Canada’s public sector pension plans are well-respected internationally for their administration, independent governance, investments, regulation and plan design. And British Columbia’s municipal pension plan is no exception.
The plan’s members include firefighters, police, nurses and other health-care workers, city workers, non-teaching staff at schools and colleges, community social service providers, and more — people who are vital to day-to-day life in B.C.
The MPP has been providing secure retirement to its members for generations. Pensions for public sector workers were first provided in B.C. in 1921, and the plan was officially brought to life on April 1, 1939, with 302 members from six participating employers. Marking its 80th anniversary this year, it counts more than 330,000 members, more than 930 employers and more than $50 billion in investments.
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This longevity is no accident. The MPP has evolved, taking into account changing circumstances over time. With careful guidance from its board of trustees, the plan has adapted and kept pace over the years, and remains strong, healthy and well-positioned for the future.
So what makes the plan’s model so successful?
Joint trusteeship legislation, passed in 1999, enabled the MPP and three other public sector plans to move to joint trust arrangements. In our context, joint trust means the risks are shared between the plan’s employers and members.
The five guiding principles underlying the MPP’s model of shared risk are:
- Equal sharing of responsibility for management of the pension assets in the best interest of the beneficiaries;
- Sharing of contributions;
- Equal sharing of responsibility for any unfunded liabilities generated during the period of joint trusteeship;
- Equal ownership of any surpluses generated during the period of joint trusteeship; and
- Protection of the plan from unilateral actions by plan sponsors or principals.
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In the joint trust model, plan sponsors and key stakeholders appoint trustees to the pension plan board to oversee and govern the pension plan. The joint trust agreement ensures equal responsibility between employers and employees for the success of the plan and its investments. Evidence of this is the plan’s fully-funded status on a going-concern basis, with more than $50 billion in assets under management.
The model is also successful because it has agents that are independent from government. The four B.C. public sector plans share the services of the Pension Corp. of the British Columbia Investment Management Corp., creating cost efficiencies for the plans’ administration and investments and in the pooled nature of the investment portfolios. The Pension Corp. administers the plans on behalf of the boards and BCI invests the plans’ funds.
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The plan board governs and directs the activities of these service agents, and the directorship of both service providers is purposefully designed to ensure independence from government.
Because trustees from all four plans are directors of these agents, the broad goals, strategic direction and interests of the Pension Corp. and BCI are well-aligned with the boards. This fosters a co-operative and engaged relationship between the plan sponsors and trustees, and is a key reason this model works so well.
Retirement income security is an important issue in Canada today. Workplace pension plans play a critical role in helping average Canadians stay out of poverty in old age. Using this model, plans can secure retirement income for generations to come.
This year, the MPP celebrates its achievements over eight decades. We look forward to a bright future of continued plan value and sustainability, helping members make the most of their retirement years.
Judy Payne is executive director of B.C.’s municipal pension plan.