2024 Risk Management Conference: A look at the first days of the WISE Trust: it ‘felt like a startup’

On July 1, 2020, the Workplace Safety and Insurance Board of Ontario and the Ontario Compensation Employees Union officially converted a $3.5 billion pension plan from a single-employer pension plan to a jointly sponsored pension plan. The change was enacted through a plan amendment instead of an asset transfer into an existing JSPP.

Read: A look at the WSIB Employees’ Pension Plan’s conversion to a JSPP model

WISE Trust was created to be the administrator for the Workplace Safety and Insurance Board of Ontario’s pension plan. Today, it has 30 employees that service about 10,000 plan members and oversee more than $4 billion in assets under management. But when it was first up and running, it still lacked staff, a system to complete business and even an office, said Heldman. “We looked and felt very much like a startup.”

Looking back at the entire process, he said timing was the biggest challenge. The WSIB intended for the WISE Trust to be operational in one year, but the plan administrators felt three years would be required. In the end, it took two and a half years.

This timeline, he added, required an aggressive work pace to bring everything together. “I would have preferred to have some more time to do that, . . . incubating [the WISE Trust] within the WSIB and then, when it was solidified and ready to be launched, you push it out the door. That didn’t happen for us.”

Read: WISE Trust returns 7.9% in 2023, net assets increase to $4 billion

As part of the transition, the WISE Trust was tasked with rethinking the strategic asset allocation of the pension fund’s portfolio. Since the WSIB plan assets were managed like an insurance fund, the change required an adjustment to an actuarial treatment like a pension plan with a 25- to 35-year glide path.

The union began trying to negotiate for a move to a JSPP model in the 1990s, said Heldman, but it wasn’t until 2014 — when the Ontario government started allowing single-employer plans to merge into larger JSPPs — that the conversation became serious. At first, the WSIB wasn’t interested in moving forward with the transition, but the union continued to push, leading to the drafting of an initial term sheet in 2016.

“We needed to set up the mechanisms for which a single-employer pension plan can actually convert to a jointly-sponsored pension plan,” he said, noting it also required support from the regulator because the change was unprecedented in Canada.

The process included notifying plan members followed by a formal application to the Financial Services Regulatory Authority of Ontario. The WSIB met with each of its 10,000 members through education forums to inform them about the process and illicit their feedback. The conversion received a favourable vote between 86 and 93 per cent.

Read: Tips for moving from a single-employer to a jointly sponsored pension plan

After securing plan member support and receiving approval from the pension regulator in December 2019, the plan administrators had a year to put their plan in place for the official conversion. “What do you do when you’ve got a time stamp?” said Heldman. “You paddle like crazy to build the thing.”

The first order of business was to hire and train an eight-person board of trustees, split equally between the WSIB and the union, which would then hire a chief pension officer. A joint transition team was established to create the shell of the organization.

In addition, the process had to settle any lingering disputes between the joint sponsors because the conversion included the stipulation that pension issues are no longer subject to the collective bargaining agreement, he added. “We’ve found a way to solidify the defined benefit pension promise and share the costs between the employees and the sponsors.”

Read more coverage of the 2024 Risk Management Conference.