September 13, 2017
Following the success of the ROM Pension Plan merger into the CAAT Plan, interest has grown in the CAAT Plan’s ‘growth initiative’, with a number of pension plans exploring the benefits of such a merger. Most recently, the Board of Trustees and Sponsors’ Committee agreed to the merger of the Youth Services Bureau of Ottawa (YSB) Pension Plan into the CAAT Plan (effective January 1, 2018). The YSB pension committee, made up of member and employer representatives explored various options for keeping their defined benefit pensions intact, and determined that a merger with the CAAT Plan with its proven record of benefit security and sustainability, was the best option for them.
The YSB merger will be similar to the ROM plan merger in 2016, which was the first of its kind to use the then new Ontario regulations permitting the merger of single-employer pension plans with a jointly sponsored plan. Those regulations require YSB Pension Plan members to vote on the proposal.
The YSB Plan merger is consistent with the CAAT Plan governors’ priorities of benefit security and contribution rate stability. Growth in membership helps the CAAT Plan continue to achieve these goals for current and future Plan members. As with the ROM Plan merger, the YSB Plan merger does not change your pension benefit, or the provisions of the Plan. What’s more, it is a key requirement of the Plan’s governors that the financial health of the Plan cannot decline as a result of a merger. This means that the Plan will not assume another plan’s pension deficit or subsidize contribution rates of new employees that join.
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The YSB was founded in 1960 to deliver programs and services that support at-risk youth and their families. The organization is one of Ottawa’s largest and most comprehensive non-profit agencies serving individuals 12 years of age and older, and offers services in French and English. The YSB maintains a fully funded, $33 million defined benefit, single employer pension plan (SEPP) for its employees.
Merger subject to Provincial Regulations
As with the ROM Pension Plan, the YSB plan merger is subject to Provincial regulations, which require consent from the 300 members of the YSB Pension Plan. In mid-September, YSB Pension Plan members will receive a formal merger information package, which describes the merger and provides a personal pension statement to illustrate their pension under the merged plan.
If the merger is approved, YSB plan members would become members of the CAAT Plan on January 1, 2018, and the pension they earned under the YSB Plan will be replicated in the CAAT Plan. Active members will start earning a pension in the CAAT Plan on January 1, 2018.
Plan merger is cost-neutral to the CAAT Plan
The merger is cost-neutral to the CAAT Pension Plan. To complete the merger, the YSB plan will transfer assets to cover its pension obligations, plus additional funds to match the CAAT Plan’s funding ratio. This additional amount ensures the cost of the merger is borne by YSB plan and its members.
Q: How does the change affect the CAAT Plan and its current members?
A: As the Plan grows, existing CAAT Plan members continue to make contributions based on their earnings and accrue a secure lifetime pension with no impact to their entitlements and retirement options. In the long-term, as membership grows, all members can benefit from ongoing benefit security.
Q: Will YSB Plan members pay the same contributions as all members?
The funds being transferred from the YSB pension plan will include an amount to pre-pay a portion of future YSB member contributions, allowing YSB members to phase in the higher CAAT Plan contribution rates over a four year period, while ensuring the correct amount of total contributions are made to the CAAT Plan. Taken together, the amount of assets to be transferred to the CAAT Plan will ensure existing CAAT Plan members do not subsidize the YSB benefits being transferred to the CAAT Plan.
Q: When will we know if the merger is approved?
A: The YSB member consent process ends on December 15, 2017. At that time, the CAAT Plan will notify members of the results through My Pension NewsLink and on the website.
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