How Canadian corporate retirement plan sponsors adapt to the enhancement of the Canada Pension Plan remains a work in progress, speakers at the Association of Canadian Pension Management National Conference in Banff, Alberta, said Wednesday.
The enhancements, which will increase benefits from the C$326.5 billion ($263.4 billion) CPP, Ottawa, by a maximum of 50% for all Canadians outside Quebec, have made a complex system of computing benefits even more so, said Bonnie-Jeanne MacDonald, fellow of the Society of Actuaries and an academic researcher at Dalhousie University in Halifax, Nova Scotia. But, she added, plan sponsors can adapt by taking a more individual approach to adjusting their plans.
Retirement calculation "isn't just a complicated but a complex system," said Ms. MacDonald. "But people individually have a strong knowledge of their financial situation and use their own risk levers to adapt to their individual needs. Sponsors can play a major role in helping these individuals get clarity. They can help assess how CPP will impact them, based on their circumstances. I see plan sponsors as more instrumental than on the government-to-the-professional (financial services) level."
Mountain Equipment Co-op, Vancouver, British Columbia, is having "an ongoing dialogue with employees" about potential changes to the co-op's defined contribution plan as a result of CPP enhancement, said Abbie Hodgson van Essen, director, compensation and benefits.
"Sometimes you would think we would peel something back" because of the increase in CPP benefits, Ms. van Essen said. "But then we stepped back and see what our priorities are, to maintain our business and assess the needs of our employees. It's a bit of a tightrope walk." She did not specify any potential changes.
Linda Speedy, chief talent officer at KPMG Canada, Toronto, said the firm has been making changes in its overall benefits package but the CPP enhancement was not the driver of change. However, she added, "CPP changes will be in scope for what we do" with KPMG LLP's Canadian pension plan. "Stay tuned, we don't know practically what this will mean."
