Commentary

Read an article you like/don’t like? Feel strongly about one of the hot topics we’re covering? Want to share your opinion?

 

 

Re: New voluntary pension plan most feasible: minister

The options for pension reform being considered nationally and by the B.C. finance minister are broader and more multifaceted than noted in your recent story.

The truth is that public pensions were never intended to provide the sole source of retirement income. Retirement savings vehicles available to Canadians include government plans (i.e. OAS and CPP), group/employer pension and retirement savings plans, and individual savings and investments. Improving Canadians' access to secure and efficient retirement incomes should build on the strengths already found in the private sector, rather than focus solely on expanding public options.

This has to include making regulatory changes so that company pension plans become less complex and costly to operate. In this way, more companies, employees and the self-employed can participate. This will help ensure we maximize private saving efforts in concert with the government pension plans.

Frank Swedlove
President, Canadian Life and Health Insurance Association Inc.
Phone: 416-777-2221
email: fswedlove@clhia.ca

 

 

Re: New voluntary pension plan most feasible: minister

Well I wonder if the minister has been smoking any of the local home grown. Voluntary plans simply will not work, the RRSP stats prove it.

Neil Craig

 

 

Re: Unions warn Conservatives over pensions

Unless we change the public sector pension benefits the growing situation will continue, that is, private sector workers who continue to work past normal retirement date paying taxes to pay public sector pensioners who took early retirement. The anger will be palpable.

I talked to one federal public sector employee who said that all public sector unions would threaten to unseat any elected official who supports changes to the public sector pension package - call it blackmail?

Brian Jackson

 

 

Re: Government called out on slow pace of pension reform

Glad to see that the seniors of the nation under the CARP banner are so willing to spend my money and perhaps my employers to increase contributions and benefits in CPP. Younger Canadians are already paying an excessive amount relative to benefit for CPP in order to provide the benefits grandfathered in to the existing recipients that had no or insufficient funding to prop them up. Placing the burden on the next generations is not the solution.

Attractive private sector programs with inducements for the employers to participate are the way to go. Our system is not as broken as they would have you believe and Canada ranks very highly relative to other countries when it comes to evaluating the overall retirement system.

Neil T. Craig BA, RPA
Senior Pension Consultant
Stevenson & Hunt Insurance Brokers Ltd.

Re: Literacy: the skeleton in the closet

Thank you, thank you, thank you for putting this issue out in front. I've actually had this discussion with our own benefits provider a few years ago when they introduced new, improved "Welcome" packages for our Group Retirement Savings Plan.

This package was supposed to explain our program and help the new member with their retirement planning. It weighed about two lbs. and was comprised of several separate multi-page brochures, booklets and forms in a vinyl pouch. Very pretty: all glossy colourful paper and pictures of bright, beautiful, happy 50ish looking couples already enjoying retirement and perfect families playing at the beach and yuppie singles lounging in there upscale living quarters, smiling at their laptop computers. YIKES, what those pictures say to our production and warehouse workers is "forget it, you'll never have that kind of lifestyle and you can't afford to save for retirement". So the poor guys are turned off even before they start to wade through the industry jargon. Even our managers and supervisors found the materials totally daunting.

My request and recommendation to our benefits provider: fire the advertising types that put that stuff together and consider who their real target audience is. If they want ordinary people taking advantage of their retirement savings vehicles, they need to connect with those people realistically. I suggested they look for some photos of real people (not models) doing real jobs, not lounging about in designer jeans or dressed like bank executives. Use simplified language and where industry terms must be used, provide an explanation of what they mean. To no avail, I have yet to see any financial services company's literature meet this standard of communication for rank and file employees.

But then, the same holds true in government literature, health and safety regulations and all manner of employment related services. All seemed to be premised on the misguided notion that all working Canadians can read and comprehend the mountains of printed information they generate. But wait, now we expect those same people to Google it up, log in and download it from the internet.

Jeannie McQuaid, CHRP
Supervisor, Human Resources
BELSHIELD CORPORATE GROUP LIMITED

Re: Why have ASO plans become commodities?

Re: Mike Sullivan is right that plan sponsors are missing the boat if they are focusing on the 5% administration fees. Of the remainder 95% claims costs, the only thing that should be commoditized that isn't, is the everyday generic drugs covered by all plans. Canadians pay vastly more for these drugs than Americans, and for no good reason, except that's the way its always been. Private payers are now realizing that these prices are too high, and they are empowering themselves to deal with their insurers and pharmacy providers to get a better deal.

For those drugs, commoditization is the key to sustainability of the drug benefit plan.

Saving money now on those everyday drugs makes sense, if one looks at the funding that's going to be needed for biologics and other new, expensive medications coming in the next few years.

One of Mike's earlier articles suggested that plans could save up to 10% of their benefits dollar by focusing on this area.

Plan sponsors who would like to pursue this with other plans are invited to contact me to discuss the new Health Plan Payers Canada organization, formed recently for these and related purposes.

Hugh Paton
Paton Consulting Inc.

 

Re: Pension reform options plentiful

I fully agree that Canada and Canadians need to better prepare themselves for retirement. However, before we start thinking of the CPP as an alternative, we need to acknowledge that the CPP is not compliant with the federal government’s own Pension Benefits Standard Act ,in at least two instances/provisions/benefits.

The first is the death benefit for single Canadians. For most, the death benefit is significantly lower than the vested accumulated value of contributor and employer contributions.

