Ontario’s Workplace Safety and Insurance Board is converting its defined benefit pension plan to a jointly sponsored model, making it the first single-employer plan in Canada to make the change.

The Financial Services Regulatory Authority of Ontario approved the move on Dec. 5, 2019, and the conversion is expected to take place on July 1, 2020.

The WSIB Employees’ Pension Plan has been in place since July 1940. Currently, full-time employees are automatically eligible for the plan, while contract employees must work at the WSIB for two years before becoming eligible. The contribution rate for employees is seven per cent.

Read: Why the jointly sponsored UPP is the right pension for the university sector

The possibility of a conversion has been under discussion for years and made sense for a number of reasons, says Harry Goslin, president of the Ontario Compensation Employees Union, which represents more than 3,400 WSIB employees and 150 employees of the Infrastructure, Health and Safety Association, who are also part of the plan.

The union wanted to preserve the existing DB plan and prevent the opening of a defined contribution plan or a transfer to a target-benefit or shared-risk plan. As well, says Goslin, the OCEU believes single-employer plans involve an inherent conflict between the employer’s role as sole plan administrator and its concern for the best interests of the organization.

“It’s exciting to be the first in Canada [to transfer]. And we’ve now structured a board of trustees that [is] working in unison. And they’re making decisions that are only in the best interests of all the plan members — they’re meeting their fiduciary obligation.”

Read: Ontario removes red tape for pension plans joining JSPPs

As well, he notes, the organization’s history of taking full or partial contribution holidays during good times became a motivating factor for the union to pursue a JSPP, since it would prefer to use those times to make plan enhancements. “It would be better not to take contribution holidays at all and improve the pension benefits,” says Goslin. “The union takes the position that pension plans should always be in surplus . . . to guard against the bad times.”

The OCEU has expressed interest in a JSPP structure since the late 1990s, but the conversation “really shifted” in 2012, when the provincial Liberal government began to encourage public sector plans to convert to JSPPs. But when the union approached the WSIB, the latter said it wasn’t interested. The OCEU then gathered petition signatures from 2,100 members asking for the government’s support to bring the WSIB to the bargaining table. “That ended up putting us into a process where we started to actually earnestly explore the benefits of a jointly sponsored pension plan,” says Goslin.

From the WSIB’s perspective, the plan’s gains and losses will be equally shared between the employer and the union. As well, over time, plan members and the WSIB will contribute equally to the plan. In addition, pension issues will no longer be subject to collective bargaining, noted the WSIB in an emailed statement to Benefits Canada

Read: Newfoundland and Labrador Teachers’ Pension Plan bouncing back under JSPP model

“Over the past few years, the WSIB, like many other organizations, has been exploring potential changes to improve the long-term sustainability of our pension plan,” wrote WSIB spokesperson Christine Arnott. “Although our plan is well funded, we want to make sure it stays that way. By changing to a [JSPP], we aim to preserve retirement benefits that are sustainable and affordable for both the WSIB and plan members.”

As of July 1, 2019, the estimated value of the WSIB’s savings from implementing a JSPP could be $350 million over the next 25 years, according to the provincial government’s fall economic update.

On the union side, Goslin says “we’re able to secure a defined benefit [pension] well into the future and actually have a say over our deferred income.”

Since the WSIB plan is the first single-employer plan to convert, the process has been slow, he adds. “We had to work closely with the [Ontario] Ministry of Finance. We had monthly meetings with them to consult on changes to the Pension Benefits Act and, particularly, the regulations to be able to create a structure that would allow single-employer pension plans in Ontario to become jointly sponsored pension plans.”

Read: Could solvency reform in Canada lead to a DB pension revival?

In Ontario, before a single-employer plan can convert to a JSPP, two-thirds of active members must approve the move, though bargaining units can consent on the behalf of their members. The OCEU opted out of that route and its members voted 92.8 per cent in favour of the conversion in November 2017. Canadian Office and Professional Employees Union Local 24, which represents professional and support staff from Workforce Safety North and the Public Services Health and Safety Association, also held a vote, with 86 per cent of members in favour.

Retirees, deferred members and survivors have a negative consent process, with one-third required to vote against it to halt the process. Only 112 of the 3,900 inactive members voted against the transfer.

Once Ontario Finance Minister Rod Phillips approves the conversion, the WSIB plan will receive listed status within the PBA, consistent with other major JSPPs, such as the Ontario Teachers’ Pension Plan, the College of Applied Arts and Technology Pension Plan and the Ontario Municipal Employees Retirement System.

Read: What pension legislation is expected in 2020? 

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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