Senior federal regulators have warned Finance Minister Jim
Flaherty that the financial health of many private pension plans is
worsening. It appears as if some pension plans may even be given
permission to reduce benefits that were previously promised to retirees.
Apparently almost 72% of private pension plans were less than fully
funded as of June 2005. To show how many are close to the limit, just six
months earlier only 53% were in that position.
Pension problems are not limited to small business. Some of the
nation's largest companies are experiencing pension difficulties.
This means that it will be extremely important for people in the
workforce today to take precautions against pension plans that may not
live up to their promise. In some cases, a company bankruptcy could
jeopardize one's pension.
The trend in the workplace today is towards more temporary employment,
contracting services and changing careers every seven to ten years. This
does not lend itself well to any kind of pension plan, unless it is done
through individual investing in a mutual fund or registered savings plan.
Financial advisors always recommend that a person keep their own
investment portfolio healthy to allow for a personal pension income.
It is quite likely that many companies will consider a "pension
plan" that involves contribution to an employee's personal registered
savings plan instead of forming an official company plan. This will cost
the company much less in contributions and eliminate the need to have a
Agreeably, it is hard for many in the workplace today to discuss
pensions when they are trying to find meaningful employment. However, what
happens to private pension plans in the near future may have a profound
impact on the nature of employment in the future.