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shunned and DBRS even predicts their demise in 40 years, Kennedy says DB plans have advantages. "They are a lot cheaper… because you are pooling the risk." As well, she says, a DC plan puts the risk "totally on the employees" and that may have negative long-term social policy issues if DC plans fail to provide adequate retirement resources. "You're going to have to pay the piper at some point — if it's not today, it's tomorrow." Shared risk plans The key, she says, is building flexibility into the plan. The low-interest rate environment and underfunding is prompting more discussions around creating hybrid plans. New Brunswick, for example, which has had a negative experience with DB plans that have gone belly up leaving pensioners with a shortfall, has introduced shared risk pension plans which attempt to combine the best features of a DB and DC plan. SPECIALIZATION IN BUSINESS LAW Part-time, Executive LLM program for corporate counsel and practising lawyers Taught by U of T Faculty of Law professors, together with top international faculty from MIT-Sloan School of Management and expert practitioners. GLLM (U of T) 1/2 island TIME: EVENT: For more information, call 416-978-1400 or visit: http://www.law.utoronto.ca/programs/GPLLM.html Supported by the Association of Corporate Counsel (ACC) - Ontario Chapter and in partnership with Carswell, a Thomson Reuters business. 26 • a pr il 2013 LLM_IH_Apr_13.indd 1 They remove absolute guarantees, such as indexing, and require both employers and employees to share in the risk, as opposed to the employer assuming all the risk for shortfalls. The plans provide basic benefits, and contributions can increase or decrease depending on the performance of the plan. Additional benefits, such as indexing, depend on whether the plan meets or exceeds expectations. In a stress test of more than 1,000 scenarios, basic benefits under an SRRP were achieved in 97.5 per cent of cases and the average indexation reached at least 75 per cent of CPI. Contributions were also stable, requiring no increases above 1 per cent of payroll. Currently, some New Brunswick public pensions are converting to the SRPPs. The age for retiring without a reduction in pension will bump from 60 to 65. Pension law reforms In terms of provincially governed plans, there are a number of minefields awaiting in-house counsel. Many provinces are introducing changes to their provincial pension laws. As well, the Canadian Association of Pension Supervisory Authorities has introduced an agreement respecting multi-jurisdictional plans, which Quebec and Ontario have signed. The goal is to simplify the administration of plans that operate in more than one jurisdiction and reduce oversight red tape. Blake Cassels' Boyd says, "We're only now starting to understand some of the implications of what they have agreed to." She explains the "tricky thing" with pension plans is the home jurisdiction for regulating them depends on plurality of members in a plan. That can change as the business grows and acquires or divests operations. There are also hitches in provincial laws when it comes to meeting family law obligations in a separation or divorce. Grow in rights Boyd says another thing to watch for in Ontario is "grow in rights," which are contained in recent Ontario pension reforms. Now, a pension automatically vests once a person joins a plan, as opposed to after two years. As well, if a person who has accrued 55 points (age and service INHOUSE 13-02-26 4:07 PM

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