Protecting Pensioners of Traditional Defined Benefit Plans: A New Approach to Solvency Funding and Benefit Reductions on Plan Wind-up

Author: Serge Charbonneau, Joseph Nunes

Publication date: 22-09-2021

Version: Current

Language available: Bilingual

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The current system for winding up underfunded defined benefit (DB) pension plans involves dividing the segregated pension fund among all plan beneficiaries on a pro-rata basis according to the value of their pension entitlement. This means that if the available funds represent, for example, only 90% of the value of the collective promises, then each beneficiary sees a 10% reduction in their pension. This begs the question: Is there is a better approach to addressing underfunded pension plans?

Categories: Statements

Types: Insight statements

Topics: Pensions

Pages: 27

Format: PDF

Accession no.: 221105