As SERPs grow, so does scrutiny

Supplemntary employee retirement plans are in the spotlight
By Gerry Schnurr and Lyle Teichman
|Canadian HR Reporter|Last Updated: 08/10/2004

A decade ago, supplementary employee retirement plans (SERPs) were a relatively obscure HR tool. Now they’re very much in the spotlight.

Employees are worried about the adequacy and security of their pension benefits. Employers are concerned about rising costs of funding and the inherent risks in sponsoring plans. Directors in turn are under pressure to ensure that senior management’s performance-based compensation really reflects the organization’s performance. And to top it off, investors and the media are demanding full disclosure.

SERPs restore pension adequacy for higher earners. This is to address the impact of federal government limits on the benefits that can be provided through a registered retirement plan — limits that have remained essentially unchanged since 1976. As salaries have risen, more people are affected by these limits so that it is no longer just senior executives whose pensions are affected.