Soaring deficits resulting from the plunging stock markets had prompted many federally regulated pension plans to band together to lobby for federal help. But in an economic statement yesterday, Finance Minister Jim Flaherty announced that pension plans will only have an extra five years to repay funding shortfalls, giving them ten rather than five years to make up differences between their asset values and their pension obligations.
Many companies had hoped for a ten-year extension and are warning that with only five years, they will still be unable to resolve their funding problems.
Since the majority of Canadian pension plans are provincially regulated, yesterday's move will pressure the provinces to provide relief. Ontario is looking at introducing similar measures for provincially regulated pension funds.
Mitch Frazer said the relief is still an important "Band-Aid" and said he is relieved to see Mr. Flaherty also announce a review process with a view to making permanent pension changes in 2009.