More on Pensions

Brent Jang of the Globe and Mail has been kind enough to point me to an article from March that lists companies with federally regulated pension plans that are seeking relief from regulatory requirements. The one that is now in the news is Air Canada, but this list includes:

1. Canadian Pacific;
2. Bell Canada;
3. MTS Allstream;
4. Canadian National Railway Co.;
5. Canada Post; and
6. Nav Canada.

FETCO, the industry association representing these organizations on pensions, among other matters, presented a brief (pdf) to the Department of Finance in March outlining some of the remedies sought. Among those measures was an extension of the period in which shortfalls can be made up, from five to ten years, as well as various means to improve the existing solvency of defined benefit pension plans.

This is not proof of pension plans in trouble, but surely it suggests that there are a number of very large pension plans that may be at risk. As in so many instances in this financial crisis, there is a huge moral hazard risk here. It is all too easy to underfund pension plans, knowing that if some calamity arises, governments, provincial and federal, will pick up the tab.

The regulator, the Office of the Superintendent Financial Institutions (OSFI), must regulate more vigorously. But it also needs to be more accountable and transparent regarding the health of worker pensions.