During Benefits Canada’s annual DC Plan Summit, plan sponsors participated in interactive sessions. They split into small groups and were given questions to discuss. Based on these discussions, moderators later offered their insights and relayed key take-aways.
Catherine Jackman, vice-president with Phillips, Hager & North Investment Management shares the best ideas from the question she moderated: How might DC plan sponsors deal with potential liability issues with respect to the proposed CAP Guidelines?
The CAP Guidelines talk about plan sponsors providing information about the adequacy of retirement income. This borders on getting into financial planning territory and raises liability issues for plan sponsors that will be held accountable for what they say. In general, there were differences in how people felt about income projections and the threat of liability. Some people were already worried; others said they know they will be sued—it’s just a matter of when.
Call to action:
- Income projections are potentially misleading. The ideal way to clarify that projections are not “guaranteed” is to have members use an interactive online tool that shows how the projections change based on things like assumed investment returns. Disclaimers such as “returns are based on assumptions and are not guaranteed” are also very important. More communication with members is better, regardless of the liability risks. Ideally, plan sponsors will direct members to financial planners.
- Plan sponsors can protect themselves by documenting everything.
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