mechanism for providing payouts to DC members other than the traditional insured annuity or life income funds.

An Improved Application of the Variable Annuity

How Assets will be Invested in the ICPP

In this post I will review how assets will be invested under the Ideal Canadian Pension Plan (ICPP) but, again, first a little background.

The ICPP will clearly distinguish between assets that are supporting benefits that are payable later and assets that are supporting benefits that are payable now.  There will be an Accumulation Fund for assets supporting benefits payable later, a Transition Fund for assets being transitioned from the Accumulation Fund into a Payout Fund and a number of Payout Funds to support the various targeted benefits under the ICPP when they are in “payout” mode.  Continue reading How Assets will be Invested in the ICPP

Benefits Targeted Under the ICPP

In this post I will review the benefits targeted under the Ideal Canadian Pension Plan (ICPP) but first a little background.

The ICPP will clearly distinguish between targeted benefits, funded benefits, secured benefits and insured benefits in all decision making and communications. 

The targeted benefit is the benefit that is expected to be provided to an employee given the agreed upon contribution levels.  It is the benefit that the plan member expects to receive in retirement. 

All targeted benefits do not have to be lifetime benefits.  All targeted benefits will not have to be fully inflation protected.  Most employees will have more than one type of targeted benefit.  Some benefits will be payable for a member’s lifetime.  Some will be payable for a shorter period.    

All plan members will not have the same targeted benefits.  Each member will set his own targets to meet his own needs.   Continue reading Benefits Targeted Under the ICPP

Background on Design Elements of the Ideal Canadian Pension Plan

In my last post I reviewed why we need a solution to the pension “crisis” in  Canada and described what I think the “crisis” truly is.

Once a problem has been defined, a solution is needed.  We must create a pension plan that delivers sustainable and appropriate solution to the crisis – the Ideal Canadian Pension Plan (ICPP).

The ICPP must be a pension plan that meets all of our requirements.  The goal is to deliver an “ideal” solution. Continue reading Background on Design Elements of the Ideal Canadian Pension Plan

Why the Ideal Canadian Pension Plan

The popular press has been buzzing with suggested solutions to the Canadian pension crisis.  Generally there have been two schools of thought.  Increase the Canada/Quebec Pension Plan (CPP) or introduce Pooled Registered Pension Plans (PRPPs).

I have heard many inventive ideas about how the CPP should be expanded or how PRPPs could make the pension system more efficient.  I have also been subjected to countless opinions about what should be done by our political masters to solve this crisis. Continue reading Why the Ideal Canadian Pension Plan