Analysis: Canada takes tough stance on pension fund relief
By Louise Egan and Susan Taylor
OTTAWA/TORONTO (Reuters) - Conservative Canada is taking a different tack than Washington on the thorny issue of helping companies fund their widening pension gaps, shrugging off corporate pleas for relief even as the United States lets businesses slash their contributions.
A frightening prospect for workers, retirees and companies, yawning pension deficits have gone from arcane accounting entries to front page news on fears that massive shortfalls could even cause some corporations to fail.
As a growing number of employers look to roll back benefits to the alarm of unions, others are pouring cash into their pensions funds only to see the hole get deeper.
With no sign the problem is going away any time soon, six big Canadian corporations have banded together to ask the government for measures such as more time to pay down deficits in their defined-benefit pension plans.
But the federal government, which provided companies with three rounds of pension funding relief between 2006 and 2010, has no plans to do the same again.
"We're not looking at any changes," Finance Minister Jim Flaherty told Reuters in a recent interview in California.
"At the end of the day, these are pension funds that need to be worked out between the employers and their employees. It's a private matter, except that there's a legislative vehicle in place, if they want to follow the distressed pension plan model. There's a way of proceeding," he said.
Flaherty was referring to 2010 reforms that relaxed funding rules for stricken plans but which some say don't go far enough to address the fundamental problems companies face. Continued...