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A new pension system could be in the works

Sources say the Harper Government will be proposing a third option pension plan system on Thursday

(File photo)
Photo: CTV News

Sources say the Harper Government will be proposing a third option pension plan system on Thursday.

Minister Kevin Sorenson speaks to the Economic Club of Canada at lunch, saying there will be a national consultation on a new shared-risk pension plan which would be available to Crown Corporations and any companies federally regulated, such as broadcasting, telecommunications, airlines and banks.

As things are now, if you have a pension plan at work it is either a Defined Benefit plan or a Defined Contribution Plan.

Defined Benefit isn't used much anymore because it can cost corporations more.  A Defined Contribution Plan makes it so the employee assumes all the risk of contributing into an investment vehicle.

Ottawa wants something in the middle, where the employee and the employer share the risk and jointly manage the plan.

If the investment over performs, benefits could be increased to retirees.   

If the investment under performs, employers would not be required to top up the fund so the retiree could have their benefits reduced, their contributions increased, or both.

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