Mercer Solutions - Foundation Flashcards
What is a plan sponsor?
A plan sponsor is a designated party—usually a company or employer—that sets up a healthcare or retirement plan for the benefit of the organization’s employees. The responsibilities of the plan sponsor include determining membership parameters, investment choices, and in some cases, providing contribution payments in the form of cash and/or stock.
What is a plan administrator
The person(s) or entity that is/are ultimately responsible for the oversight, management and administration of the pension plan, and the administration and investment of the pension fund.
The administrator is usually the employer that established the pension plan. However, the administrator may also be: a board of trustees (e.g., for multi-employer pension plans where at least half of the trustees are member representatives); a pension committee (composed of member representatives); an insurance company (if it guarantees all benefits of the pension plan); or a group that is authorized by an Act of the Legislature.
Responsibilities of a plan administrator
Ensuring that certain plan information is available to those who are entitled to receive it, and that the information is accurate and complete
Enrolling employees in the pension plan.
Providing plan beneficiaries information about their rights and responsibilities in respect to the pension plan.
Providing plan beneficiaries information and documents that are required to be disclosed under the PBA and regulations.
Determining plan beneficiaries’ entitlements under the pension plan.
Making payments to plan beneficiaries when they are due.
Making payments to former spouses of plan beneficiaries with respect to their share of the plan beneficiaries’ pension benefits (in accordance with the PBA and regulations, and court documents that are filed with the administrator).
Responding to inquiries or complaints from plan beneficiaries.
What is a pension wind up
The purpose of a pension plan wind up (sometimes referred to as a termination) is to determine and settle all member entitlements in accordance with the pension plan documents and the applicable legislation and regulations.
A pension plan may be wound up if:
all or a significant number of members have ceased employment;
the plan sponsor has ceased to remit contributions to the pension fund;
there has been a plant closure, downsizing or discontinuance of operations;
the employer has sold all or part of the business and the purchaser does not provide a pension plan for the transferred employees;
the employer is bankrupt or insolvent; or
the company initiates a plan wind up.
How do pension plan deficits occur
There are several reasons why a defined benefit pension plan may have a deficit:
significant change in plan membership;
low long-term interest rates;
lower than expected equity market returns; and
plan benefit improvements for which the plan sponsor has not had sufficient time to fully pay.
Federal and provincial pension legislation allows for benefit improvements and plan losses to be funded over a certain number of years. If a wind up occurs before the benefits are fully funded, the plan will have a deficit.
If a company spends a lot of time on pension matters, why should they consider outsourcing?
The growing trend in Canada is for companies to outsource the management and execution of certain pension plan operations and decisions
Often companies will spend a significant amount of time on organizing pension committee meetings, overseeing day-to-day operations, selecting investment managers and reviewing individual investment manager performance
By delegating these areas to Mercer, your employees to focus on key business priorities, e.g. investment strategy and HR objective
Pension plan governance
Governance refers to the system in which the roles and responsibilities of governing parties are clearly defined so that clear and timely decisions are made in respect to the Plan. Good governance puts the best interest of the Plan’s stakeholders first and ensures that fiduciary duties are met as well as ensuring the best practices and administration for all Plan members and their beneficiaries. This is important to ensure that members are receiving good value for their investment in the SPP in the form of a stable lifetime retirement pension.
Fiduciary responsibilities
A fiduciary is essentially someone who holds something in trust for someone else. In pension plans, the parties involved in sponsoring and managing a pension plan act as fiduciaries for plan members and their beneficiaries. This means that they must act in the best interests of all plan members and beneficiaries.
Elevator Pitch: Plan Design
Many pension and savings plans were designed decades ago
The world is changing. Fast. Savings plans still have an important role to play in context of Total Rewards. But often in a different way
Mercer has a team of experts who specialize in aligning plan design with overall business strategy
We also help design programs to help employees make better savings decisions
A smarter plan design helps every dollar go farther… with an appropriate level of risk
Elevator Pitch: Delegated DB Pension Solutions
The growing trend in Canada is for companies to outsource the management and execution of certain pension plan operations and decisions
Often companies will spend a significant amount of time on organizing pension committee meetings, overseeing day-to-day operations, selecting investment managers and reviewing individual investment manager performance
By delegating these areas to Mercer, your employees to focus on key business priorities, e.g. Investment Strategy and HR objectives
The additional benefits of an outsourced model are that companies are able to, stay current on new ideas andindustry best practice, leverage collective purchasingpower and gain access to solutions that might not be withinreach of many pension plans
Elevator Pitch: Delegated DC Services (Future Wise & Future Wise Core)
Mercer Future Wise allows clients to outsource all aspects of retirement plan governance to Mercer, freeing up plan sponsors to focus on more strategic matters
An all-inclusive approach, this solution provides plan sponsors with the full suite of Mercer’s defined contribution (DC) services – from portfolio management and investment selection, to vendor management and compliance, to plan design and fee benchmarking
Mercer has over 20 years experience of operating delegated DC models for nearly 500 clients globally
Elevator Pitch: Managing Defined Benefit Pension Risk
There are inherent risks within corporate pension plans. Understanding these risks is important, but managing these risks is critical
Mercer has a team of experts who specialize in building strategies to effectively manage pension risk within the context of you overall business strategy
We have also invested in a suite of tools which can help you identify and manage pension risks
When executed properly, you will not only better manage your risk but you will also seize opportunitiesin the market place
Elevator Pitch: Enhancing Investment Returns
Increasing investment returns increases wealth! Higher investment returns result from better asset class decisions, better investment manager decisions, better diversification, and lower costs Mercer offers tools, advice, and solutions to plan sponsors looking to improve investment returns Any investor seeking real returns (returns greater than inflation) can benefit from Mercer’s investment advice … DB plans, DC members, Endowments and Foundations, any pool of institutional assets
Elevator Pitch: Financial Wellness
Plan sponsors continue to be challenged with changes to the Canadian retirement program landscape with up to five generations in the workforce, a large cohort of employees entering the workforce (millennials) that may challenge access to information and level of benefits and another large cohort of employees that will look to retire with financial freedom
Now is the time to review overall objectives for financial wellness and how the current plan design aligns with objectives within your organization
Elevator pitch: Mercer Value Plus (core MMB services)
ADVICE – Expert help from Mercer’s advisors gives you:
Strategies to identify and reduce risk in your plan
Proactive benefit plan and cost management
Plan design benchmarking
ADVOCACY – With Mercer advocating for you, you benefit from:
Our leverage to get the best terms for your plan
Red phone access to your insurer to resolve issues
Comparative insurer information
FINANCIAL ACCOUNTABILITY – With Mercer you gain lowest, financially sound costs, the best terms for your plan and budget projections to ensure no surprises
