From the article:

‘Kuruliak notes that plan sponsors are looking at managers and pushing fee issues to make sure their interests are aligned, and they’re getting what they pay for. “Certainly, the awareness and understanding of fees has gone way up, and people want to understand what they’re being charged—to know they are getting value for that.”’

Effective January 1, 2012, new regulations relating to the division of pension assets on the breakdown of a marriage will come into effect in Ontario. Please see this recent Pension Update from Proteus for more information.

His discussion covered the future of DB plans in Canada from a governance perspective. His discussion was covered in Benefits Canada.

The Saskatchewan Government and General Employees Union (SGEU) has 35 employees and a defined benefit pension plan. On January 14, 2010 the SGEU planned to increase the employee contribution to the pension plan to 54.25% of wages to help overcome funding problems. However, on January 8 the employees were able to obtain a court injunction freezing the current contribution rate of 19.6%. This contribution rate was instituted on November 5 from a previous rate of 9%. The employees claim that their employer is using the tactic of raising contribution so swiftly to pressure employees to consent to ending the defined benefit plan. The SGEU claims it is following the direction of its actuaries and the superintendent of pensions.

We will continue to follow this story as it develops.

Bill 236 stems from recommendations of the 2008 Ontario Expert Commission on Pensions.

The reforms in the Bill include:

• Clarifying the benefits of plan members affect by lay-offs and eliminating partial wind-ups

• Facilitating the restructuring of pension plans affected by corporate reorganizations

• Increasing transparency and access to information for plan members and pensioners

• Enhancing regulatory oversight

• Improving plan administration and reducing compliance costs

Click here for more information.

We are continuing to analyze the proposed changes. Stay tuned for more information and implications for Defined Benefit and Defined Contribution pension plan sponsors.

One of the proposals would see a lifting of the 10% cap on surplus for DB plans. While this would be a welcome change, the reality is it is coming about 10 years to late for most DB plans, as very few find themselves with a surplus these days.

Other changes could see stricter and more frequent reporting from Plan Sponsors to OSFI on the state of their pension plan.

The Canadian Press has a good summary of this and other aspects of the proposed changes.

- underfunding

- sponsor bankruptcy

- coverage

- financial planning

- hybrid pension plans

- coverage for small employers

- Canadian pension from the global perspective

If you are interested in reading more, the complete series can be found here. The last part of the seven part series will be posted tomorrow.