Who’s in charge of pensions?

With the finance department’s interest in the pension portfolio at an all-time high, it’s a chance for HR to talk strategy
By Joe Nunes
|Canadian HR Reporter|Last Updated: 01/27/2005

With all the difficulty employers are having funding pension plans, it’s no wonder chief financial officers are getting more involved in plan design.

High on the list of benefit programs to be redesigned, or eliminated entirely, are defined benefit pension plans and post-retirement health programs. In the past, the cost of these programs did not receive as much scrutiny from the finance department, and HR professionals were often left to manage them as they saw fit. However, with an ever increasing awareness of both the cost of these programs, as well as the volatility in costs, CFOs have stepped forward to put controls in place.

For employees, there is a shift away from “entitlement-based” programs towards programs that place a greater onus on the employee to take responsibilities as well as risks. This shift is best exemplified by the movement towards defined contribution pension plans. While employers still retain responsibility for the effective administration of the plan (including the selection of appropriate investments offered), employees are now provided with the responsibility to make investment choices and bear the risk and rewards of their decisions.