Risk & Business Magazine Capri Insurance Spring 2016 | Página 7

Pension Reform
And How it Conflicts with Public Interest

BY: STEVEN HESKETH, B.COMM, CFP, RPA, GBA, GROUP BENEFITS & PENSION MANAGING PARTNER, CAPRI INSRUANCE

T

hanks to recent BC and Alberta Pension
legislation, pension plans have become
less attractive to employers. And yet in a cruel
twist the Ontario government has deemed
only pension plans to be exempt from their
proposed Ontario Retirement Pension Plan
(yet to see if CPP reform will adopt the same).
Why? Because only pension law ensures the
funds are used for providing retirement income
beyond employment. Apparently no other type
of savings is worthy.

(Defined Contribution - DC) or define the
money going out (Defined Benefit - DB).
Both RPPs are subject to pension law but
DB comes with significant financial liability
to the employer that remains the domain
of public sector and unionized plans. DC
pension plans are the only consideration of
fiscally responsible employers who might
care that the funds be locked-in until of
retirement age and then to be converted to a
pension income.

With immediate vesting, Annual Information
Returns,
monitoring
of
forecasted
contributions, written governance policies
and processes for pension windups, small to
medium sized businesses are less inclined to
adopt a pension plan versus a DPSP or Group
RRSP (both exempt from pension law).

Instead of rewarding those employers
who have or may adopt a DC pension plan,
our regulators have required even greater
compliance, monitoring and ongoing reviews.
In fairness their focus is still with Defined
Benefit and multi-employer plans that make
up most of the pension assets and cover more
members than DC plans. And they should be
given the liabilities these plans carry but DC
plans serve a different market and beyond

To step back, Registered Pension Plans (RPPs)
have to either define the money going in

funding their monthly contribution, few
private sector employers are keen for greater
responsibility and more onerous governance.
This makes DPSP and Group RRSPs more
attractive but does not guarantee the funds
are used for providing retirement income
and would not be considered comparable for
exemption under ORPP or possibly future
CPP reform. In fact, these plans can provide
the seed money for funding competitive
threats or employee’s material wishes. As
a result of pension reform, our regulators
may have simply displaced locked-in funds
with cashable assets, which defeats any
government rhetoric.
Steve started his career at London Life as an Employee
Benefits Representative. In 2001, he joined the Benefits
Division at Capri Insurance. As a Benefits Advisor, one
of