See, that’s the difference. The Canadian law requires a company to begin immediately and contribute enough each year that over 5 years the plan is fully funded. The company cannot take a break or expect thye market to fix things.
As a result, Canadian pensions are in much better shape that US ones.
However, the economics of a defined benefit plan in a volatile market still suck so much that Canadian compaies, like US ones, are dropping them for new employees.
I’m not sure if you’ve actually read the article, but it has nothing to do with what you’re talking about.
The issue is not a change in the requirements for full funding, but the interest rates used to measure the liabilities.
The lobbyist’s point (or at least one of them) is that interest rates are being held artificially low in an effort to stimulate the economy and this is causing them to need a greater level of funding for “full funding”.
The point though is that one big reason the government allowed this is not because of its merits but because allowing it would increase tax revenue. And that’s how the sausage is made. The years later when everything collapses everyone points fingers at everyone else.
Which is another argument for leniency. The idea is that if we make it too tough for these companies to sponsor pension plans fewer will actually do it, so let’s make the costs lower.
Bottom line is that it will have to be paid, in the end.
This is what I was talking about. You don’t get to $10B in the hole while contributing what you should have, in a matter of a few years. Especally considering that the interest rates have been very low for a decade. (See my post: I talked about this interest issue)
Adjusting the interest rate used for the calculations may ease the amount the fund is considered in shortfall - but it’s not going to take a fund $10B in the hole and paint it black…