The Liberal government is following the Conservatives’ lead by introducing legislation that will allow employers to reduce pension benefits.
Bill C-27, An Act to amend the Pension Benefits Standards Act, had its first reading in the House of Commons last week.
A target benefit pension plan is a big gamble
This bill will allow employers to shift from good, defined benefit plans that provide secure and predictable pension benefits, into the much less secure form of target benefits.
Unlike a defined benefit plan, where the employer and employees contribute and retirees know how much they can expect when they retire, the amount you receive under a target benefit pension plan is just that, a target. Meaning, the plan aims to give you a certain pension benefit, but there’s no guarantee.