Mitch Frazer Discusses Healthy Position of Canadian Pension Plans

December 27, 2017

Partner Mitch Frazer has told the Globe and Mail many pension plan sponsors are not ready to make any quick decisions on future movements despite the positive position the market currently find itself in.

The article says “Canadian pension plans are the healthiest they’ve been in almost a decade after a turnaround this fall left close to half of all plans in a fully funded position.” It also says that some plans find themselves with a surplus.   

With the surpluses somewhat unexpected, Mitch told the Globe and Mail many sponsors are not rushing to make decisions on what their next move might be.

"Right now, I think most people are still thinking about what to do with it because I think there's more of a surprise than anything else," Mitch told the Globe and Mail.

"I think people are happily positive that there's an upswing, but are waiting to see if things stay in that position."

Mitch also spoke about the timing of valuations for pension plans. The articles discussed how many companies still needed to make cash contributions to their plan to fund the shortfalls experienced from the previous years.

It is pension rules to conduct “valuations of the funded status of a pension plan at least every three years.” Companies then have up to five years after that to cover any funding shortages.

Pension plans are permitted to redo valuations whenever they like, Mitch told Globe and Mail, and added that some companies are planning to “file new actuarial reports with regulators to show their plans have little or no shortfall so that they can reduce special payments.”

"Everyone looks at the funding on an annual basis, and if there's a benefit to filing sooner, everyone files sooner," Mitch said.

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