Group RRSPs very similar to defined contribution pension
Can be used in addition to or instead of pension plans.
Benefits to employees: pre-tax contributions directly from
payroll deductions, lower commissions and admin fees paid by
Not subject to pension legislation – reporting and admin
requirements are not as extensive.
Administrate: Make payroll deductions and remit to plan
provider on time; complete and submit necessary documentation
Advise: educate, support and promote
Anyone who is responsible for managing the assets of another
person is considered a fiduciary at common law.
A fiduciary has an ethical and legal duty to act in the best
interest of the person whose assets they are managing, and must not
benefit personally from the relationship.
Indalex Limited (Re) 2011 ONCA 265: Administrators owe
a fiduciary duty to plan members to act in their best interests,
notwithstanding any conflicting duties.
when an employer is both plan administrator and sponsor, it
must put the conflicting duties of these roles aside and act in the
members' best interests.
Scope of Fiduciary Duty
The scope of the fiduciary responsibilities of a group RRSP
sponsor depends on how it defines its role.
Higher duty: an employer that takes an active role in the
oversight and management of the group RRSP.
Lesser duty: If the employer communicates that it is simply
facilitating payroll deduction and requires the employee to make
all other decisions.
Less plan oversight and management creates risk that the group
RRSP will not perform as expected.
US developments: employers cannot completely abdicate
responsibility for investment.
Aspects of Fiduciary Duty
Ault v. Canada (Attorney General) (2011): there is a
duty to communicate information that is "highly relevant"
to beneficiaries of a pension plan.
The principles articulated by the court can apply to the CAP
model where information relating to investment options and plan
terms are important, since plan members' retirement income is
dependent solely on their investment decisions.
R. v. Christophe (2009), the Ontario Court of Justice:
The court also noted the administrator's fiduciary duty to
prudently select and supervise its delegates—which gives
legal responsibilities to the plan administrator to select and
monitor investment options and managers.
Communicate and educate
Don't forget about fees
Encourage independent advice
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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