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© Copyright 2000 Rogers Media. The following article first appeared in the July 2001 edition of
BENEFITS CANADA magazine.
E-POLL
The Joint Forum of Financial Market Regulators recently released its report on defined contribution
(DC) plans. Does the current regulatory process around DC plans concern you?
Vote at www.benefitscanada.com
As defined contribution (DC) plans grow in prominence, the industry is looking to regulators and
governments for more definite terms on how to manage and deliver them. In fact, in this month's E-poll, 69%
of respondents say that the current regulatory process around DC plans concerns them.
But is the Joint Forum of Financial Market Regulators' report, entitled Proposed Regulatory Principles for
Capital Accumulation Plans, the answer? Most industry representatives admit it has at least brought
different voices together. It has also given the industry a clearer idea as to what changes it would like
to see.
"It's very hard for a sponsor to have a clear view of the underlying differences of a trust-based product
versus an insurance-based product," says Joan Johannson, director of product and marketing, investment and
pensions, Canada Life in Toronto. "And from the employee standpoint they look very similar so [they may
wonder] 'why in one case do I get all this paper and in the other case, I don't?'"
Other issues the industry wants dealt with include education and liability. The industry would rather the
onus to dispense advice did not fall on the plan sponsor. The report suggests the plan sponsor absorb the
expense of hiring an outside investment expert.
In terms of education, Becky West, pensions manager at B.C. Telus in Vancouver, says plan sponsors need to
realize that DC plans are not "an easy out" just because the investment responsibility lies with the plan
member.
Plan sponsors also need to understand the terms of disclosure and what they're responsible for providing.
Stanley Hamilton, associate dean of academic programs, faculty of commerce and business administration and
a professor of urban land economics at the University of British Columbia in Vancouver, explains that "when
you start to get into a DC plan, you're immediately saying that choice is going to be subject to some
disclosure requirements in the Securities Act. You're dealing with regulatory authorities on the pension
side and the securities side. It's just not a seamless operation. And that needs to be cleaned up."
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