Why DC Plan Sponsors Should Care About Decumulation
by John T. Por, published July 9, 2014 in Benefits Canada
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The article argues the case of sponsors having to pay closer attention to the process and outcomes of their current defacto
decumulation policy of disinterest. Apart from the economic merit of sponsors' articulating their decumulation policy, latest discussions between DI and leading benefits attorneys suggest that the legal community's views shifted on this issue. It is now deemed that the risk of not assisting members in achieving potentially higher retirement income by regular communications and using own purchasing power to obtain better fees may be higher than providing assistance.
The argument for such view is that a) the damage of doing nothing is quantifiable and b) preparation for decumulation should start well before retirement i.e. in the accumulation phase during which fiduciary duties do apply.
Note: The views expressed in the article is DI’s judgments and opinions and do not represent those of the legal community or the sponsor community at large.
Pensions and Benefits Monitor
by John T. Por, published August 2014 in Pensions and Benefits Monitor
The article argues that the industry’s perception of DC plans as saving vehicles has evolved over time and is due to a confluence of different historic factors. Had most DB-to-DC conversions not taken place at the time of high interest rates and the highest expected market returns in history, the evolution of DC plans would have been radically different.
The first step in making DC plans more member friendly is to acknowledge that their sole purpose is providing the highest possible retirement income.