Pension Reform, Litigation and Governance

The regulatory and legislative landscape has changed significantly over the past few years with almost every Canadian jurisdiction embarking on pension law reform. While many of the changes have been implemented, regulations have yet to be enacted to bring the rest into effect. As a result, many companies are in a holding pattern waiting to see what is released. What better way to gain an understanding of the constantly evolving landscape than by hearing from this important panel of regulators and experts on what you can expect to see over the next few months and how to ensure you are prepared for the next wave of regulations. In this session, you discover:

• When will the Ontario regulations be rolled out and how do the regulators see them working?
• How will plan deficiencies be dealt with and will there be a more formal procedure put in place?
• Understanding OSFI’s policies on consent benefits and risk monitoring
• Multi-Jurisdictional Pension Plan Agreement – determining benefit entitlements and the determination of “final location”

Q & A

New rules affecting pension entitlements upon marriage breakdown in Ontario come into effect January 1, 2012, significantly changing the procedures plan administrators follow with respect to spousal entitlements. It will be imperative that plan administrators understand the impact of the rules in order to correctly administer benefits and avoid liability.

• Responsibilities of the administrator in valuing the payout – Using the prescribed formulas
• Will plan documents have to be amended and, if so, how?
• Liability risks of disclosure to former spouses
• How to deal with joint survivors
• What are the issues with respect to spousal rollovers?
• Ensuring changes are properly communicated to plan members
• Reviewing and properly completing the new prescribed forms
• Evaluating the practicality of collecting fees for preparing a Statement of Imputed Value
• Identifying and addressing the different rules with respect to marriage breakdown among the provinces

Q & A

• “Grow-In Benefits” – New rules in effect July 1, 2012 – What you need to know
  • How to provide “grow-in” benefits for employees who have been involuntarily terminated
  • Obligation of an employer with respect to voluntary severance packages offered prior to July 1, 2012 to disclose entitlement to “grow-in” benefit
  • Application of the rules to “without cause” terminations vs. resignation
  • What to do about early retirement and bridge benefits
• New Advisory Committee Rules – Prior to the recent reforms, members of plans who formed committees did so on an informal basis. The new rules formalize the concept and impose additional responsibility on the plan administrator to provide assistance – What are your obligations and what should you be scared of?
  • Who has the right to set up a committee?
  • Understanding the role of the plan sponsor in the establishment of the committee
  • What kind of information can committee members demand?
  • Entitlement of plan members to actuarial estimates of possible deficits
  • Will plan members be entitled to see evaluation reports and sit in on pension committee meetings?
    

• Understanding the continuing effects of Slater Steel and Borealis on the broadening scope of fiduciary duty
• What does it mean that FSCO is now added as a party in Slater Steel?
• Has Haliburton been followed outside of Alberta and what has its effect been on plan governance?
• Expert analysis of the latest case law and its impact on your business, including decisions on:
  • Death benefits and age discrimination
  • Entitlement to surplus on plan termination
  • Guidelines for eliminating indexing
  • Costly consequences of deviating from prescribed forms
  • Liability for negligent misrepresentation by omission
  • Whether gratuitous payment of benefits establishes a DB plan
  • Consultation and notice requirements when converting from DB to DC
• Preparing for pension insurance claims in a DC world
  • What’s keeping corporate clients up at night?
    

The federal government has indicated its intention to amend the Income Tax Act to allow for PRPPs. Some experts believe they are just another form of RRSP and will not offer anything new while others believe they will substantially increase pension coverage for Canadians. This lively discussion will address all sides of the issue and identify the respective pros and cons.

• What will they look like and how will they differ from a DC plan?
• Will the employer bear any fiduciary duty or will it shift to the financial institution?
• How will plan members be protected if the duty is not on the employers?
  

The landmark Ontario Court of Appeal ruling in Indalex Limited (Re) which favoured an insolvent company’s pensioners over its creditors sent shock waves through the world of pension and bankruptcy lawyers and appeared to create uncertainty for companies looking to obtain financing. Is everyone over-reacting? Hear from this expert panel, including lawyers representing the parties, who will discuss the effect of the decision and the strategies required to minimize its impact.

• Understanding the facts and the effect on every day practice
• Addressing the concerns of lenders and how it has impacted the ability of companies with defined benefit plans to obtain financing in general
• How will it impact the ability of employers to fund their defined benefit plans and obtain credit financing?
• Is it the nail in the coffin for defined benefit plans?
• What is its impact on the fiduciary duty of a plan sponsor?
• Structuring a credit agreement - examples of financing deals that have addressed the “Indalex effect”
  
  

• Weighing the financial risk of a DB plan against the potential legal liabilities of a DC plan
• Assessing the role and the liability of a plan administrator in a DC plan – how does the fiduciary duty change?
• How and when to properly communicate the changes
• Establishing investment choices and offering a suitable range of options
• Understanding the duty of a DC plan administrator to monitor investment choices
• Identifying the critical difference between educating plan members on investment choices vs. offering investment advice
• Evaluating the benefits of taking control - are there advantages to managing assets on behalf of members?
• Anticipating liability issues and developing strategies – the U.S. experience - trends in U.S. case law
  • Expanding definition of fiduciary and obligation to disclose fees
    

Increasingly plan sponsors are focusing on hybrid plan designs that fall somewhere in the middle of DB and DC plans with all parties sharing the risk. Don’t miss this opportunity to learn about the various alternatives from experts who can give you the knowledge you need to decide if a hybrid plan is the answer for your organization.

• What is a hybrid plan and how does it differ from a two tier, or a jointly sponsored plan?
• Evaluating the sustainability of jointly governed plans
• Identifying the characteristics of a target benefit plan and determining whether it is the best design for fairly allocating risk
• How does an organization’s governance model affect its ability to switch to a hybrid plan?
• Exploring plan designs that give investment certainty without increasing the cost to the risk taker
• Are there plan designs that allow for adjustments but are not target plans?
• Can the current legislative framework accommodate hybrid plans in Canada?
• Overcoming the challenges of embracing a new plan design when there is no legislation to give guidance

• “Two hats rule” – How can employer/administrators separate their duties so that they satisfy their fiduciary duties?
• Practical implementations of good governance – what controls should you have in place?
• What is a Funding Policy, what should it cover and who needs one?
• How is a Funding Policy different from a Statement of Investment Policies and Procedures?
• Addressing conflict in situations where both a Funding Policy and a SIPP exist – how to ensure consistency between the two
• What are the key compliance challenges with provincial and federal pension fund investment rules?
• How to implement a dynamic risk management approach
• How to administer plans from an investment funding perspective that have been frozen but not yet wound up
• De-Risking – what does it mean and why is it a bad word?
  • Is switching to a DC plan the best advice?
  • Investment options for a plan that is scheduled to be wound up or suspended
  • Learning how to limit equity, interest rate and mortality exposure
  • Understanding liability driven investing, longevity insurance and annuity buy-ins and buy-outs – assessing the cost that accompanies each solution
  • Transition from current state to desired state
• Determining whether the plan will ultimately reach the required results

• What does an employer do with a Defined Benefits Plan with liabilities when the company is insolvent or it wants to wind it up?
• Is the state of the annuity market the reason DB plans are so expensive to run?
• How to manage the wind up period of an old DB plan when a company can’t buy enough annuities
• Using letters of credit to meet minimum solvency requirements
• Taking advantage of funding relief and exemptions offered by federal and provincial governments
• What is the state of buy outs in Canada and are they a viable solution to the solvency crisis?