NUPGE says real pension crisis about coverage, not funding

'Coverage is way too low, especially for new members in the private sector workforce.' - Larry Brown

Toronto (17 Nov. 2006) - The real pension crisis in Canada is not about the financial sustainability of defined benefit plans but the alarming decline in pension coverage for new members of the workforce, according to a new research report produced by the National Union of Public and General Employees (NUPGE).

NUPGE represents 340,000 workers, in both the public and private sector, who participate in pension funds with over $70 billion in assets.

The report, No Pension Panic: The real pensions crisis - it's all about coverage, not funding, sheds light on the current funding and coverage status of pension plans in Canada.

It is being released as union representatives and leading policy experts gather at a NUPGE conference in Toronto to discuss key policy issues confronting the pension industry today. The report and conference are timely as recent surveys indicate that the future of pension plans and retirement income is among the top concerns of Canadians these days.

“The pensions debate in Canada must focus on the real crisis,” says Larry Brown, NUPGE’s Secretary-Treasurer.

“Some of the large private sector industries are definitely experiencing formidable funding challenges. But this report shows that the extent of the problem has been overstated. And recent dramatic growth in pension assets and corporate profits indicates that most funding shortfalls are manageable and will be resolved in due course.”

“On the other hand, this report clearly shows that the real pensions crisis in Canada is that coverage is way too low, especially for new members in the private sector workforce.”

Some of the report’s key findings include:

A defined benefit pension plan offers workers and their families the best option for ensuring a predictable and adequate retirement income and benefits.
Jointly trusteed defined benefit plans are better managed and funded.
The pension funding cupboard isn’t bare and any claim that pension plans in Canada are facing a “funding crisis” is getting less persuasive by the day.
While the number of workers in defined benefit plans has increased, the percentage of the Canadian workforce covered by a pension plan has declined from 45.1% in 1992 to 39.9% in 2003.
The reason for this is that between 1992 and 2003, Canada’s workforce grew by 2.7 million workers, with the majority of new jobs being part-time, temporary or contingent work.
Over one-third of the Canadian workforce is now employed in contingent work and it’s estimated that only 15% of these workers participate in a workplace pension.

“If these trends continue it’s going to place increased pressure on our public pension system as the primary source of income for a growing proportion of Canadian seniors,” says Brown. “We need a strong national policy focus on improving the level of pension coverage to ensure all Canadians have financial security in retirement.” NUPGE

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