The Plan is strong and members’ pensions are secure
At the beginning of 2020, the CAAT Pension Plan was 118% funded on a going-concern basis, with $2.9 billion in funding reserves plus additional asset smoothing reserves of $0.8 billion. Our thoughtful design, long-term focus, and large reserves are key factors in CAAT being one of the most sustainable pension plans in Canada. Our stability provides peace of mind in an uncertain world.
The secure defined benefit pension you have earned is not affected by investment market fluctuations. There is no change to the benefit you are earning, and the granting of conditional benefit enhancements have been extended to at least 2023. Our Plan remains strong.
Growth benefits all
Growth initiatives contributed to Plan health through 2019. CAAT’s Growing Plan Membership strategy – which saw a significant increase in the number of employers and members in the past year – contributed $0.4 billion to Plan reserves in 2019. Welcoming more employers and members will continue to strengthen the Plan.
Funded Status and the Discount Rate
The Plan is currently 118% funded. That means that for every dollar of pension earned by members, there is $1.18 set aside to pay it.
This year, the Plan’s discount rate was lowered from 5.5% to 5.15%. That means that every year the investment returns are over 5.15%, the Plan’s funded health will improve. The 2020 funded ratio is slightly lower, but the likelihood that the funded status will grow in the future has increased. The Plan’s lowering of the discount rate is consistent with its focus on long-term benefit security and sustainability. CAAT maintains a healthy funding reserve and uses realistic valuation assumptions to ensure the pension promise remains strong.
What is a valuation?
The actuarial valuation compares the CAAT Plan’s liabilities – the pensions earned by members, and the estimated pensions that will be earned in the future – to the assets of the pension fund and estimated contributions to be received.
The valuation has been filed with the regulatory authorities and can be downloaded (PDF).
We look forward to sharing with you our 2019 audited investment results and annual report. Sign up for our annual webinar with the CEO, who will review the Plan’s health on Tuesday, May 12, 2020. [This webinar has ended] A recording of the webinar will be available in the coming days.