A look at how the legal landscape for DC pension plans is changing — Benefits Canada

Jonathan Marin

Nov 1, 2019

Member communication is a “key challenge” facing defined contribution (DC) plan sponsors in terms of their legal obligations to employees, Osler associate Jon Marin tells Benefits Canada. Author Martha Porado’s article details Jon’s comments during Benefits Canada’s 2019 Defined Contribution Investment Forum on September 27. Jon, an associate in Osler’s Pensions and Benefits Group, explains how the legal landscape for DC pension plans in Canada is changing.

“In the vast majority of DC plans, investments are member directed,” Jon tells Benefits Canada. “And these members are being asked to make complex financial decisions that they often don’t have the requisite expertise to make.”

Jon adds that DC plan members take on all the risk when it comes to the outcome of investments and their related fees.

“From a legal perspective, this creates the potential to place a microscope on the prudent selection and effective oversight of investment options and managers,” he tells Benefits Canada.

Jon also says that “Canada’s current legal framework for DC plans is designed primarily to deal with the accumulation stage.”

“Ironically though, the retirement period can – in many cases – have a greater overall impact on DC value than the initial accumulation phase. And this gives rise to complex questions, including who bears the responsibility for preparing members for the decumulation stage and how to improve upon retirement outcomes,” Jon tells Benefits Canada.

Jon goes on to explain why plan sponsors should be aware of the differences between case law and common law scenarios, highlighting a particular case that should be of interest to DC plan sponsors.

Read more of Jon’s insights in Martha Porado’s article “A look at how the legal landscape for DC pension plans is changing,” on November 1, 2019, in Benefits Canada.