National Webinar - Defining Your Ambition - Target Benefit Plans in Canada

Overview
This trend initially emerged following the 2008 financial crisis and resulting low interest rates.  The federal government has kicked off a consultation process for federally regulated plans, joining a number of other pension jurisdictions, such as Alberta, British Columbia, Ontario and Nova Scotia, which may soon allow target benefit plans.  New Brunswick already makes a form of target benefit plan, the shared risk plan, available under its Pension Benefits Act.  Target benefit plans have also been implemented in certain public sector plans in Nova Scotia and Prince Edward Island, and are being considered in other provinces. 

The basic concept is relatively simple and has great promise, but can mask some challenging public policy and design issues.  Target Benefit Plans provide for fixed contributions by employers and employees.  If the contributions are not sufficient to fund the targeted benefits, then benefits (accrued and future) may be reduced.  Significantly, target benefit plans continue to permit pooling of investment and longevity risk which is a major benefit to employees over DC plans.  However, the employer’s contribution risk under the defined benefit plan is now limited to the fixed contribution rate, together with any agreed upon variances. 

Considering the implementation of these plans gives rise to various key questions, including:

1. How will active members, retirees and unions be involved in plan governance? 
2. What level of transparency for members and retirees should be required?
3. Is intergenerational equity a concern?  If so, how is it to be achieved and at what cost?
4. What benefit design features may support the success of a target benefit plan?
5. What is the required funding level to support the targeted benefit?
6. Under what circumstances may benefits be reduced, a key provision of such plans? 
7. Should the rules be prescriptive, as in New Brunswick, or will the parties be able to take into account their particular circumstances? 
8. On conversion of a defined benefit plan, what is the treatment of existing benefits and any employer covenant related to those benefits?

Who should attend
This webinar will be of interest to plan administrators and sponsors, as well as their service providers.  Target Benefit Plans will play a prominent role in pension reform discussions over the next number of years, and all those who may be affected will be interested in this seminar.

Hugh Wright is a Partner in McInnes Cooper’s Halifax office and Group Leader of the firm’s Pensions and Benefits Practice Group.   Hugh provides advice to pension plan sponsors, administrators, employee groups and governments in all areas of the pensions and benefits field.  He regularly advises pension plan sponsors and administrators concerning pension standards legislation, guidelines, common law requirements, pension governance requirements, and pension issues arising from corporate transactions. He acts for administrators, employers and employee groups in pension related litigation.  Hugh is listed in Chambers Global: The World’s Leading Lawyers for Business and Lexpert   in the area of pensions and benefits law. He has also been recognized by Best Lawyers in Canada   for his practice in Employee Benefits law since 2006. He is Vice-Chair of the Board of Directors of the Association of Canadian Pension Management and is a director of the Canadian Bar Insurance Association. Hugh is a Past Chair of the National Pensions and Benefits Section of the Canadian Bar Association and a member of the Judicial Compensation and Benefits Committee of the CBA. He is also a member of the Canadian Pension and Benefits Institute, the International Pension and Employee Benefits Lawyers’ Association, and the International Foundation of Employee Benefits Plans.  Hugh regularly presents on pension and benefits topics to pension industry groups. Hugh is active is various community organizations and chairs the firm’s Pro-Bono Committee.