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© Copyright 2000 Rogers Media. The following article first appeared in the October 2000 edition of
BENEFITS CANADA magazine.
The pension promise
Governance tools such as pension information councils, guides and questionnaires help ensure the
pension plan fulfils its promise. So why do some retirees still feel out of the loop?
By Dian Cohen
A few months ago, a reader complained that pensioners and their beneficiaries have no opportunity to
question pension plan sponsors about developments that might affect the plans that provide them with the
bulk of their retirement income. The reader makes the point that pensioners depend on this money and have
the right to more information than the occasional newsletter.
The reader also bemoans the fact that no one involved in the management of pension funds really looks out
for the interests of retirees as distinct members of the plan. He ends his lament with a query about
pension information councils, mandated by the Pension Benefits Standards Act.
Your intrepid reporter has some answers to these concerns.
To begin, the Office of the Superintendent of Financial Institutions (OSFI) confirms that in 1998--in the
wake of the Senate Banking Committee inquiry into the governance of pension plans headed by Michael
Kirby--it authorized the creation of pension councils to raise awareness and understanding of pension
plans. These councils have the power to review financial and actuarial information. In fact, in the words
of an OSFI spokesperson, they can "do anything the plan sponsor allows them to do." The employer is even
obliged to provide sufficient information to allow the pension council to carry out its duty. Sounds
progressive.
NEW FOCUS
However, a random sample of organizations undertaken by yours truly reveals that many big companies don't
have active pension councils. While OSFI allows the councils to exist, it says it doesn't monitor them.
Indeed, in the last year OSFI has changed its focus.
Ron Bergeron, OSFI's senior director, acknowledges our reader's concerns. He has also stated publicly that
"more regulation, with its emphasis on compliance, is clearly inappropriate in today's financial and social
climates. As a regulator, our focus had to shift from compliance to ensuring that plans can meet their
obligations."
Bergeron adds "although OSFI no longer supports passing more and more regulations, we still believe in a
sound legislative framework where all parties share some responsibilities to ensuring that the pension plan
will deliver on its obligations."
To that end, and with its new mandate of ensuring that risk management systems for pension governance are
in place, OSFI joined forces with the Association of Canadian Pension Managers (ACPM) and the Pension
Investment Association of Canada (PIAC) to jointly release a corporate governance guide for the pension
industry as well as a self-assessment questionnaire for every organization with a pension plan.
Both Michael Beswick, president of ACPM and Bob Bertram, a past chairman of PIAC, emphasize that the
questionnaire will not be monitored. It's merely a guide to help plan sponsors and administrators ensure
their plan is healthy.
When this reporter suggested that the questionnaire would at least provide some statistics about how many
plans were involved in the exercise that could supply the information our reader wanted, the response came
back emphatically negative. The questionnaire is an internal matter, completed voluntarily by an
organization for the sole benefit of its governance.
So where does this leave our dear reader? Firmly on the outside looking in, but with more assurances today
that his plan will be able to deliver its promise.
Pensioners are owed a pension--that is a clear and defined promise. But they are not entitled to increases,
and no one makes demands on them for contributions. "It's like buying an annuity from an insurance
company," explains Bertram. "What we're all doing is trying to make sure that the regulations kick in when
they're supposed to so that the credit quality of the guaranteeing company is sound, and that the pension
promise is never broken."
That said, pensioners still have the right to ask and get answers to the questions and concerns that cloud
what should be some of their brightest years.
Dian Cohen is an economics consultant with a special interest in pension issues.
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