Employers who sponsor defined benefit(DB)plans should help teach their employees about the benefits of the plan, said Mark Fuller, executive vice president and chief operating officer of the Ontario Pension Board.
Speaking at the sixth annual Canada Cup of Investment Management yesterday, he said DB members have a low understanding and appreciation of their plans because employers in the past didn’t think it was necessary to spend a lot of time and effort conveying that value.
“The problem about this lack of understanding and appreciation is that if employees don’t fully value or appreciate their defined benefit plan, it will never act as a strong attraction and retention tool for the employer which after all is the main—if not the only reason—that the employer wants to sponsor a plan like this.”
Jonathan Barry Forman, vice chair of the Oklahoma Public Employee Retirement System, agreed with Fuller about educating employees and giving them more information about how much the plan is worth.
“What we need to be doing is a better job of telling our employees is what you’ve got is worth $300,000 or $400,000,” Forman said, “so be grateful for this wonderful plan and don’t be anxious to go out there and play the stock market with an individual account.”
Fuller thinks that plans sponsors need to get their message across to employees—who are more focused on their retirement today than they were in the past—about the value of their plans. “From my perspective,” he said, “this lack of understanding and appreciation of DB has to be fixed if the DB plan is to survive.”
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