Trouble Being Experienced By Private Pension Plans Is A Trend We Must Watch Carefully

Special Report By 
Robert Kirwan
Valley East Today

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 fully-funded plan.

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.


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