CEOs and business leaders on the COMPAS business panel were consulted for their general views about employers’ rights to re-allocate monies between Defined Benefits (DB) and Defined Contributions (DC) plans in the wake of the Supreme Court’s decisions in the Kerry Canada case.
The company had retained its DB plan for existing employees while creating a DC plan for new employees. As DB plan assets exceeded actuarial requirements, the company stopped making DB contributions and withdrew DB monies to support the DC plan. Employees on the DB plan sued. By a large margin, the Court sided with the employer on the basis of contract law.
Without making any reference to the specificities of this particular case, members of the COMPAS business panel were asked for their views on the rights and wrongs of such situations in general. They were also asked what should be done, if anything, about the situation whereby public sector employees are on DB plans that are far more generous than the benefits available to the private and not-for-profit sectors.
Most but not all panelists called for rectification of the inequality between the public and other sectors. They were unhappy with that situation. Yet, on the issue of transferring resources between a DB and DC plan, they tended to have mixed views:
- On the one hand, a majority embraced one argument of the employees’ counsel, that “companies should not be allowed to stop making contributions to a Defined Benefits plan or to withdraw funds because doing so weakens the ability of the plan to weather economic storms in the future”;
- On the other hand, a majority agreed that “when a Defined Benefits plan has enough money to meet its obligations, the company should be allowed to stop making contributions to it.”
These are the key findings from this past week’s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine under sponsorship of BDO Dunwoody LLP.
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