Diversity, equity and inclusion initiatives aren’t a new concept for employers — just ask any human resources professional.

However, in a changing world marked by growing calls for social justice, many plan sponsors are extending these initiatives beyond workplace conduct and employee benefits into retirement planning, merging diversity with their pension plans’ designs and communications strategies.

Focusing on diversity

The Ontario Teachers’ Pension Plan is embedding DEI initiatives into its latest corporate strategy, which it uses to guide the plan’s global growth and expansion, says Beth Tyndall, its chief people officer.

“For the first time ever in [our] corporate strategy, we’ve been able to make [DEI] very prominent. We went through a refresh of our values and the first value we landed on was inclusivity. It’s a really important topic for us. . . . Within our culture, we recognize there’s a huge area of opportunity for us to double down on the DEI space, especially when we think about how we want to grow globally and the types of talent we need to bring into the organization.”

Read: Ontario Teachers’ focusing on DEI as key part of long-term vision

Last year, the OPSEU Pension Trust appointed Michael Kaneva as its first director of inclusion, diversity and equity to develop and implement a three-year DEI strategy. While the pieces of the strategy have been in place for some time, he’s been tasked with taking that strong foundation and forging the connections between the OPTrust’s ability to serve its members and building the pension fund amid strong feelings of DEI.

“We put ‘I’ in front — diversity is being invited to the party and inclusion is being invited to dance. My philosophy is, why have a party when you’re unsure if people are going to be invited to dance? That’s why inclusion comes first and it’s about making sure we have the behaviours, the education and perspective in order to be as inclusive as possible.”

Jeffrey Barber, director of pension and economic affairs at the Ontario Teachers’ Federation, says the organization’s DEI philosophy reflects those of the four provincial teachers’ unions it represents, noting the OTF is currently reviewing its internal policies and procedures through a DEI lens. The OTF has contracted with the Shareholder Association for Research and Education to engage companies in its defined benefit pension plan’s portfolio on issues related to civil rights, decent work, Indigenous rights and reconciliation and racial justice. “People are very concerned with having a plan, but also want the plan to be a good steward of their money.”

Recent events, such as the murder of George Floyd and the ongoing discoveries of unmarked graves at Canada’s former residential schools, are influencing and accelerating DEI initiatives.

Read: How HOOPP is increasing DEI focus in culture, recruitment strategies

“Diversity and inclusion used to be something off the side of the desk for so many organizations,” says Kaneva. “Since February 2020, we’ve had a complete shift in work and, with the focus on racism that occurred in 2020, for better or worse, for many organizations there’s been a shift to realize DEI is critically important and needs to be part of their mandate.”

Key takeaways

• While DEI has been a focus for DB plans for some time, these strategies have been influenced and accelerated by recent world events.

• An inclusive approach to plan member communications is one of the easiest ways for plan sponsors to convey their commitment to DEI principles.

• Inclusive pension plan designs account for all forms of diversity.

In the wake of these incidents, the Ontario Teachers’ has opened up a dialogue with employees, says Tyndall. “I think it’s really helped. At the same time, we’ve brought in a focus on well-being and mental health to try and make that connection. We’re very attuned to global issues — we’re a global fund with offices around the world and we’re looking to grow globally, so it’s a huge area of focus to keep our eyes on.”

A 2016 report published by the Organization for Economic Cooperation and Development found, on average, women aged 65 and older in countries in the OECD — including Canada — received 26 per cent less income than men from their country’s pension system.

The report attributed this gap to a number of factors, including labour market inequalities and lower rates of participation in retirement savings plans among women, particularly from the ages of 25 to 44, which may correspond to parental leave. Changes in plan design — such as pension eligibility rules and the continuation of pension contributions or accruals during parental leave — could help narrow the gender pension gap, noted the report.

Read: University Pension Plan integrating DEI into investment strategy

In 2019, the OPTrust launched its OPTrust Select plan for the non-profit sector. Spokesperson Jason White says the plan’s membership is roughly 75 per cent women, in line with the sector’s employee base. “[Women] are a vastly underserved group who often come up short in retirement savings for a few reasons, one of them being women tend to live longer and need to save more. A DB plan helps to close that gap in a sector that has been underserviced and primarily consists of women.”

Sandeep Kakan, director of pension and benefits at Unifor, says there’s still work to be done to make Canadian DB plans inclusive of all members. However, he notes a recent Supreme Court decision is prompting many plan sponsors to reconsider their buy-back provisions for employees on leave or in a work-sharing arrangement. In Fraser v. Canada, the court sided with four female members of the Royal Canadian Mounted Police who were denied the opportunity to buy back into their DB plan after entering job-sharing arrangements to work reduced hours and spend more time with their children.

“The court went so far as to express that pension plans are designed for upper-level and full-time employees with long service, who are typically male,” says Kakan. “Plan sponsors need to offer meaningful value to the beneficiaries by incorporating flexible service buy-back provisions.”

