Role of DC pension plans in Canada's retirement system is underestimated

Morneau Shepell Chief Actuary, Fred Vettese, mounts a defense of DC pension plans

TORONTO, April 20, 2015 /CNW/ - Morneau Shepell (TSX: MSI), the largest administrator of retirement and benefits plans in Canada, reports that Defined Contribution (DC) pension plans will continue to play an important role in providing retirement security for many years to come.

The Company's Chief Actuary, Fred Vettese, notes that plans could be further improved if better decumulation options were available, something that the provincial governments – including Ontario's – could make happen. This is communicated through Morneau Shepell's latest issue of the Company's Vision newsletter titled, "The Case for DC pension plans".

"We have learned that DC plans are sustainable over the long term, partly because much of the short-term volatility is smoothed out over long periods and partly because participants are resourceful enough to make adjustments to cope with market fluctuations," said Vettese. "DC plans should work even better in the future with improved online education and modeling tools, age-appropriate default options and a greater focus on keeping investment management fees low."

In the Vision newsletter, Vettese gives predictions on what will likely happen if the CPP is enhanced or if the ORPP is launched in its present form.  The chief actuary concludes that overall retirement security will improve with an enhancement in the public programs, though not by as much as governments might hope.

About Morneau Shepell Inc.
Morneau Shepell is the largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of employee and family assistance programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,600 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.

SOURCE Morneau Shepell - Pension/Retirement

Nathan Gibson, Morneau Shepell, [email protected], 416-390-2641