Funding Task Force completes review

At their March 2011 meetings the CAAT Pension Plan’s governors accepted the recommendations of the Funding Task Force created to examine all means to eliminate the Plan’s funding deficit.

After reviewing the Plan’s actuarial assumptions and updating its funding projections, the task force concluded that the Plan is secure over the long term with only small changes to contribution rates. The task force chose to recommend an increase in contributions over any reduction to benefits that active members would build in future because it was highly aware of the value members place on their benefits. (Reductions to pensions in pay and other already-earned benefits were not under consideration because these benefits are protected under law.)

Plan is secure over long term with only small changes – active
members will contribute more to help secure benefits

Active members and their employers will contribute more to the Plan beginning in 2012 with a 0.8% rate increase that will be followed by 0.4% increases in each of 2013 and 2014.The contribution increases are needed to help fund the  increased number of pension payments based on improving life expectancy. The task force’s review of actuarial assumptions showed that members are expected to live to 87.7 years on average, up 2.4 years from the last actuarial valuation. This increase in life expectancy means the Plan must set aside more funds because members will receive more monthly pension payments. The ongoing cost of funding these increased lifetime pensions is $447 million. Other changes made to actuarial assumptions to align them with updated actuarial standards partially offset this increase in ongoing costs.

Plan financially stronger with changes

"The Plan is financially stronger as a result of the task force recommendations", says Derek Dobson, Chief Executive Officer and Plan Manager. "The task force’s work builds on the actions already taken by the Plan to manage the deficit and keep the Plan financially healthy over the long term," he says.

Active members and their employers continue to pay additional contributions to help manage the Plan’s deficit, caused by 2008 investment market losses and low interest rates. Changes to investment strategy are also helping to improve the financial health of the Plan, which is continually monitored to ensure long-term security of benefits.