And while pension plan sponsors have largely updated their policies to accommodate same-sex couples, members and beneficiaries still encounter occasional gaps. In May 2021, the Canadian Broadcasting Corp. reported Newfoundland and Labrador resident Ken Haire was in a years-long battle with the Canadian National Railway Co. over access to spouse Gerry Schwarz’s pension benefits.

Read: Pride Month: CN Rail dispute ‘catalyst’ for same-sex pension plan policy reviews

The CBC’s report said Haire’s claim was initially rejected because Schwarz retired in 1991, prior to a 1998 policy amendment that provided pension benefits to same-sex common-law partners of deceased employees. CN Rail later reversed its decision to award Haire with pension benefits.

Danielle Varela, executive director of Gahnic Services & Consulting, says pension plan sponsors are also contending with the impact of diverse age demographics on plan design. “Some plans haven’t changed for decades and were designed with baby boomers in mind. Provisions were developed to promote early retirement in order to reduce staff. This has the effect of benefiting only the highest earner at the expense of low-income employees.

“But today, employees don’t want to retire as early as they did in the past. . . . Just because an employer has incorporated DEI into their employee management strategy, it doesn’t mean their pension plan is meeting those needs. The framework in place at many organizations was designed as a single model that reflects the demographic of the time. But corporate values and practices have changed and plans need to evolve to benefit all employee groups.”

Inclusive communications

When it comes to retirement plan communications, a 2021 Aon report on DEI in benefits and retirement plans found 82 per cent of employers ensure images in their communications represent all types of employee backgrounds and demographics, while 64 per cent said they prioritize accessibility of content to ensure it will be understood by as many members as possible. More than half (57 per cent) said they use generic communications, while 24 per cent use communications geared to specific demographics.

Targeted communication is especially important for plans with members from diverse communities, says Kakan, particularly when it comes to communicating the value of a DB plan. “If I didn’t know the attractiveness of the retirement package the employer set aside for me, it’s meaningless. If 10 years pass by and someone then tells me about it, that’s 10 years that I’ve lost.”

Read: BCI updates code of ethics, personal conduct to address DEI-related issues

Varela says ensuring plan communications reflect diversity is one of the simplest ways to express inclusivity. “Sometimes plan administrators change the plan design, but they don’t change their communications. The plan sponsor should ensure that communications are inclusive of all types of diversity, such as ethnicity, gender, religion and sexual orientation. Sometimes organizations equate diversity with ethnicity, but it’s more than that.”

One of the key components of the OPTrust’s strategy is communication and finding ways of being better aligned to the expectations of both members and the investment community, says Kaneva. “That means sticking to language that makes sense to them. The first step of our strategy is ensuring we use words the right way — if I say inclusion, it may mean two different things to two different people.

“Part of the education process we’re putting together for our leaders and anyone doing outreach to communities and stakeholders is how to use those words effectively, to ensure we’re mapping against cultural change. We’ve got a context in the world right now that is completely different from before and we need to ensure we’re recognizing that change in everything we do, including how we communicate our plan to our members.”

The focus on accessible communication also extends to the OPTrust’s customer service approach. The plan sponsor is currently working with the Canadian Centre for Rehabilitation in the Workplace to develop a program for communicating with plan members who have developmental and cognitive disabilities.

“The employees with the most communication with plan members are the people sitting on the phones helping them out,” says Kaneva. “Those one-on-one relationships are how we establish our brand as both an employer and service provider. By investing in the skill set of our member services team, we’re providing [plan members] with much better service and the ability for them to access information more easily, as well as giving them the comfort of being who they are and what they’re experiencing.

Read: Asset managers adopting DEI policies, but top ranks remain relatively unchanged: survey

“Our goal as an organization is to create a sense of fulfilment and peace of mind, so by allowing us to understand how disabilities can create some difficulties for our members, just through that understanding, is how we can create peace of mind.”

Education is key

At the OPTrust, education on DEI matters starts at the top and moves down through the ranks, says Kaneva.

“One of the most effective approaches is to start at the top of the house. The very first unconscious bias training we led was with our board of trustees, with strong insights and participation from them. Then we moved on to our executives and to the rest of the organization — it says, ‘We’re taking this seriously.’ We’re following that up with extensive training throughout the rest of the leadership and then with employees as well.”

One result of this approach is the creation of employee resource groups, which further expand education on DEI issues throughout the organization, he says, noting the OPTrust also engages external non-profits, including the CNIB Foundation, for education sessions. “We get to learn so much from other people and cultures. Every time you learn about something, you add a new layer and that approach allows you to enter new situations in a way where you have more confidence.”

Blake Wolfe is the managing editor of Benefits Canada.

Download a PDF of the 2022 Top 100 Pension Funds Report.