The legal community may soon be able to get in on the ground floor of an “innovative” retirement plan designed specifically for lawyers and their staff, says Dawn Marchand, vice-president of marketing, product and direct distribution for Lawyers Financial.
“This is unique in the industry, and we want to get the word out and start generating interest,” she tells AdvocateDaily.com. “On the one side, we are working on the development of the plan, and on the other, we’re building interest because it won't work unless lawyers are keen on the whole concept.
“We set up a task force three years ago, and we are working with the very best pension providers and experts to develop the Lawyers Financial pension plan,” Marchand says.
CBIA/Lawyers Financial was established about 40 years ago and offers insurance and investment products to lawyers, their families and staff. The organization is led by a volunteer board of directors made up of 12 lawyers from across Canada. Marchand says providing a retirement plan for lawyers is “very consistent with our mandate.”
“Lawyers Financial is a not-for-profit organization, and one of our goals is to deliver the highest-quality insurance and investment solutions at the very best rates. So providing a vehicle for lifetime financial security fits very well because our whole purpose is to serve the financial needs of the legal community,” she says.
Marchand says very few employees have defined-benefit pension plans with lifetime payouts in the current work environment.
“Our goal was to consider a pension plan for law firm staff, associates and partners, that would deliver predictable and sustainable lifetime pensions,” she says.
Marchand explains that there are two primary types of workplace retirement plans. One is defined contribution (DC), which are “savings vehicles where the employer and the employee” make contributions to an RRSP.
“All of the investment decisions are up to the employee. They assume all the risk and a DC plan does not deliver a predictable retirement pension,” she says.
There is also a defined-benefit (DB) plan.
“These do deliver predictable retirement pensions,” Marchand says. “If you have a DB plan, you know how much you're going to get every month for the rest of your life.”
While a DB plan is preferable to the employee, it comes with a “significant funding risk to the employer because they have a great fiduciary responsibility,” she says.
“I haven't found very many companies — even the big financial companies — that offer DB plans for their employees,” Marchand says.
Lawyers Financial proposes to offer “the best of both worlds,” eliminating the fiduciary risk for employers while creating reliable retirement pension income for employees, she says.
Marchand says the plan, which will be available for firms of every size, would “allow participants to realize benefits from previous years of employment with an ability to buy past service” and comes with inflation protection and survivor benefits.
“It will also provide portability, so if a lawyer or a staff member leaves one firm and goes to another, the plan remains intact,” she says.
The board of CBIA/Lawyers Financial is “fully behind” the concept, Marchand says.
“We have lots of work over the summer and fall, meeting with law firms through information sessions,” she says. “Anyone interested in learning more, can visit our website.”