The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management

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The Key To Working With Consultants

For pension and investment consultants in Canada, 2005 brought two significant challenges before pension plan sponsors. To start, December 31, 2005, is the deadline for Canadian Defined Contribution pension plans to be compliant with the Joint Forum of Financial Market Regulators’ Guidelines for Capital Accumulation Plans. Released last year, the guidelines set out best practices for operating these plans.

Consultants have been active helping their clients to make sure their plans are onside in areas such as investment selection, monitoring of providers, and the other issues covered off in the guidelines. And, while these guidelines are voluntary, the Joint Forum has warned that if pension plans fail to follow them, the next step would be to turn them into regulation.

The last half of the year promises to see a flurry of activity as those plans which are not yet compliant, turn to their consultants for help in meeting the end-of-year deadline. Early this year, another consulting issue developed when the federal government proposed the elimination of the 30 per cent limit on foreign property in pension plans. Despite several tortuous months where the fate of the proposal was caught up in the government’s struggles to survive a non-confidence motion, it was, in fact, approved.

So pension plans can now exceed that limit which means they are seeking help from their consultants on issues such as:

On the non-pension benefit side, the traditional benefit plan continues to the norm and it’s an area where consultants have a lot of expertise and experience. This is largely a function of the fact that small business continues to employ the majority of Canadians so traditional plans are continue to be the norm.

However, when it comes to the large Fortune 1000 companies, flexible benefit plans, in which employees choose the type and level of benefits that best meet their needs, is becoming the delivery vehicle of choice. The attraction of flex is that costs can be controlled better at the same time as members can be offered more choice. Research by Hewitt Associates shows more than half (52 per cent) of organizations currently offer, or plan to offer, flex plans in the next two years. Another 33 per cent anticipate offering them in the future. Of those employers using flex plans, nearly all say flex benefit plans are meeting or exceeding their expectations in addressing employees’ needs. Other key benefits include improving employee recruitment and retention and containing rising benefit costs.

This year, Benefits and Pensions Monitor’s Annual Report on Consultants follows the same approach that was introduced and well-received last year. In the pages that follow, you’ll find a combined Directory of Consultants who do business in Canada providing pensions and benefits, investment, healthcare, record-keeping and third-party administration, and software and technology services.

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