Jan 14, 2020
The recent trends toward hybrid plan structures and going-concern funding rules will continue for the “foreseeable future,” Osler partner Jana Steele tells CAiP. In his article, author Rick Baert explores key trends that will most impact the pension industry in 2020, and what Canadian pension plan executives should expect moving forward. Jana, a partner in Osler’s Pensions & Benefits Group, explains that hybrid plan structures are in part driven by efforts to keep retirement plans “more sustainable.”
“There’s a lot of pressure to do this,” Jana tells CAiP. “Changes in accounting rules have made it more difficult for pension plan sponsors. Hybrid plan structures and going-concern accounting have made it more attractive for plan sponsors to keep their retirement plans.”
Jana also says that another derisking trend in 2020 “will be to protect plan sponsors that would like to use annuity buyouts for their pension obligations from ‘boomerang risk’ — the risk of being responsible for those obligations if the insurer that manages the annuity declares bankruptcy. Jana says that other provinces “will be considering” passing such legislation, following the lead of Ontario, B.C., Québec and Nova Scotia.
Jana also predicts that more DB plan sponsors will consider consolidation with jointly sponsored pension plans. “People are seeing the pooling of assets as a more efficient way of maintaining their defined benefit plan,” Jana tells CAiP.
For more information, read author Rick Baert’s article, “What pension execs expect for 2020,” in CAiP.