On September 26, Derek Dobson, CAAT Pension Plan CEO and Plan Manager, hosted a webinar about the Plan’s “Growing Plan membership” initiative. The update focused on the Plan’s progress in this area, and the benefits and implications for the future of the Plan. If you missed the webinar, be sure to visit our webpage Growing Plan membership to watch the recording.
Shift in focus
You may recall that the CAAT Plan has been in discussions with interested university pension plans about potential mergers. Since that time, interest in the Plan’s initiative has expanded beyond Ontario’s university sector, resulting in the 2016 merger with the Royal Ontario Museum Pension Plan.
Why the interest?
As Derek explained during the webinar, a recent study shows that Modern Defined Benefit (DB) pension plans, like the CAAT Plan, offer the features Canadians want, predictable lifetime income in retirement, with early retirement features as protection against unforeseen life changes. What’s more, Canadians are willing to pay appropriate amounts (10% or more of pay) to get them.
The CAAT Plan has been approached by several organizations, including single employer pension plans in the public and private sectors and organizations with no pension arrangements, that see participation in the CAAT Plan as a desirable and sustainable pension solution. An example of this is the Sheridan Student Union. This organization had group RRSPs for its 17 full-time employees and decided to join the CAAT Plan on a “go-forward” basis on September 1, 2017. Diversifying and increasing active membership means a stronger CAAT Plan and one that is better able to manage risk.
The Plan is having exploratory discussions with 12 other organizations about joining the CAAT Plan. CAAT Plan governors are aligned with the goal of making the Plan stronger through expansion beyond Ontario’s postsecondary sector. Every potential new employer will continue to be carefully reviewed by the Board of Trustees and Sponsors’ Committee, and tested against the principles for growth. Those principles say that any type of growth must be in the best interest of the Plan and its members, and that the Plan will not take on the debt of another pension plan.
As expert managers of pension risk, the CAAT Plan carefully reviews any potential mergers so that the costs of past benefits and other risks are fully reflected in any merger agreement.
As recently announced, the 300-member Youth Services Bureau of Ottawa (YSB) Pension Plan is currently in the “consent phase” of a merger with the CAAT Plan. Like the ROM Pension Plan, a merger with the YSB Pension Plan requires consent from at least two-thirds of its members. If the merger is approved, the YSB Pension Plan will become a new employer as of January 1, 2018. Read the announcement, and watch for updates in the coming months.