1. www.clc-ctc.ca cope/sepb 225 Canadian Labour Congress Department of Social and Economic Policy Bob Baldwin, National Director bbaldwin@clc-ctc.ca C4-PD

2. 2 The Future of Defined- Benefit Pension Plans Presentation to the Canadian Institute of Actuaries November 17-18, 2004 Montreal, Quebec

3. 3 Role of Trade Unions Bargain benefits Serve as (joint) administrators Policy advocates

4. 4 Coverage and Preferences of Trade Unionists Coverage overall (80 vs. 35) –small business (70 vs. 15) Preference hierarchy –defined benefit –MEPP (contingent benefit) –defined contribution

5. 5 Canada’s Recent Experience with DB and DC Plans Important change in the relative size of DB and DC membership Note: largely corporate sector Note: context of overall decline in plans and decline in member/employed person ratio

6. 6 Pressures Against DB Plans Longer term –Regulatory (and tax environment) –International (policy) developments –Limitations of DB plans (as we know them) –Slack labour markets –Changing composition of employment More recent –Surplus conflicts –DB financing problems

7. 7 Mitigating Developments (current and prospective) Union (plan member) pressure Experience with DC –High administration costs –Unpredictable benefits and retirement ages –Problems recruiting older workers New Hybrids –DC with DB guarantees –Explicit cost-sharing CAP Guidelines (new world of DC?)

8. 8 Hopeful DB Developments Less irrational exuberance Greater clarity about financing (risk-sharing) Overcoming DB limitations

9. 9 Conclusion Rumours of DB death are probably exaggerated Hybrids, including MEPPs, may become more important

10. Canadian Labour Congress 2841 Riverside Drive Ottawa, ON K1V 8X7 (613) 521-3400 www.clc-ctc.ca