When the words “let’s talk about the details of your pension plan” are spoken, employees either flee in fear or tilt their heads in a confused manner — at least that used to be the case. Take a look at the following sites for some readings that will make things a smooth sail.
Defined contribution pension plans — rules and benefits
www.accesdirect.com/e-dcpp.html
A short and sweet rundown of the basics of a DC plan, including plan dollar limits ($13,500) and some benefits for the employer: “Vesting schedule reduces turnover and promotes loyalty to the company. Employer costs are easy to budget and forecast because they are fixed by the plan.”
Manitoba Association of School Trustees (MAST) pension plan
www.mast.mb.ca/Pension/booklt97.htm
If you’re just in the initial stages of setting up a DC plan, this example from the Manitoba Association of School Trustees takes you from A to Z. The plan also provides details on separation from a spouse or common-law partner. “This division of pension benefits does not apply to a common-law relationship unless you both agree to it in writing, and you make a written declaration of your relationship stating when the relationship began and that the division of pension benefits should apply.”
The dangers of not using a DC plan
www.clac.ca/publications/the_guide/issues/DispArt.asp?an=21&sec=2
This article from the Christian Labour Association of Canada cites one situation of an employee switching from a DB pension plan to a DC plan. Much to this employee’s dismay, the amount he thought he could transfer was nowhere near the amount he was allowed. He “received no interest and ended up receiving less than one-quarter of the actual contributions made.”
Comparison of traditional DB with DC plans
www.sbm.temple.edu/~jvanderh/rmi306/dbvsdc.htm
This is a very thorough and unbiased comparison between a DC and DB plan written by students at Temple University in Philadelphia. It’s tough to find a comparison like this anywhere, primarily because most of the studies that have been done are conducted by either DC or DB providers, which slants the findings in their favour. On the topic of administrative costs, it states: “While actuarial services are not required to the extent necessary for defined benefit plans, the provision of participant investment education and the cost of administering many individual funds for loans, hardship, and/or retirement benefits may make defined contribution plans more expensive. However, defined contribution plans generally are less expensive to administer, especially for smaller employers.” This comparison also has a second section called “More Philosophically-Oriented Considerations” which addresses such things as “responsibility given to participants” and “benefits provided at retirement.”
Manufacturing finds DC plans work best
http://www.workforce.com/archive/feature/22/28/12/index.php
This article explores the benefits of DC plans in the manufacturing sector. “There has been a shift by employers of all sizes to defined contribution plans or hybrids of defined benefit plans that offer employees more visible value,” says Steve Vernon, vice- president and consulting actuary for Watson Wyatt Worldwide. The article discusses the need for portability in employee pension plans, since people no longer stay at companies “for life.” Also of interest is the links on the sidebar to three sections — DC plans at a small, medium and large company — which explores the details of how different sized companies have incorporated DC plans into their benefit menu. (Note: this is a “Subscribe For Free” site; after signing up, you must re-paste the URL in your browser.)
Canada’s pension history
www.civilization.ca/hist/pensions/cpp1sp_e.html
HRDC offers a lot of information on pensions in Canada. The link above will take you to a special site, just launched in conjunction with the Museum of Civilization, which celebrates 75 years of public pensions in Canada. There is an extensive history presented in timeline form as well as a photo gallery. At the HRDC site (www.hrdc-drhc.gc.ca/isp/ris/private_e.shtml), there is a lengthy article intended to introduce plan members to the importance of, and differences in, private pension plans in Canada; what it describes as the third level of retirement income, after old age security (OAS) and the Canada Pension Plan (CPP). This site covers the basics but also gets into some of the current complex issues like what happens to your contributions when you leave an employer.
Scott Stratten is a speaker, trainer and the creator of WorkYourLife.com. He can be reached at [email protected] or (905) 844-2818.
Defined contribution pension plans — rules and benefits
www.accesdirect.com/e-dcpp.html
A short and sweet rundown of the basics of a DC plan, including plan dollar limits ($13,500) and some benefits for the employer: “Vesting schedule reduces turnover and promotes loyalty to the company. Employer costs are easy to budget and forecast because they are fixed by the plan.”
Manitoba Association of School Trustees (MAST) pension plan
www.mast.mb.ca/Pension/booklt97.htm
If you’re just in the initial stages of setting up a DC plan, this example from the Manitoba Association of School Trustees takes you from A to Z. The plan also provides details on separation from a spouse or common-law partner. “This division of pension benefits does not apply to a common-law relationship unless you both agree to it in writing, and you make a written declaration of your relationship stating when the relationship began and that the division of pension benefits should apply.”
The dangers of not using a DC plan
www.clac.ca/publications/the_guide/issues/DispArt.asp?an=21&sec=2
This article from the Christian Labour Association of Canada cites one situation of an employee switching from a DB pension plan to a DC plan. Much to this employee’s dismay, the amount he thought he could transfer was nowhere near the amount he was allowed. He “received no interest and ended up receiving less than one-quarter of the actual contributions made.”
Comparison of traditional DB with DC plans
www.sbm.temple.edu/~jvanderh/rmi306/dbvsdc.htm
This is a very thorough and unbiased comparison between a DC and DB plan written by students at Temple University in Philadelphia. It’s tough to find a comparison like this anywhere, primarily because most of the studies that have been done are conducted by either DC or DB providers, which slants the findings in their favour. On the topic of administrative costs, it states: “While actuarial services are not required to the extent necessary for defined benefit plans, the provision of participant investment education and the cost of administering many individual funds for loans, hardship, and/or retirement benefits may make defined contribution plans more expensive. However, defined contribution plans generally are less expensive to administer, especially for smaller employers.” This comparison also has a second section called “More Philosophically-Oriented Considerations” which addresses such things as “responsibility given to participants” and “benefits provided at retirement.”
Manufacturing finds DC plans work best
http://www.workforce.com/archive/feature/22/28/12/index.php
This article explores the benefits of DC plans in the manufacturing sector. “There has been a shift by employers of all sizes to defined contribution plans or hybrids of defined benefit plans that offer employees more visible value,” says Steve Vernon, vice- president and consulting actuary for Watson Wyatt Worldwide. The article discusses the need for portability in employee pension plans, since people no longer stay at companies “for life.” Also of interest is the links on the sidebar to three sections — DC plans at a small, medium and large company — which explores the details of how different sized companies have incorporated DC plans into their benefit menu. (Note: this is a “Subscribe For Free” site; after signing up, you must re-paste the URL in your browser.)
Canada’s pension history
www.civilization.ca/hist/pensions/cpp1sp_e.html
HRDC offers a lot of information on pensions in Canada. The link above will take you to a special site, just launched in conjunction with the Museum of Civilization, which celebrates 75 years of public pensions in Canada. There is an extensive history presented in timeline form as well as a photo gallery. At the HRDC site (www.hrdc-drhc.gc.ca/isp/ris/private_e.shtml), there is a lengthy article intended to introduce plan members to the importance of, and differences in, private pension plans in Canada; what it describes as the third level of retirement income, after old age security (OAS) and the Canada Pension Plan (CPP). This site covers the basics but also gets into some of the current complex issues like what happens to your contributions when you leave an employer.
Scott Stratten is a speaker, trainer and the creator of WorkYourLife.com. He can be reached at [email protected] or (905) 844-2818.
