The Canadian Press

Federal Finance Minister Jim Flaherty says “comprehensive reform” to federally regulated pension plans is on its way.

In question period Monday, Flaherty said his department has completed a “vast consultation” with various stakeholders across the country, led by his parliamentary secretary Ted Menzies. The consultation began last January.

Flaherty said this consultation will result in reforms which will be announced soon.

He added that the federal government has also created a working group with the provinces and territories to find a collaborative solution to pension problems in Canada, as fewer than 1% of pension plans in Canada are federally regulated.

“This is a serious issue. It is not to be dealt with on the back of an envelope or by a knee-jerk reaction. It’s to be dealt with collaboratively, intelligently and thoroughly by governments working together in Canada,” Flaherty said.

Reports say these reforms could include allowing funds to carry a greater surplus than they can currently. Existing legislation prevents federally regulated employers from over-funding their pension plans by more than 10%. The goal of this is to protect federal tax revenue, as contributions to pension plans are exempt from taxes.

The government is also considering requiring pension plans to report more often. Currently, if a federally regulated plan does not have a deficit, it only has to report every three years.

However, the Conservative government won’t consider creating a federal program to protect pensioners in case a company goes bankrupt, something NDP Leader Jack Layton has proposed in the past.

Ontario is the only province that has a pension benefits guarantee fund, which provides the province’s pensioners with up to $1,000 a month in the event a plan fails to provide its full benefit, or any benefit at all. It is funded by corporate contributions, and the government has no legal obligation to top it up.

However, the Ontario government has admitted that with only about $100 million in funds, the pension guarantee fund is dramatically underfunded.

Public and private pension plans across the country have taken a beating from the financial crisis as well as historically low interest rates, with many suffering serious solvency deficits as a result. In addition, the recession has pushed many companies into bankruptcy, leaving some pensioners in the lurch.

Many interest groups have called for a vast overhaul of Canada’s pension system to protect pensioners as Canada’s population ages.

A recent survey by the Office of the Superintendent of Financial Institutions put the average solvency ratio for the 400 or so private plans it regulates at 0.88 or 88% as of June 30.

That means that, on average, the total value of assets in all federally regulated private plans were 12% lower than liabilities. That was a 3% improvement from December 2008 when the assets of such plans were 15% short of liabilities.

But while the average solvency deficit was 12%, it is much greater for some plans and in some cases has reached 50% of more.