While stories in the U.S. about plan members suing their employers are almost everyday news, the same cannot be said of north of the 49th parallel. However, results from a recent survey suggest that a litigious future could be just around the corner.
According to a 2010 Towers Watson capital accumulation plan (CAP) survey of 119 Canadian plan sponsors, 66% of respondents believe they’re in for legal challenges in the near future.
Respondents believe the main reasons for legal proceedings would be inadequacy of retirement income level (72%), peer investment performance (63%) and inadequate communication and education provided (60%).
While the market has been on a roller-coaster ride in the last two years, one might think the risk of inadequate retirement savings lies solely with the plan member. However, Ian Genno, an actuary and senior consultant with Towers Watson, says the plan sponsor, too, is exposed to risk. “It’s just a different type,” he says. “It’s the risk of plan member expectations not being fulfilled.”
And when it comes to communicating to plan members, more than half (54%) of respondents don’t actually measure the success of their communication practices. Even for those that do measure their practices (for example, 62% use informal feedback), these useful metrics aren’t maybe as good as they could be, says Genno.
While there is no indication of any legal cases at present, Charlene Moriarty, a consultant with Buck Consultants, says litigation is truly hard to assess. “Out-of-court settlements are not public.”
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