For any pension plan administrator looking for guidance around governance responsibilities, look no further than the Canadian Association of Pension Supervisory Authorities’ guideline No. 4. The guideline, which was originally published in 2004, offers a principles-based approach, recognizing there’s no one-size-fits-all solution to governance and leaving implementation up to the plan administrator. The guideline and its accompanying […]
The Ontario government’s announcement in its April budget that it will be addressing the regulatory framework related to defined contribution pension plans has done little to quell the debate about whether modernization and expansion of the existing rules is necessary or desirable. Those in favour say that, as defined contribution plans continue to grow in […]
Earlier this summer, Fidelity Investments settled two lawsuits brought by employees over the company’s own 401(k) plan. The suits alleged the firm offered employees its own higher-cost mutual funds when cheaper fund options were available and charged recordkeeper fees that were too high for a plan of its size. Fidelity contends the suits were “without merit” but settled for $12 million, which will be shared among more than 50,000 employees.
A few years back, we held a session at the annual Avantages Montreal DC conference and asked the sponsor audience how likely they would get involved in helping DC members optimize their retirement income, post-accumulation. Sadly, only two out of the 50 or so sponsors present said they would. But it looks like things are changing.
Replacement income levels generated by capital accumulation plans declined to 63% in the first quarter of 2014, according to Eckler’s Capital Accumulation Plan Income Tracker.
With funding risk in a DB pension plan borne by the employer, DB plan sponsors have little need or incentive to engage members—beyond annual statements—until they terminate plan membership or retire. In contrast, the shifting of investment responsibility and risk to members in a DC plan means those members need access to more information about investments, as well as education around the options available through the plan and how to select those options.
The Canadian Association of Pension Supervisory Authorities (CAPSA) has released a draft Defined Contribution Pension Plans Guideline for comment from the pension industry.
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.