October 3, 2019 – By sharing the experience of a pension plan operating in two very different regulatory environments, pension expert Randy Bauslaugh shows how contingent pension plans, with benefits conditional on financial performance, are more reliable in times of stress and more cost-efficient than other alternatives. But they require accommodative legislation to survive economic adversity.
Contingent benefit pension plans are a hybrid of defined-benefit and defined-contribution plans. Also known as “negotiated cost;” “shared risk;” or “target benefit plans,” if plan liabilities get too far ahead of the assets and the agreed fixed rate of contributions, the trustees have a fiduciary obligation to consider reducing accrued benefits to bring the assets and liabilities back into balance. In the face of economic and demographic headwinds, an accommodative legislative framework emphasizing fiduciary duty over prescriptive rules provides crucial flexibility needed for plan durability.
In remarks to the National Coordinating Committee for Multi-Employer Plans, Miami, Florida, September 21, 2019, Bauslaugh gives a case study that shows the advantages of these types of plans, and the importance of flexible supportive legislation, governance, design, and communications.
For more information contact: Randy Bauslaugh, Partner at McCarthy Tétrault LLP; or David Blackwood, Communications Officer, the C.D. Howe Institute, at 416-865-1904 Ext 9997 or dblackwood@cdhowe.org
