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Government of New Brunswick shared risk pension plan model given highest marks by the American Academy of Actuaries

Shared risk pension plan model designed in collaboration with Morneau Shepell receives top grade for alignment, governance, efficiency and sustainability

TORONTO, Jan. 13, 2015 /CNW/ - The American Academy of Actuaries has bestowed its highest marks on the province of New Brunswick's new shared risk retirement system. In 2012, New Brunswick rolled out a shared risk pension plan model designed with Morneau Shepell that is a more adaptable retirement savings vehicle focused on the effective delivery of stable, reasonably predictable and highly sustainable retirement income.

As part of its Retirement for the AGES initiative, Academy officials examined five public and private retirement systems and reform proposals, and evaluated how well they meet the needs of participants, sponsors and other stakeholders. Grades were determined by a task force of the academy's Pension Practice Council, and were based on four principles: Alignment, Governance, Efficiency and Sustainability (AGES).

"The overall grades provide a general assessment of whether a system is well-designed to achieve its retirement-income purpose," said Academy Senior Pension Fellow Donald Fuerst. "Our assessment shows that the New Brunswick shared risk pension plan model supports sustainability as well as good governance and decision-making, and avoids imposing undue burdens on stakeholders. It is an excellent model for stakeholders in other jurisdictions to examine."

"The reality today is that a number of pension plans across North America are facing significant funding deficit issues," said Marilyn Quinn, President of the New Brunswick Nurses Union. "Our new pension model, developed in collaboration with the Government and Morneau Shepell, offers our members high protection and value for their hard-earned pension savings. This recognition by the American Academy of Actuaries is greatly appreciated."

"The New Brunswick government was looking for ways to address the most significant challenges inherent in traditional defined benefit plans, namely financial stability, intergenerational equity, and benefit transparency," said Conrad Ferguson, Partner at Morneau Shepell. "As actuary and pension plan advisor to the expert task force, our role was to assist in designing a pension model that met the objectives they established. To have an international, expert and independent body rate the structure so highly on key principles is great news for all involved in this process."

The shared risk pension plan can be considered an extension of the standard target benefit plan. New Brunswick introduced shared risk plans under its Pension Benefits Act in 2012 which permits existing pension plans, including their accrued benefits, to convert to this structure. A shared risk plan allows for contributions into the plan to vary within a narrow range. It also has a strict, legislated risk management process that plans must follow to ensure that member benefits are substantively protected.

For the case study on the New Brunswick shared-risk model, please click here.

For further information on Morneau Shepell's services in pension plan design, please click here

For further information on the American Academy of Actuaries' Retirement for the AGES initiative, please click here.

About Morneau Shepell Inc.
Morneau Shepell is the largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of Employee and Family Assistance Programs, as well as the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity and improve their competitive position. Established in 1966, Morneau Shepell serves more than 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,500 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.

SOURCE Morneau Shepell - Pension/Retirement

For further information: Nathan Gibson, Manager, Corporate Communications, Morneau Shepell, 416-390-2641, ngibson@morneaushepell.com