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Jointly sponsored pension plans like the CAAT Plan are adequately funded and sustainable, as they help provide adequate income in retirement.

Here are 5 truths about public sector pension plans all Canadians should know:

1. DB Plans in Canada are adequately funded

The average funding ratio of Ontario’s largest 7 public sector plans, plus the federal public sector pension plan is over 95%. Together these plans have  assets of over $300 billion, and over 2 million Canadians are members of these plans. The CAAT Pension Plan is fully funded on a going concern basis, as of its last actuarial valuation (January 1, 2012).

Pension plans are highly regulated, requiring regular valuations and adjustments to meet funding standards.

2. Risks and costs are shared 50/50

In a jointly sponsored plan members and employers share the rewards and the risk. At the CAAT Plan, members and employers pay equal contributions.

In the event of a funding shortfall, members help ensure sustainability through their own contributions or reduced future benefits or both.

3. DB Plans are efficient, low-cost operations

A large investment fund like the CAAT Plan realize economies of scale and invest at lower cost: the total cost to the CAAT Plan to invest $100 in assets is about 48 cents, or less than half a percent per year.

What’s more, the investment team can tailor their approach: selecting investments that meet targets for both returns and risk level, and appropriate to the Plan’s liabilities. This reduces overall risk, and balances benefit security with affordability while minimizing contribution volatility.

4. DB Plans provide long-term capital

Pension plans have an investment horizon that is decades into the future, which means they can provide capital for long-term investments such as infrastructure, bonds, real estate, and private equity. Long term investing helps the economy and benefits everyone.

5. DB Plans help combat poverty among the elderly

Canadians are living longer than ever, and many are also carrying large debt, making elder poverty a very real concern. On average, Canadians without a workplace pension have $60,000 saved in RRSPs – an insufficient amount for a comfortable retirement. By requiring savings during the working years, pooling investments and risk, DB plans help members save enough money for retirement.

Adequate income in retirement from well-managed lower cost sources like DB plans reduces reliance on social programs by seniors. It also and provides government with a future deferred source of revenue from the taxes on pensions in payment. The CAAT Plan pays over $300 million annually to our members.

These 5 truths illustrate  how well-run DB pension plans, like the CAAT Plan, benefit more than their members  -- important points to keep in mind as you read and hear about  other views of public sector plans. Plans like ours have a wide range of advantages that reach beyond our membership, strengthening our country.

December 5, 2012 - CAAT Pension Plan named one of the 2013 Best Small and Medium Employers in Canada

The CAAT Pension Plan has been named one of the 2013 Best Small and Medium Employers in Canada . This is the first year the Plan has participated in the survey, and the Plan is proud to be ranked number  29.

“We are committed to investing wisely in our most important resource – our people.  Over the past number of years, we have built the Plan into a world class organization by unleashing the power inherent in our people.  Our workplace,  built on our core values of integrity, teamwork and impact, has had significant results both in the quality of the work we do, and the engagement of our people.

We already recognize that CAAT is a great place to work…it’s an honour to make the list the first year we participated.”

said Derek Dobson, Plan CEO.

Becoming a Best Small and Medium Employer is a detailed and competitive process.  This national awards program recognizes top employers with between 50 and 399 employees. The program mirrors the renowned Best Employer in Canada list published in Maclean’s Magazine but focused on smaller businesses.

The rankings are primarily determined by using the results from Employee Opinion Surveys.  The evaluation process also includes the assessment of organizational practices and perspectives from the leadership team.  This year, more than 200 organizations across Canada participated in the study.  

Study partners include Queen's School of Business, Queen’s Centre for Business Venturing and AON Hewitt. More information about the Best Small & Medium Employers in Canada is available online at http://bsmestudycanada.com. 

The CAAT Pension Plan has also been named to the Best Employers in the Greater Toronto Area (GTA) list at number 9.

Read our Statement of workplace values

November 26, 2012

As of January 1, 2013, the CAAT Pension Plan inflation protection rate will be 1.45%.

The inflation protection increase will apply to current pensions, deferred and survivor pensions, and to the bridge benefits of those who retired before the age of 65. If you retired this year, the increase to your pension in 2013 will be pro-rated to reflect the months in 2012 during which you were collecting your pension.
Inflation protection is cumulative: the increase applies not only to your original pension, but also to any previous inflation protection increases that you are already receiving.

Calculation based on inflation and your service 

The inflation protection calculation compares the year-over-year percentage change in the average Consumer Price Index (for the years, ending in September) and increases pensions by 75% of this amount. The calculation is further based on when you earned service in the CAAT Pension Plan as follows:

• On service earned before 1992, inflation protection increases are ad hoc and granted until January 1, 2014.
• On service earned between 1992 and 2007, inflation protection increases are funded and are guaranteed indefinitely.
• The granting of increases on service earned after 2007 is conditional on affordability, based on the funding status of the Plan. On service earned after 2007, inflation protection increases have been granted until January 1, 2015.

