Most law firms in Canada are small to medium sized enterprises that just do not have the resources to implement and monitor a retirement arrangement, let alone take on the extra cost of administration and fiduciary governance. It is simply unrealistic to expect individual law firms, regardless of their size, to assume the financial, fiduciary and administrative burdens of a defined benefit plan. In fact, most law firms have no pension arrangements at all - Defined Contribution (DC) or (Defined Benefit (DB).
Finally. A defined benefit pension plan for law firms
In 2016, a Lawyers Financial task force, comprised of leading pension and actuarial experts began investigating pension options. The result was a decision to join the CAAT Pension Plan to provide predictable and sustainable lifetime pensions for Canada’s legal community through a defined pension plan - DBplus.
CAAT is an $11 billion not-for-profit trust that has been delivering secure lifetime pensions for over 50 years. In 2018 CAAT launched DBplus, a plan that allows private sector employers to join. DBplus combines the best features of DC plans (cost certainty) with the best features of DB plans (predictability and cost efficiency for employers and valuable lifetime benefits for members).
Through CBIA/Lawyers Financial, law firms of all sizes can now provide predictable, cost certain, cost effective, adequate and sustainable workplace pensions through DBplus. This option has none of the legal or financial risks associated with firms managing their own plans. The main law firm obligation will be to set up payroll deductions and remittances, just as they do now for CPP.
DBplus eliminates the funding risk for employers and creates a reliable retirement pension income for lawyers and staff.
- Earn predictable and secure pension benefits payable for life
- Reduced stress without the burden of having to make complex investment decisions
- Existing registered funds may be consolidated into DBplus
- Security of a pension that is “portable” within the legal profession
- A compelling attraction and retention tool
- Reduced cost and risks along with ease of administration
- Eliminates compliance and fiduciary risks
- A tool to ensure employees can transition to retirement with confidence
The Bottom Line
Members participating in DBplus earn a guaranteed lifetime pension, equal to 8.5 percent of total (employee and employer) contributions, accumulated with inflation. On average, a member who participates over their entire career in DBplus is expected to receive approximately $8 in benefits for each $1 they contribute.
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CAAT Pension Plan is a trademark of Colleges of Applied Arts and Technology Pension Plan.