As pension-related litigation increases, employers who offer defined contribution (DC) plans and group RRSPs require safe harbours, or legal protection or the availability of these plans could be at risk, according to a study.

The C.D. Howe Institute Study, Safe Harbours: Providing Protection for Canada’s Money-Purchase Plan Sponsors, finds that employers who would like to encourage their employees to save, invest and withdraw more wisely in DC plans may nevertheless pull back for fear of lawsuits.

“’Safe harbours’ for such employers—legal protection for good-faith actions to foster smart employee choices—could improve the outlook for Canadians who will do most of their retirement saving in such plans,” says the study.

It concludes that adding safe harbours to Canadian pension legislation and regulation would help employers to act in ways that would enhance the retirement incomes of their workers.

To read the study on the C.D. Howe Institute’s website, click here.

Click here for more about capital accumulation plans in our special section, CAP 101.

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