By the end of this year, you will receive a letter from our pension payroll agent advising you of the new pension amount you can expect to receive starting January 1, 2013.

Related links:

Inflation Protection webpages

After extensive and successful consultations with senior government and elected officials, the CAAT Plan has negotiated an agreement with the province that provides additional contribution stability and maintains Sponsors' control of Plan governance, funding and investment decisions.

As a result of reaching a negotiated agreement, the Plan has secured a number of outcomes critical to the ongoing stability and good governance of the Plan. We have negotiated:

• Exemption from having to pool Plan investments in any new provincial ‘pooled fund’.
• Temporary 4-year valuation cycle, up from the previous 3 years. This allows more stability by providing longer periods to manage investment market and interest rate volatility.
• Exemption from any proposed special legislation determining funding decisions, which would have significantly impacted the Jointly Sponsored structure and decision-making that has been key to the Plan’s stability.

To secure these outcomes, the Plan will adjust the Funding Policy by adding a temporary “Level 1” which will be in effect until December 30, 2017. Our Sponsors’ Committee strongly believes the Plan has achieved the best possible outcome to secure the pension promise.

Read more:

Promoting your retirement security
Building and maintaining stability
Investment Pooling
How changes will affect members
Funding policy
Background resources

During the governance meetings that took place on September 24 - 26, the Board of Trustees and Sponsors’ Committee approved some Plan amendments. These amendments are the outcome of a continuing review of the Plan’s provisions in response to pension reform legislation and the Plan’s commitment to equity for all members.

Most of these changes only affect members who are working and contributing to the Plan. The details are covered in the retired member newsletter as part of our commitment to keeping you informed of all Plan developments.

These amendments fall into the category of equity-driven changes, pension reform driven changes, and Plan Text changes, or ‘housekeeping’ amendments.

September Member Newsletter

September Retired Member Newsletter

This edition includes an important announcement about slight adjustments that will be made to contribution rates starting in 2013 to improve equity. Together the contribution rate decrease/increase affects members differently according to their pensionable earnings. Read more (for Active Members)

Be sure to read the article “How government proposals might impact your pension plan” for the latest on the Plan’s advocacy efforts during the provincial government’s consultative process. Read more (for Active Members)

In the past, Plan members over age 65 who stopped contributing to the Canada Pension Plan (CPP) contributed to the CAAT Pension Plan at the higher contribution rate on all pensionable earnings, and earned a benefit at the non-integrated rate of 2%.

Starting January 1, 2013, for these members, contributions and benefit accrual will return to the integrated rates and accrual formula even if they are not contributing to CPP.

This change only affects members who are over age 65 and not contributing to CPP. These members can expect a letter from the Plan soon to inform them of the upcoming change.

This change is being implemented to ensure equity for all members. It requires all members to contribute and accrue benefits at the same rates.

This change only affects contributions and benefit accrual starting January 1, 2013.

What is CPP?
As of 2012, Canadians who are over age 65 and working can continue to contribute to CPP and accrue CPP’s Post Retirement Benefit. Please contact Service Canada if you have questions about the Post Retirement Benefit.

The CAAT Plan has long had a small pension provision which stated that when a member leaves the Plan or retires with a pension of less than 2% of the YMPE (as of the member’s normal retirement date), the member will receive the payment in a lump sum rather than a monthly pension.

Starting in July 2012, the small pension payout threshold will be increased to 4% of the YMPE, or a commuted value equal to 20% of the YMPE, as permitted in recent pension legislation. Effective July 1, 2012, this would mean that if the member’s pension is less than $2,004 per year or $167 per month (or if the CV is less than $10,020), they will receive the value of their pension as a lump sum.

A small pension lump sum payment is not locked-in. It can be transferred to a non-locked in retirement savings plan or taken in cash. If taken in cash, the lump sum payment is subject to income tax.

Small pensions are typically the result of short periods of pensionable service. In the past, most members with short periods of service (under 2 years) were not vested, and would have received a refund of their contributions (plus interest) at termination. With immediate vesting taking effect July 1, 2012, more small pensions will occur. This updated provision allows the Plan to provide members with the value of their small benefit rather than having to administer a small lifetime pension at a cost that might eventually outstrip the benefit’s value.

What is the YMPE?
The Year's Maximum Pensionable Earnings (YMPE) is the maximum amount of earnings on which you are required to contribute to the Canada Pension Plan (CPP). Your CAAT Plan contributions are lower on your earnings that fall below the YMPE; that is, the earnings on which you also contribute to the CPP. The YMPE increases each year. In 2012, the YMPE is $50,100.