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March 3, 2022

Target-Benefit Pension Rules Totally Disconnected from Plans, Regulatory Hurdles Stifle Success

  • Target-Benefit Plans (TBPs) are being hampered by a disconnect between how they are regulated and how they are managed, states a new study from the C.D. Howe Institute.   
  • In “The Challenges Facing Target-Benefit Plans: Changes Are Needed to Provincial Pension Standards,” author Barry Gros details how effective and efficient management is key to these plans’ success, and where regulating the new pension plan option went wrong.
  • Although started with a great deal of promise, regulatory hurdles continue to stifle their ability to achieve maximum efficiency. TBPs’ regulatory standards were set with traditional DB templates in mind, but they require a different regulatory approach if they are to thrive. “Somehow, in this transition not enough time was taken to ask hard questions about how target-benefit plans actually work, about their inherent risk characteristics and how they should be regulated differently from traditional DB plans,” Gros explains.
Barry Gros

Barry Gros is a pension actuary who retired from active consulting in Toronto in 2014. He just finished an 8-year tenure as the Chair of the pension board of the University of British Columbia Staff Pension Plan, a target benefit plan for the past 50 years.