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Benefits and Pensions MonitorOffering The Best Of Both WorldsDuring a time when many employers are opening DC pension plans and closing off DB plans to new hires or shifting to hybrid plans, what Nexen Inc. is offering to its employees is fairly unique. The Canadian-based, global energy company offers its employees a choice of a Defined Contribution or Defined Benefit pension plan. “Both plans are open and new plan entrants have a choice of participating in either one,” says Bob Pitman, pension advisor with the company. “We feel that this choice represents a competitive advantage compared to most pension programs and this flexibility is reflected in the name of our program: ʻPension with Choiceʼ.” The DB pension plan was introduced 1973 and currently has approximately 770 active plan participants, 377 individuals receiving monthly pension benefits, and 150 deferred vested participants. The DC pension plan came into being in 1997 when Nexen acquired a company which had an existing DC pension plan. With the significance of the acquisition and large number of employees, it was decided that there was value in bringing a DC plan into the company. There are approximately 680 active DC plan participants. Competitive Advantage Pitman says, “Itʼs no secret that many companies are facing workforce challenges, which are only expected to get worse. We hire employees at all stages of their career, from new graduates to employees who are at retirement age. Our population is also a mix of plant/operational workers and professionals. The fact that Nexen has both a DB and DC plan open to new hires contributes to our ability to attract and retain our skilled workforce. New hires are able to choose the pension plan that best suits their current situation and retirement needs.”
The ʻPension with Choiceʼ program is intended to:
“As the ability to choose between a DB and DC pension plan is not prevalent in our industry, we view our pension program as a competitive advantage in the attraction and retention of skilled individuals.” Further Flexibility Flexibility and choice are further built into the program with the option to prospectively switch between the DB and DC plans at the following subsequent dates:
Employees aged 45 or older in the year of initial pension plan enrollment will not be eligible to switch between the DB and DC plans. Both pension plans require employee contributions. Active DB plan participants also have an annual opportunity to prospectively switch between the base 1.8 per cent plan provision and the optional two per cent plan provision effective January 1st of each year. The optional provision of the DB plan requires that the participant contributes an additional two per cent of their pensionable earnings up to an annual contribution limit. Information And Resources Nexen offers programs which provide for a reasonable level of retirement income. Along with government programs and individual savings, it recognizes that for many employees, the company pension will be an important part of their retirement income. New hires are provided with a wide variety of information and resources including employee booklets, information sessions, and an online modeling tool. Initial plan enrollment, as well as any subsequent plan participation changes, are facilitated through the modeling tool. What does the future hold? “The pension plan program has been very well received by employees and deemed a success by the company,” says Pitman. “Because of its design, it will continue to meet the varying needs of Nexenʼs Canadian-based employees well into the future.” |
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