People don’t consciously control a lot of their behaviour. For plan sponsors, this is frustrating, because getting employees engaged in benefits and retirement plans is all about behaviour change.
The core of any employee benefits plan is the pension. But with DB plans, rapid changes in longevity have pushed the majority of funds into an underfunded position, and employers are increasingly closing plans to new entrants in order to get the deficit under control and reduce the pressure on the corporate balance sheet.
The new BC Pension Benefits Standards Act (PBSA) emphasizes governance and the role of the pension administrator.
Canada needs to look to target benefit plans if we are to have achieve adequate retirement savings, says the Association of Canadian Pension Management (ACPM) in its new Target Benefit Plan Paper.
The reality that Canadians are not saving enough for retirement has sparked the idea of reforming the pension system. Speakers at the 2012 DC Plan Summit discussed the recently proposed pooled registered pension plan (PRPP), changing the lifetime contribution limit and the need for increased financial literacy as strategies to encourage people to be better prepared for their post-work years.
Ontario’s minority government released its budget for the 2012-2013 fiscal year yesterday. The budget announces a number of measures that are expected to have a significant effect on pension plans and retirement saving—particularly in the public sector—if the budget is passed by the Ontario legislature.
VRSPs to take effect next year.
Although the risks and challenges are often the same, no matter the size of the plan, the solutions are ultimately different, says Steve Eadie, a partner and pension consultant with Robertson, Eadie & Associates.
With a standard planning tool, we can plug in RRSP savings of a million dollars and an assumed investment return of 5% a year and determine that we can generate an income of about $76,800 per year, including government benefits, indexed to 2% inflation, and our money will run out in about 20 years.
Pension standards legislation in Canada allows an employer to act as the administrator of its single employer pension plan. However, as a plan administrator, an employer must remember two points: do no harm and take no advantage, says Randy Bauslaugh, a partner in the Pensions, Benefits & Executive Compensation Group with McCarthy Tétrault, LLP.