When thousands of disgruntled Nortel retirees gathered on Parliament Hill last month to demand pension reform, they carried placards with messages such as “Why don’t governments care?” Faced with mounting public concern about pensions, governments across Canada are now rushing to prove they do, in fact, care. A joint federal-provincial report on pension reform will be released in December, when federal Finance Minister Jim Flaherty meets with his provincial counterparts in Whitehorse. Meanwhile, Flaherty’s government is pushing ahead with its own pension reforms for federally regulated companies, such as airlines, which represent only 7% of all of Canada’s pensions. But even if the scope of the change is small, the proposals appear to be welcome news for Canada’s corporate leaders.
According to a recent Compas poll of Canadian CEOs, they overwhelmingly support the government’s plan. Asked to grade four key proposals on a scale of one to seven, with seven meaning “strongly agree,” the business leaders gave all the reforms a ranking of 5.5 or higher. Receiving top marks were changes to tax laws that would allow plans to run surpluses of 25%, compared with the current level of 10%. This higher surplus cap received a mean score of 5.8, as did plans to limit companies’ ability to improve the benefits if the plan is less than 85% funded.
Respondents demonstrated an appetite for further changes, giving high marks to reforms proposed by the opposition parties. Most popular was a plan to make pensions a priority in the event that a company goes bankrupt.
While the CEOs endorsed the proposed reforms, they also expressed considerable anger with the current system. “The companies and the management that have screwed with pension plans, removed funds or underfunded plans piss me off to no end,” commented one CEO. “I can’t believe anyone would be so callous.”