According to the Canadian Broadcasting Corporation (CBC), the church’s pension plan faces the same issues dogging most private sector plans—people are living longer, which puts stress on pension plans that have to pay them longer, and sustained low interest rates are eating into normal investment returns.
At the end of the church’s last fiscal year, the pension plan had $602.8 million in assets and a $28.7 million shortfall—95% funded over the long term. However, the plan is only 70.5% funded on a solvency basis were it to be wound up tomorrow.
The plan’s administrators are asking for a three-year extension on having to address that gap. The hope is that by then, the plan’s finances will have improved, no doubt helped along by rising interest rates that improve the plan’s valuation.
"With funding relief, we will have three years to try to improve our plan's funding level," the plan administrators told pension members in a recent letter, according to the news report. "At the end of three years, we will do another valuation of the plan. If there is still a solvency funding shortfall, we will likely have no choice but to cut benefits."
The church's pension plan returned 13.2% last year, and has averaged 7.5% per year for the past decade.
By law, the plan must have the support of two-thirds of members before government will consider giving approval to the proposal, the news report said. A vote is scheduled for September 6.