Ahead of this week’s meeting of finance ministers in Whitehorse, The Great-West Life Assurance Company Monday released a position paper on pension reform.

“Pension reform is an important issue for working Canadians, and one which Great-West Life believes needs to be dealt with on a fully-informed basis,” says Bill Kyle, senior vice president of group retirement services.

Great-West Life administers nearly 30% of capital accumulation plans (Defined Contribution Pension Plans, Deferred Profit Sharing Plans, Group RRSPs and Group Tax Free Savings Accounts) in Canada and has a significant presence in the North American group retirement savings market.

“Our position paper provides an overview of Canada’s current group retirement plan environment and recommends a practical, ‘made in Canada’ solution that addresses access, cost and adequacy.”

Great-West Life suggests a collaborative approach between government and industry could identify modifications to existing pension legislation to make DC pension plans more attractive. RRSP rules could be adapted to recognize a Group RRSP product type with features benefiting both plan members and sponsors, such as auto enrolment, auto escalation of contributions and no payroll tax on employer contributions.

Kyle says the solution proposed by Great-West Life would be practical to implement as it builds on current products such as RRSPs and DC pension plans, which enjoyed 70% growth between 2000 and 2008.

“This new product type — together with modifications to existing pension legislation — represents a progressive and innovative solution to addressing coverage and retirement income adequacy for working Canadians,” Kyle says. “Furthermore, this proposed solution effectively leverages existing private industry capabilities.”

Kyle notes that as the current debate about Canada’s pension system progresses, a successful model of collaboration between government and interested stakeholders already exists; that is, the process used by the Joint Forum of Financial Market Regulators in successfully developing and implementing the Capital Accumulation Plan Guidelines.

Kyle says the same process can serve as an excellent model for identifying and implementing improvements that would encourage new retirement plan creation and help ensure income adequacy for retiring Canadian workers.

“We believe that an objective, fully-informed review of the issues, objectives and available approaches will enable an open dialogue involving all stakeholders,” Kyle says. “Ultimately, it will help ensure a stronger pension system for all Canadians.”

IE