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exceed 55) is involuntarily terminated, then they must be allowed to "grow in" to a plan's early retirement subsidies, which Boyd says can significantly increase the cost of a plan. She adds it's not clear what happens if someone is fired for willful misconduct. There are also issues to be determined around a voluntary versus involuntary dismissal. Companies look to de-risk Ian McSweeney, a pension lawyer at Osler Hoskin & Harcourt, says there is a "spectrum of possibilities," when it comes to de-risking pension plans. At one end is managing risk through investment and making sure the investment strategy aligns with the execution and matches liabilities. In the middle is the plan design and issues such as whether a DB plan is still feasible or should a company convert to a DC. He says "conversions gets you there over time, but you still have a legacy deficit." At the other end of the specturm is getting rid of the risk entirely through lump sum payments or annuities. Desjardins-Siciliano says achieving better pension results can be as simple as reigning in plan costs. VIA started by applying "rigorous management oversight" of expenses related to managing the fund and it reduced cost to 30 basis points from 50, a big savings when you are managing millions of dollars. VIA is also requiring employees to contribute more of their earnings to the pension fund. Employee contribution was 30 per cent and will move to a 40-60 split. Beware of fiduciary duties One area where Desjardins-Siciliano says "lawyers really have to be careful and It's an area where the more financial knowledge a general counsel has, the better they can be serving their client. Larry Swartz, Morneau Shepell Ltd. diligent is on the issue of governance." There is a fiduciary duty on the part of the company to make sure the plan is properly managed. He says in-house lawyers have to limit the risk of conflict when it comes to hiring fund managers or plan administrators. "The obligation is one that requires lawyers at the board level to be very diligent in making sure that all the steps are taken so that — especially in a deficiency or insolvency environment — if you should, god forbid, run out of money, no one can go back and say you are negligent." It's the same with things like making decisions on taking contribution holidays. Larry Swartz has seen both ends of the pension challenge. He is counsel to Morneau Shepell and a principal at the HR consulting firm, which provide pension and benefit administration services. As a lawyer, he is involved in advising his firm on its DC and DB plans and providng clients with advice on theirs. He says one of the biggest challenges for companies is communicating with employees about their pension options in DC plans in a way that meets the employer's obligations as a fiduciary. The role of the lawyer in pensions, he says, is helping the company manage risk. For DC plans, that risk can be in deciding how far a company goes in communicating about investment options for its employees. "You need an understanding of trust laws and fiduciary duties so that you can help realize it's not just company money, you are providing a service for the company that is ultimately for the benefit of the employees. "It's an area where the more financial knowledge a general counsel has, the better they can be serving their client." It's taken a while for the economy and corporate Canada to dig the current pension hole and the problem won't be solved overnight, especially if interest rates don't start climbing soon. Air Canada's Headon says while there is light at the end of the tunnel, "pensions are going to remain a pretty significant part of our time for a few years yet." IH BENNETT J. 1/4 page Your lawyer. Your law firm. Your business advisor. BennettJones-3_IH_Apr_13.indd 1 w w w. c a n a d i a n law y er m a g . c o m / i n h o u s E april 13-02-26 10:34 AM 2013 • 27

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