In a recent post by David Blundell and Anne-Marie Lainesse on Buck Exchange the online forum of Buck Consultants, the authors looked at some of the federal pension changes from a different angle and the impact they would have on federally registered plans.
Electronic communication
For plan administrators looking to reduce costs by eliminated paper annual statements, that currently isn’t an option under the OSFI rules. OSFI allows electronic annual statements only if a paper version has been provided first.
However, Blundell and Lainesse write, the future changes to the Pension Benefits Standard Act (PBSA) will let an administrator provide disclosure information electronically, including annual statements other disclosure information available under the plan. But, administrators will need to obtain member consent in advance to do so.
DC pension plans
Currently defined contribution plans have no formal legislation, but look to the Capital Accumulation Plan guidelines for advice. However, these guidelines are just that and are used on a voluntary basis by plan administrators.
However, the federal government has committed to revising its pension legislation to provide clarity for stakeholders on their responsibilities and accountabilities under a DCPP. The government will consider the guidelines when making these legislative changes but has made no commitment to use the CAP guidelines as it.
“It is becoming clearer that the legislative compliance burden for DCPP sponsors will increase over the next several years,” Blundell and Lainesse write. “Sponsors who embraced a DCPP as a simpler, less complex compliance solution to a defined benefit pension plan may be dismayed to realize plan operation costs will increase. Defined contribution suppliers may end up absorbing some—but not all—of these costs.”
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