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


Conference Report
Saskatchewan's Recipe For Success

Confeerence BannerThe best-ever recipe for effective communications requires plan sponsors to know the difference between disclosure and communication, say Susan Deller and Dianne Gavieres, both of Eckler Ltd.

Their presentation on communications capped off a successful 2013 Saskatchewan CPBI regional conference. Themed 'Seasoned & Sound,' it saw a number of presenters from the pensions and benefits field offering their 'recipes' for everything from effective communications to an alternative pension retirement system for Canadians.

Deller and Gavieres noted that disclosure is a transfer of information. But, it is usually one-way from management down to staff, passive, and often has no tangible results. Communication, they said, is a transfer of understanding. It is active and two-way and can offer measurable results. Think of disclosure as a product and communication as a process, they said.

Huge Opportunity

Mental health issues in the workplace were also examined as the workplace offers a huge opportunity to provide support for those facing this situation, said Maureen Long, of Sun Life Financial. She told the session 'Accommodating Mental Illness in the Workplace – The Basic Ingredients' that most people spend more time at work than any other place. However, the concept of creating a psychologically safe workplace is a relatively new one. While employers will be encouraged to follow the new standards, there are good reasons why employers will not be able to do so on their own. To start, there are capacity constraints as they do not have the resources and while the website for the psychologically safe workplace standards has lots of information, it lacks much information on how employers can do so. As well, employers often welcome an objective evaluation. She said the most important thing an employer can do is create a culture of awareness about mental health.

Heather Monus, Maureen Long, and Kit Loewen
Maureen Long, of Sun Life Financial, (pictured in middle), took part in a panel discussion with Kit Loewen, of the Saskatchewan Teachers' Federation (right) and Heather Monus, of the Saskatchewan Human Rights Commission (left), on 'Accommodating Mental Illness in the Workplace ‒ The Basic Ingredients' at the 2013 Saskatchewan CPBI regional conference.

To help Canadians better save for retirement, Faisal Siddiqi, of Buck Consultants, and Jim Pierlot, of Pierlot Pension Law, suggested lifetime retirement savings limits. This could also help end the dual system of pensions that exist in Canada. In 'Legal for Life: Why Canadians Need a Lifetime Retirement Savings Limit,' they said the duality of retirement savings was first identified in the mid-1980s. The pension reform of 1990, with its factor of nine, was supposed to end the inequity, but failed to do. The differences between defined benefit and defined contribution pension plans mean a retiree from a DB plan can collect about 50 per cent of their final salary as a pension whereas a retiree from a DC plan may end up with only 20 per cent. A lifetime retirement savings limit offers a number of benefits. It would see all retirement savings lumped together and permit savings of up to $2 million, a figure they suggest. This would allow late savers to catch up. It would also simplify pension management and reduce the cost as well as facilitate plan designs such as target benefit and cash balance plans.

Something Sustainable

Another opportunity to enhance retirement savings may exist with target benefit plans. While they may not be the plans of the future, they satisfy the need for something sustainable, said Troy Milnthorpe, an associate partner at Aon Hewitt. Changes need to be made to DB to make it sustainable, otherwise the move to DC will continue, he said in his session – 'Target Benefit Plan – 1/2 Cup DB, 1/2 Cup DC.' Target benefit plans offer the best of both and employers are looking for a sustainable plan that can consistently, through both favourable and adverse circumstances, deliver an appropriate range of benefits at an acceptable range of costs. For the plan member, the goal is a lifetime pension. The target benefit plan offers a benefit at retirement which can be changed according the funded level of the plan. And for employers, the cost is fixed. This satisfies the needs of both. However, they still face challenges. For example, solvency requirements would have to be waived and a means of converting existing DB plans would have to be found.

Employee attraction and retention was the focus of a presentation from Lynn McNally-Power, director of talent management at Cameco Corporation. Speaking at the opening session of the conference on a 'Global Approach to Keeping Spice in Employee Engagement – Not Just the Flavour of the Month,' she said a hot labour market combined with labour shortages and changing employee expectations are making the ability to attract, retain, and engage workers critical to success. She defined employee engagement as having employees who are highly motivated and enthused about coming to work and who see and feel an alignment between what they do and the success of the organization. The leading drivers of engagement are work processes, managing performance, and offering career opportunities. Pensions and benefits, she said, are not drivers of engagement at her company. So it becomes about planning for the workforce, attracting people, keeping them, and engaging them. In return, the company is looking for return on investment, increased productivity and profitability, a healthy workforce, and lower turnover.

How Much

The future needs of employees in retirement was the focus of a session with Darryl Diamond, of Diamond Retirement Planning. In 'Retirement Income Planning and Rock Music Trivia,' he said one important thing advisors can do for their clients is to remind them to make the best use of their time and their money in retirement. However, plan members find it frustrating when they can't get an answer to the question about how much they will have in retirement. While not knowing how long someone will live makes retirement planning difficult, a blueprint for their retirement can help clients assess their current lifestyle, determine their lifestyle and time objectives in retirement, establish financial goals and priorities, and show the accumulative value and positive value of improvements that can be made. This also provides a context to address investment strategies as well as health risk and wealth transfer issues. This can help people adapt more easily to change in retirement.

Darryl Diamond
Darryl Diamond, of Diamond Retirement Planning, told attendees at the 2013 Saskatchewan CPBI regional conference that one important thing advisors can do for their clients is to remind them to make the best use of their time and their money in retirement.

However, the pensions and benefits industry may need a reality check, said Donald Cooper, a business management, marketing, and service expert, so it can realize the business is changing. In a keynote address at the conference, he said there is no urgency among young people about pensions and benefits. Others are just playing ostrich and sticking their heads in the sand when it comes to retirement planning. Combined with this is that most plans are underfunded and the low interest rates exacerbate the underfunding.

However, while pension plans need reinventing and the cost of benefits keeps rising, the real challenge is that the industry has to realize it needs to do a better job of selling them. While generally the purpose of pension and benefit plans is to attract, engage, and retain top performers, employees seem only moderately interested. And, this is a huge expense which is underappreciated, he said.

– Benefits and Pensions Monitor Staff

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