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Pensions Change Only Thing Permanent!

By: Susan Thorpe

If someone were to ask the pension industry 'Can you spare some change?',they’d find that change is something it has plenty of, but unfortunately not the kind that can be given away.

Change is happening to the pension industry in Canada at unfathomable speed: takeovers, mergers, and acquisitions are forcing corporations to become more multi-jurisdictional than ever before.

Plan sponsors and administrators are faced with increasing demands with respect to their fiduciary roles; and plan members are required to make more decisions and constantly revisit their retirement plans. As a result of the changes being imposed, plan sponsors and administrators are looking for support and guidance to ensure that they are providing their plan members with the right products and decision-making tools. Plan sponsors, impacted greatly by the constant changes to their corporate structure, plan legislation, and demographics, are often confused. They are challenged by the differences in their plan members’ geographical, cultural, and socio-economical standards. These variances coupled with legislative diversity can lead plan sponsors down an onerous path when they are merely trying to provide the best that they can offer for their plan members. They must rely heavily upon the support of their providers, consultants, and agents to assist them with plan blending, plan wind-up, and new plan set-up

. The aforementioned can be confusing to say the least, but there are organizations in Canada that are working diligently to offer a resolve. The Canadian Association of Pension Supervisory Authorities (CAPSA), working in concert with all facets of the industry, has been developing guidelines and alternative solutions to the problems.

CAPSA has long been a strong proponent of Capital Accumulation Plan (CAP) guidelines and now is responsible for the initial suggestions that will formulate the new Model Law Principles.

Almost Non-existent

Plan sponsors are being invited to actively participate and respond to the new CAP guidelines and to the suggested Model Law. In the past, these types of uniform guidelines have been almost non-existent. However, their purpose is to ensure that:

The new guidelines will provide consistency in the industry. They will offer gentle directional support to encourage a focus on constant improvement and development of good governance practices. Plan sponsors will be (or should now be) responsible for maintaining the good health of their plan. They will be urged to provide a diversified selection of investments, be prudent with respect to the fees charged to the members, and provide the tools to enable the members to make informed decisions. By combining these many good practices, the results will be:

The last point brings up an important question: While CAPSA’s guidelines resolve a number of issues, will they actually guarantee effective education for plan members? We are constantly reminded that the entire responsibility cannot fall upon the shoulders of a plan sponsor. After all, members do have to take some accountability for their future, correct?

Well, let’s consider that retirement is just the next phase in life. It should be something that plan members should look forward to – not just for the fact that they will no longer be ‘working.’ Realistically:

But, how do we really prepare plan members for the next stage of their lives?

Sufficient Funds

We can demonstrate to plan members how to acquire sufficient funds to achieve a certain lifestyle at retirement. We can educate them and we can guide them into that lifestyle. However, where does the skill set suddenly come from to assist a prospective retiree to develop a long-term strategy for retirement?

The following information outlines the relationship of plan sponsors, administrators, and plan members since the 1980s. Change has been very apparent over the years. Are plan sponsors, administrators, and plan members ready for the new challenges?

It’s tempting to predict what changes are going to take place in the next 20 years. And, current geo-political insecurity allows the imagination to run wild. Rest assured we can only guarantee constant change … the pension industry will always have plenty to spare.

Pension Trends

‘Cocooning’ was the theme of the ’80s along with straightforward acceptance of what was offered.

For the plan sponsor, administrator, and plan members, the ’80s were a simpler time.

Plan sponsors:


Plan members:

1990s Awaking in the ’90s, it was a time of change, optimism, and enthusiasm.

Plan sponsors:


Plan members:

2000 The new millennium and new found fear.

Plan sponsors:


Plan members are...

As we progress in the realm of greater knowledge, greater accountability, and more complex educational programs, there are items key players (sponsors) of this industry could consider.

Plan sponsors:


Plan members:

Once again, it’s is very tempting to predict what changes are going to take place in the next 20 years and one thing is for sure…the pension industry in Canada will always have plenty of change to spare!

Susan Thorpe is a senior account executive, Alberta and British Columbia, for Great- West/LondonLife/Canada Life – Group Retirement Services.

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