Defined benefit pensions at tipping point

A new survey of more than 150 Canadian pension plan sponsors from professional services firm Towers Watson indicates that just over half (51%) of the private sector defined benefit (DB) plan respondents have now converted their plans to defined contribution (DC) arrangements for current or future employees - up from 42% in 2008. The survey also reveals that recent improvements in economic conditions have had virtually no impact on executives’ perception of a DB funding crisis. The percentage of respondents who agree there is a pension funding crisis has remained at historic highs since the financial downturn of 2008. The survey found that more than half of respondents (56%) believe that the funding crisis will persist for the long term, compared with 34% who held this view in 2008 before the recession. Just under one third (32%) perceive funding challenges to be a cyclical phenomenon. (Read the article “Definedbenefit pensions at tipping point” at Towers Watson online.)