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21 CANADiANLAWyERMAG.CoM/iNhousE april 2014 heavily invested in equities, but you're not focused on the performance of the assets in the plan — you're focused on maintaining the security of the plan. "You're not chasing returns — that's a gamble," says Rowland. It's about matching assets to liabilities; if your testing shows you're going to have a deficit, the shared-risk model can force contributions from members and the orig- inal plan sponsor up to a cap. If that's not enough, they can then look at ancillary ben- efits, such as not paying cost of living. Only as a last resort would they cut basic benefits. Why would employees buy into this? The intention is to allow for the ongoing provi- sion of sustainable benefits. After all, guar- antees are only as good as the funding in the pension plan or the solvency of the employ- er. If the plan sponsor goes into bankruptcy, that guarantee isn't going to mean much. "The idea is it does allow for adjustments and some flexibility as you go along instead of without warning seeing a reduction [in your pension] by 40 per cent," says Hugh Wright, a partner at McInnes Cooper in Halifax and group leader of the firm's pen- sions and benefits practice. "It's the difference between shaving someone's head and a haircut," says Row- land. With a shared-risk plan, there is joint governance between employees and man- agement — and it's off the books of the employer. It's a stand-alone entity in and of itself, she adds. And that has big appeal to a lot of employers. "We're all in the same boat," she says. The plan is designed to weather heavy seas — and when the seas are calm you can let the sails out and just go for it. "That's the idea behind the plan — set money aside for future benefit increases and pay off any cuts that you might have had to make." The shared-risk model has been created as a design option in legislation (which oth- er provinces could adopt). So far, it's being rolled out by both public- and private-sector organizations in the province, in unionized and non-unionized environments. It's anticipated several provinces will bring the target or shared-risk model into force (with regulations) in the near future. Quebec is introducing target benefits for the pulp and paper industry. Ontario is pro- posing changes — including some single- employer target benefit provisions — but those have not yet been enforced in regula- tions and are limited to the collective bar- gaining workforce. Nova Scotia, Alberta, and B.C. all have proposed legislation. "It's unclear what elements of shared-risk models will end up in other jurisdictions," says Steele. What makes the N.B. model different, she added, is prescribed risk man- agement. "Arguably some form of risk man- agement is a good thing," she says. "The question is how prescriptive should it be? That's a policy decision." N.B. was way behind the eight ball on shared risk and then leapfrogged ahead, says Bauslaugh. But several provinces allow for jointly managed plans, done on a fidu- ciary basis (by a board that has a fiduciary obligation to consider all of the stakehold- ers in the plan). "New Brunswick made a lot of noise, but it's not that different really than jointly sponsored plans — they're already shared risk," says Bush. "In Ontario there are seven From one team of professionals to another, when you or your clients are talking audit, tax and advisory solutions, the right counsel is essential. With offices from coast to coast, Collins Barrow professionals offer you the insights and opinions you need, combined with objective, actionable advice, to help maximize opportunities in virtually every area of business. When clarity counts, call Collins Barrow. Where there is clarity there is order In your court and ours collinsbarrow.com ntitled-1 1 14-03-05 2:08 PM

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