A year after the Certified General Accountants Association of Canada (CGA-Canada) reported serious funding shortfalls in Canadian defined benefit pension programs, CGA-Canada has released an update showing even more disturbing numbers.

The update builds on CGA-Canada’s June 2004 report and compares 2003 and 2004 survey results. The report estimates that the additional funding required to fully fund deficit plans has grown from $160 billion at the end of 2003 to $190 billion at the end of 2004.

Recently, the number of companies that have failed to deliver on pension obligations have been a wake-up call for the Canadian business community. As a result, defined benefit plans, once the flagship of benefit packages, are losing favor. The new CGA-Canada report encourages employers to consider the relative benefits of defined contribution programs as a safer long-term solution for their employees.

CGA-Canada believes that pension obligations, like payroll, should be considered a contractual undertaking, and that employers should not be permitted to abdicate from pension obligations. “For a company to fail on pension obligations is no more acceptable than not paying an employee their salary,” says Rock Lefebvre, CGA-Canada’s vp, research and standards. “Canadian employers need to change the way they think about pensions and start looking at them as deferred compensation.”

“The pension situation in Canada is ripe for reform,” says Anthony Ariganello, CGA-Canada president and CEO, “and reform is necessary in order to sustain the lifestyle and economic expectations of Canadians.”