The second is the retroactive reduction of benefits in the event of marriage breakdown. Benefit or credit splitting does not take into account child rearing years. As such one spouse is transferring benefits/credits to the other spouse who can’t use such benefits/credits to improve their CPP benefit. These benefits/credits which cannot be used by the receiving spouse are not reversed back to the spouse who has had their benefits/credits reduced. The net affect is that the total benefits/credits before the split are considerably lower after the split. This represents a retroactive reduction in benefits/credits.
Federal civil servants and politicians have chosen to ignore these huge deficiencies and discriminations in the CPP; and they need to be appropriately addressed before any further expansion of the CPP be considered.

Regards,

Barrie Entwistle

 

 

Re: Knives out for CPPIB bonuses

If we are going to be like Wall Street and reward poor and damaging performance then we as the payees into Canada's Pension Plan should have the payment come out of manager's own salaries, and not ours. This is ridiculous. They should be giving the bonus up and putting into the pension fund that so many of my generation will never receive.

I personally would rather have a separate private account in which my CPP and UI benefits go into monthly and then I earn interest similar to a TSFA. At least this way I know I have the monies down the road when I retire. Maybe we should all start something like this instead of being robbed by overpaid bureaucrats.

Helen Dzambazov
Investment Administrative Assistant

Sentry Select

 

 

Re: Mental health in the workplace: how to accommodate

What a great article! It touched on a lot of things that affect workers and the workplace. I have been treated for depression/dysthymia for many years. For the most part, things go very well. However, I burned a lot of bridges before I learned that what I had was an illness.

In any case, the workplace today is very different from what it was 20 years ago. Now it's okay to excuse yourself from a meeting because the dots are just not connecting at that moment. In the past, you had to stay put, and it usually caused increased anxiety, which sometimes led to anger or hostility. I don't mind telling people that I am being treated for depression; it's as much a part of me as diabetes is for someone else. I also keep an eye out for people who exhibit some of the behaviours I used to. As often as not, my suggestion that they see a professional is adopted, and there is appreciation all around.

I have a sister who suffers from depression as well. She also has chronic pain and fibromyalgia. In her case, the employer was not able or willing to accommodate her frequent absences; she ended up on long-term disability. That was close to 10 years ago. Her physical idleness has not helped her condition, nor has her isolation from work, responsibility and social contact. I have often wondered if there could have been a way to accommodate her so that she could have regained her former resilience. Thanks again for the article.

- Stephanie Michaels, Alberta Pensions Administration

 

 

 

I wanted to thank your magazine for the comments made in the March 2009 Straight talk and Whose job is it anyway? articles. My opinion is that too many companies rely on the all-in-one package of services they receive from their providers. Yet, according to your survey (of CAP members) 71% say they would use a company-provided qualified individual if offered at no charge. There will continue to be confusion for the masses as to what "investment advisor" and "investment advice" mean.

Is the financial information being provided in the best interests of the employee or in order to get more money into the newest mutual fund? I think many people over the last year who have relied on their advisors (many commission-paid) now realize they didn't come first. Too many conflicts of interest still exist.

Our approach is that the investment process is the most important part, not the investment product. What many people are missing is a basic financial plan, as this will tell them what rate of return they need to live their lives. From this, a proper portfolio is structured. If you need only a rate of return of 5% to maintain your lifestyle, then you would have very little need for some of the aggressive products that continue to be sold in portfolios. We see this all the time, but they are the products that pay the most money to the advisor and their firms.

Appreciating the need for budget cutbacks in the global slowdown, it would be a mistake for firms to take a step back and do nothing regarding independent financial education. It is needed more now than ever.

- Greg York, director, corporate services, Second Opinion Investor Services Inc.

 

 

 

Re: Target benefit plans: the overlooked gem in the OECP report

It is interesting how enamoured various stakeholders and commissions have become with target benefit plans and multi-employer pension plans (MEPPs) in general. To any employer that is seriously considering joining one of these plans, you should be very careful that you fully understand what you are signing on for. In the past, these plans have been sold to employers as plans that limit employer liability to only the amounts contributed, with no overall responsibility for the sufficiency of the funds to pay the future promised benefits.

In Ontario, these plans are heavily promoted as defined benefit plans with very fine print alluding to the risk of benefit reduction should there be a funding shortfall. There have been a number of cases in which benefits have been reduced, and plan members and retirees were surprised that this could happen. This plan feature is rarely highlighted at the shop-floor level. If a plan does become underfunded, it has the potential to create a two-class system of plan members, with existing or new members having future benefits reduced while retirees are fully subsidized.

Pension plan coverage of any kind is preferable to no coverage, but there are cost-effective alternatives for employers to assist employees with saving for retirement without having to expose the employer to risk levels above and beyond the fixed compensation dollars allocated to pension expense.

- Neil Craig, senior pension consultant with Stevenson & Hunt Insurance Brokers Ltd.

 

 

 

Re: What's so super about a superfund?

Spoken like a true consultant, investment advisor, investment manager, custodian and/or actuary, all of whom will suffer revenue loss if this idea takes off! I am confident that some of the biggest funds in Canada like CPPIB, Ontario Teachers and OMERS would be able to figure out many of the issues raised in this article. In addition, there are many multi employer plans that seems to manage pretty well on the governance matters identified.

Non-public sector single pension plan sponsors (SEPPs) in Canada face fragmentation, non-uniform legislation, and a multi-stove piped service industry which has not served pension plans as well as this article would like to suggest. We still have over 40% of Canadians not even covered by employer-sponsored registered plans, largely because of the costly and complex "price of entry".

Evidence shows that when it comes to pension fund performance, size does make a difference. The chance for small to medium size employers to take advantage of the buying power of larger funds, without having the internal resource commitment, legal and governance risks, is pretty compelling to me.

- Gretchen Van Riesen, GVR Consulting