SERP Environment Changed

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    Canadian organizations are operating in a different business environment from when Towers Watson issued its SERP study in 2008. Its ‘Canadian Digest’ says prolonged weak economic growth and uncertainty are putting greater pressure on employers to balance the benefits of attraction and retention through programs such as SERPs with the increasing costs of those benefit programs. At the same time, Canadian employees have altered their retirement perspectives and plans for the future. Many workers are re-evaluating the impact of retirement benefits on their employment decisions making it now more important than ever for organizations to examine how they design, fund, secure, and communicate their SERPs. SERP sponsors are finding boards are concerned about the volatility of SERP costs and unfunded liabilities. As well, letter-of-credit standby fees have been rising in recent years, resulting in a narrowing of the incremental cost of pre-funding. Increased attention is being paid to funding targets, such as establishment of a “right” funding target and how quickly the target should be achieved. It may be time, says the study, to examine whether the chosen funding method still satisfies the organization’s objectives.