Manitoba Finance Minister Cameron Friesen is launching a public review of pension law he says could reduce employers' contributions and give individuals greater access to their locked-in funds should they experience financial hardship.
"We understand how important it is for Manitobans to have secure income," Friesen told a news conference Wednesday.
The pension commission reviews the Pension Benefits Act every five years, then makes recommendations to the province, Friesen said. The finance minister said his goal is to have greater flexibility and to improve the affordability of pension plans, while protecting those investments.
Pension commission vice-chairman Tim McGorman said the major recommendation proposes changes to defined-benefits plans.
McGorman said the recommendations advise Friesen to relax the requirements for going-concern funding and solvency funding. Going-concern funding involves the amount of money needed in the fund to cover normal requirements, while the solvency criteria cover how much money is needed should the plan all be paid out at once.
The proposals would both reduce how much money would be set aside and change the time necessary to bring the plan up to appropriate levels, he said.
Currently, "It is placing a severe burden on plan sponsors. The changes would lessen the funding requirements for solvency. The net result would be lower contributions for employers," McGorman said.
Friesen said the recommended changes would improve the long-term health of pension plans.
"This is about recognizing the economic framework (affecting plans). There's a lot of pressure on pension plans now," the minister said.
Investments are earning less money, said Friesen, and there are more pensioners drawing on their plans, but fewer working people paying into plans. "The danger is," he said, employers are saying: "We'll roll this up and not offer it to our members anymore."
McGorman said it is difficult to say what effect the possible changes to going-concern and solvency criteria would have on workers' pension contributions and retirees' payments, because those figures are set at the bargaining table.
Friesen said most jurisdictions allow workers to draw on their locked-in funds when needed.
"We have some of the least-flexible rules when it comes to unlocking," Friesen said.
People in financial hardship are telling the province, "We need it, we need it now," he said.
Linda Buchanan, provincial superintendent of pensions, said Manitoba does not yet have definitions of financial hardship.
Seniors activist Tom Farrell applauded the proposals Wednesday after meeting with Friesen.
"To pensioners, it's assurance some of the things ahead of us are going to be more secure," said the 79-year-old Farrell, president of the Manitoba Association of Senior Centres.
The current system is too rigid, Farrell said in an interview. "Many companies have tried to move from defined-benefits plans because the rules are too rigid."
Economic cycles can lead to employers' underfunding pension plans, but giving employers more time would sort of contributions, Farrell said.
"It can be challenging to make up that deficit. (It) would give them more time and more opportunity to deal with that. As an old dog, I'm glad to see the attention to pensions. I credit the minister for that," Farrell said.
Public comment closes Feb. 21. More information on responding to the review is at www.gov.mb.ca/labour/pension.
Nick Martin is the bearded guy we keep hidden away at the back of the newsroom. He is now in his fourth decade working in daily newspapers.