Clear and flexible regulations that reflect the nature and diversity of target-benefit plans would allow these plans to thrive, according to a new report from the C.D. Howe Institute.

The report analyzed data collected from 29 target-benefit plans registered in British Columbia, which was the first province to implement these plans.

Read: Report finds disconnect between how target-benefit plans are regulated, managed

“It’s important to develop regulations that reflect the nature of these plans and how they are managed,” said Barry Gros, chair of the board of trustees of the University of Victoria Money Purchase and Combination pension plans, in a press release. “This can be facilitated by a clear statement of the objective of the regulations and their desired outcomes in the context of the nature of these plans. Such a statement has often been missing when legislation has been introduced.”

He noted 25 plans in the study were conversions from defined benefit multi-employer pension plans, while two were conversions from defined contribution pension plans, one was a new start-up target-benefit plan and one has been a target-benefit plan since its inception 50 years ago. Among all plans cited in the report, membership was mostly represented in the construction and natural resource sectors.

In addition, while active membership was shrinking among nine plans, it was increasing among 12 plans, while three plans reported no change in their membership and five plans didn’t provide this information. Further, plan maturity also varied widely with the proportion of inactive-member liabilities, ranging from zero per cent and 91 per cent.

Read: DB regulations a bad fit for target-benefit plans, MEPPs: report

Due to this complexity among target-benefit plans, Gros said it’s important that regulations be less prescriptive than they currently are to allow a range of accepted methods within actuarial practices for them to assess their financial position and deliver designed benefit outcomes.

“Unfortunately, boards can fall into a pattern of doing what’s required by law. Having less prescriptive regulation tends to force boards to better focus on what needs to be done for the benefit of the plan rather than just what is required by the law.”

The report also noted target-benefit plan members would benefit from transparent communications about the nature of these plans in order to appreciate how they operate as well as to build trust in those who oversee them. As well, strong guidance and oversight at the board level could ensure members receive the benefits they deserve.

Read: A look at one of Canada’s oldest multi-employer target-benefit plans