Representatives from a few of Canada’s most progressive pension plans weighed in on topics ranging from plan design to the various challenges posed by legislation and governance during a webinar hosted by the Association of Canadian Pension Management last week.
Orla Cousineau, executive director of pensions at the University of British Columbia, said the province’s introduction of specific legislation for target-benefit plans in 2015 posed a challenge to the university’s staff pension plan. She explained that, while the university welcomed the legislation, the plan didn’t initially fit the legislation’s language.
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“We weren’t a negotiated class multi-employer pension plan, which is how the [the legislation] was drafted. We basically engaged in conversations with the regulator, the Ministry of Finance . . . [and] we very collaboratively tried to work through how they could recognize us. It took us two years, but we managed to achieve it. The key was being recognized as well for all service, because we didn’t want to go through a plan conversion, given how we operated.”
The UBC’s faculty pension plan offers members a variable payment life annuity. While smaller defined contribution pension plans may face difficulties implementing a VPLA, there are possible solutions, said Cousineau.
“It would be very difficult for a small plan to start from square one, because they would have no asset base and there’s obviously operational costs in setting one up. You also need a big enough group to pool the longevity risk among the members. I believe VPLAs are the answer for DC plans to provide members with retirement income and I think smaller groups should look at getting together with a not-for-profit running the VPLA, similar to a multi-employer pension plan.”
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The British Columbia Municipal Pension Plan was redesigned, effective Jan. 1, 2022, addressing issues such as equity between plan members, affordable contributions and the future resilience of the plan, according to Harpinder Sandhu, trustee and investment committee chair, during the webinar.
“We’re now at a flat accrual rate for all membership, regardless of income. Previously, we had a two-tier system based on yearly maximum pensionable earnings. The other part is early retirement provisions, where those plan members who didn’t take advantage of those provisions were essentially paying for those who did. We’ve eliminated those provisions and increased the accrual rate so that all members across the spectrum are treated more equally.”
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