Talking Shop
Consultants share their views on…
The Impact of the Recession “Organizations that struggle financially are obviously going to be preoccupied with more pressing issues than their pension and benefits programs. But you’ve still got to manage your pension and benefits plans, and you need to meet your regulatory requirements, so those activities will continue.”
– Greg Malone, principal, Eckler Ltd. “While people are looking at cutting back on things, like trying to lower their overall health cost spend, we’re seeing increased interest in investments in wellness, health promotions, et cetera, despite the recession. So it’s a two-edged sword: while we see a lot of cost reduction going on, it’s actually represented a fair bit of opportunity to support clients around those types of issues.”
– Kevin Aselstine, managing principal, Towers Perrin Helping Clients Through Tough Times “It’s more about walking alongside them—just being there to make sure things go as they should, relying on us more…we’re there for the long term.”
– Joy Sloane, partner, Morneau Sobeco “It is our responsibility to get very creative, deeply thoughtful and empathetic in terms of being able to work with clients who are going through tough economic times, and think about the relationship from a longer-term standpoint.”
– Ashim Khemani, chairman and CEO, Aon Consulting Changing Client Expectations “Clients are asking us to help them—to work smarter and get more bang for their benefits buck, and to keep things moving through the economic conditions.”
– David Krieger, president, Krieger + Associates “Everyone’s looking to do more with less. One of the solutions is for us to help employers manage their employees’ health and well-being so they get that outcome of having lower absenteeism and higher productivity.”
– Sarah Beech, managing principal, consulting, Hewitt Associates Pension Plan Funding and Investing “Solvency rules have driven many of our clients crazy because of the volatility that they create. They have become frustrated because the solvency relief has not necessarily given them what they felt was important as a plan sponsor.”
– Ian Markham, director of pension innovation, Watson Wyatt Worldwide “How many cycles of five-year volatility in the equity markets do we need to see to accept that DB plans are simply too risky to have a significant amount of equity holdings to effectively weather short-term market volatility? What do we need to see before we accept that we need a different strategy?”
– Kevin Sorhaitz, principal and consulting actuary, Buck Consultants Plan Member Education “Retirement education and overall financial planning education are becoming extremely important—not just for those near retirement but also for younger people.”
– Sarah Beech, managing principal, consulting, Hewitt Associates “I’ve seen many more clients—even mid-size ones—being much more focused on governance of their pension and benefits programs. I think two-way communication is a big part of that.”
– Zahid Salman, executive vice-president, Morneau Sobeco Competition and Consolidation “The large, mammoth firms will be able to offer virtually every conceivable service to their clients. I think the simple truth is that most companies don’t need every single one of the services. But, in some manner, they end up paying for the availability of the services—even if they don’t use them.”
– David Krieger, president, Krieger + Associates “One of the trends we’ve seen is an increased focus on partnership—the plan sponsors themselves, their service providers, the beneficiaries of the program. There seems to be a more coordinated effort, not just in being informative but in the whole designing and operation of plans.”
– Greg Malone, principal, Eckler Ltd. Future Pension Reform in Canada “The fear that we have from the expert panels is, will they eliminate any incentives for employers to have single-employer pension plans?”
– Zahid Salman, executive vice-president, Morneau Sobeco “If there’s no significant change in regulation, I don’t think you’re going to see many single-employer DB pension plans that aren’t associated with a union or aren’t in the public sector. It’s just not feasible; they can’t handle the large [cost] fluctuation. If they want to avoid the inevitable cost spikes of DB that can jeopardize the short-term viability of a business, DC is a much safer bet in the current legislative environment.”
– Kevin Sorhaitz, principal and consulting actuary, Buck Consultants “At this stage, we’re at a big crossroads. We wait to see whether the pension reform will take us down the route of enhanced benefit security for past service and just let sponsors do whatever they’re going to do for future service, or whether there will be more catering toward the future service accruals and trying to help sponsors manage those going forward on a DB basis.”
– Ian Markham, director of pension innovation, Watson Wyatt Worldwide | 