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Benefits and Pensions MonitorToday’s Markets Move Volatile By: Bob Collie Sir: I enjoyed Michael Beswick’s article DC Better Than DB? Who’s Kidding Whom in the February 2003 issue of Benefits and Pensions Monitor. I must note my own participation in our Defined Benefit pension plan (we have a Defined Contribution alternative) reveals my alliance with his views. Unfortunately, in the private sector, the cost of administration (adhering to multijurisdictions of non-uniform legislation) and the fear of mounting liabilities have stopped new DB plans dead in their tracks. Smaller companies, in particular, are very reluctant to enter DB plans. I recall some recent Statistics Canada data that about 60 per cent of private sector employees still have no employer pension plan (DB or DC), while the public sector has more than 95 per centplus coverage. The stability, economies of scale, and permanence of the public sector has facilitated a superior result in protecting the retirement of their DB plan participants. Perhaps the only way to make DB more prevalent in Canada’s private sector is to raise the CPP income replacement factor from 25 per cent of the average industrial wage to 50 per cent or higher, and to push normal retirement up to age 70. I suspect such a change would have to be applied to members of the labour force under age 50, and we would continue with the present options for those above age 50. However, after 20 years of watching the pension industry (suppliers and regulators) fail to effectively penetrate the small business sector where many Canadians work, raising CPP benefits (and costs) may be the only solution. Unfortunately, our industry is obsessed with ‘large employers’ and complex solutions that small and midsize companies cannot afford. Increased, affordable DB benefits for these important sectors of our economy may only be possible via the CPP. And, as an Albertan, proposing further reliance on a government- administered program is not easy. Bob Milner
Sir: We read with great interest the 2003 Group Insurance Report published in the April 2003 edition of Benefits and Pension Monitor. We found the analysis presented in the introduction to the report very interesting and we were pleased that you pointed out the fact that Desjardins Financial Security, being a smaller carrier, will be able to take advantage of its size to “respond better to the needs of our clients.” However, we would like to make one important clarification. The article stated “And, for regional players, like Desjardins Financial Security…” Desjardins has not been a “regional player’ since 1996 when we created the Group Network, an operational entity putting together the resources of Imperial Life and Desjardins Financial Life Assurance. Since then, Desjardins Financial Security’s Group Network has grown to eight sales offices from the Atlantic to Pacific coasts with about one-third of our group business staff based in Toronto. We offer services designed to meet the specific needs of large national groups including an administration system that can serve clients across the country, a proven disability management program, and an effective administration of flexible plans and HCSA. Before the end of 2003, we will be able to offer a national payment card for both drug and dental care and an integrated EBusiness management solution, This type of effort has resulted in business growth which has seen our sales go from $548 million in 1999 to a projection of around $1 billion by the end of this year. Desjardins Financial Services is a member of the Desjardins Group of Companies, the sixth largest financial institution in Canada, with assets of more than $90 billion, more than 3,000 employees and five million clients across Canada. We are strongly committed to the development of our business operations on a national basis in both the group and individual markets. I would also like to make one additional clarification. For groups located in Québec, I am the person to contact, as stated in your 2003 directory. However, for groups located in other provinces, the person to contact is Dan Poole, Vice-president, Sales – Group Network (Atlantic, Ontario, and Western Canada). He is located in Toronto and can be reached at (416) 926-2700, extension 5117. André Simard Vice-president Sales – Insurance – Group Network (Québec) |
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