TORONTO, Nov 29: Canadian Finance Minister Jim Flaherty’s move this week to give federally regulated pension plans more breathing room to make up funding shortfalls could be the precursor to more substantial, nationwide pension reform.

The financial crisis -- which has beaten down global markets and chopped the value of assets held by pension funds -- might speed up ongoing discussion about how to modernise federal and provincial pension laws, experts say.

Flaherty has proposed that companies in such federally regulated sectors as telecommunications and transportation get 10 years to make up pension funding shortfalls, instead of the current five years.

On Friday, he said that pension issues will be on the agenda at a mid-December meeting of federal and provincial finance officials.

“We recognise that there are more issues relating to pensions than the single issue that we dealt, but what we did will be of significant assistance to pension plans in Canada,” Flaherty told reporters after a speech in Toronto.

But some experts question whether eligible companies will actually be able to make use of that assistance.That’s because by the end of 2009, plan members must approve the 10-year payment schedule, or companies must secure the difference in funding with a letter of credit.

Today, thanks to the financial crisis, those letters are not an option, and consent from unorganised pensioners is difficult to obtain, said Michel St-Germain, an actuary and partner with consulting firm Mercer in Montreal.

“The hope with those measures is that, by the end of 2009, the credit crisis would be resolved and then perhaps some of the (plan) sponsors would have access to a letter of credit,” St-Germain said.

Another pension expert called the latest measure “a short-term fix” to help companies meet commitments.“It’s a temporary thing to get us to the main act,” said Keith Ambachtsheer, director of the Rotman International Centre for Pension Management and president of KPA Advisory Services Ltd. Of more significance is Ottawa’s commitment to explore broad changes to the Pension Benefits Standards Act, said Ambachtsheer.

The Finance Department said it will consult on issues facing defined benefit and defined contribution pension plans “with a view to making permanent changes to the framework in 2009.” —Reuters