Is your pension fund likely to come up short?
Just like everbody else, Canada’s biggest pension plans are struggling to cope after they took another beating over the past few months. And, when you look at future payouts, they continue to come up short, according to a recent Mercer study.
The Mercer Pension Health Index now stands at 60% down from 71% at the end of the second quarter -- not to say that's anything unusual. The index, showing the ratio of assets to liabilities, has been on a steady downward trend for several years.
And things don't seem to improving.
Pension costs are rising as retired teachers and their surviving spouses live longer. And most DB plans are subject to the same pressures.
To turn things around, OTPP will demand more contributions from members starting next year. The plan has also started trimming inflation-related increases for soon-to-be-retired teachers.
Why should you care? Well, even if you're not a teacher, this conditional indexing and higher contributions is a blueprint for what's likely to happen to your own pension plan - if you're lucky to have one to begin with.
Have you been hit with a request for more money? Have your prospective benefits been trimmed as well? Does any of this worry you?
By Gordon Powers, MSN Money