Pension plan sponsor appetite strong for new innovative design options

Across Canada, innovative pension plan design options are continuing to emerge for employers considering a move away from traditional single employer, in-house defined benefit or defined contribution plans. 

During an event last week at Osler, Hoskin and Harcourt LLP’s office in Toronto, four pension industry professionals shared their experiences developing new plan design options.

Speaking about the Colleges of Applied Arts and Technology pension plan’s DBplus, which it introduced in 2018, Derek Dobson, chief executive officer and plan manager, noted it offers new members the opportunity to de-risk their past service, as well as a fixed-cost DB plan on a go-forward basis. “We have tried to . . . design something that brings the best of DC — fixed costs, easy on the books, no accounting risk, predictable, easy to budget — with defined benefit, which is what members and employers should be driving for.” 

Read: University of Saskatchewan, Community Living Toronto join CAAT’s DBplus pension

With no restrictions on what type of new members can join the plan, it has attracted small and large employers coming from DB, DC or no pension at all. “We celebrated our first birthday of DBplus on [Sept. 30] and we have 15,000 members confirmed in the plan,” said Dobson, noting many more plans are preparing to join.

At the beginning of this year, the CAAT’s business planning assumption was that, by 2027, 105,000 members would be in the plan, he added. This has now been revised from 2027 to 2021. “We’ll be surpassing 100,000 members in the next year and a half and our new 2027 assumption is at least 300,000 members.”

The OPTrust Select, offered by the OPSEU Pension Trust, is another new pension design innovation. The plan, which was also launched in 2018, is only available for broader public sector and not-for-profit organizations in Ontario on a go-forward basis.

The plan is not looking to expand beyond this group, said Dani Goraichy, vice-president of actuarial solutions and pension policy at the OPTrust. “When we designed OPTrust Select, what we were hoping to do is create a core defined benefit surrounded by conditional benefits.” 

Read: OPTrust Select welcomes first members

The plan’s goal is to maintain a stable contribution rate, he said, with enhancements provided when the plan is funded and taken away if it isn’t. “We were hoping to walk before we ran, but it didn’t end up being that way.”

More than 700 organizations have contacted the OPTrust, with 21 employers signed up and about 60 applications currently in process. 

During the event, James Pierlot, chief executive officer at Blue Pier Administration Corp., also shared details about his organization’s plan, which is targeted at small- and medium-sized employers. “The genesis of Blue Pier is a focus on the 12 million people in Canada who don’t have pensions.”

It’s a multi-employer, multi-jurisdictional pension plan governed by a board of trustees. “It’s open to any employer that meets certain threshold criteria, which include employee income, and it’s designed to make it possible for any employer anywhere in Canada to offer a customized workplace retirement plan without the costs and risks of operating a stand-alone plan,” said Pierlot. “Each participating employer chooses its own design features including, for example, the classes of employees who will be eligible to join, any waiting periods that might apply, the contributions or benefit structure, etc.”

Read: Blue Pier launches customized, outsourced workplace pension

Once employees are enrolled in the plan, all other responsibilities, aside from contributions, fall to Blue Pier, including asset custody and management, record keeping, regulatory compliance, member communications and benefits payments. Blue Pier also takes on the statutory and fiduciary responsibility for service delivery.

“We’re kind of like middle-ware, the Amazon of pensions,” said Pierlot. “We’re not selling the products ourselves, but we’re trying to put the best solutions in front of our clients.”

The plan has some participating employers and is looking to grow, he added. “We know that people want pensions and we know that many employers want to offer them as a means of attracting and retaining staff within a competitive labour market, and we’re ready to deliver on that. We have the institutional support we need and our team is growing.”

Steve Eadie, partner at Robertson Eadie and Associates, spoke about his organization’s Ideal Canadian Pension Plan, which is a collective DC plan. “It really is a defined contribution pension plan [until] retirement, with a lot that sort of mimics defined benefit plans, in particular target-benefit plans, once you get into the payout stage.”

Read: New report explores policy implications for new ‘contingent’ pension plans

The multi-employer plan allows for shared resources and administration, and its sponsor will be an independent expert pension committee registered in Ontario, said Eadie. The organization is also trying to register a pooled registered pension plan with the Office of the Superintendent of Financial Institutions which would be available for self-employed people or very small employers, he added.

The ICPP expects to be available at the end of this year, said Eadie. “Obviously, you can’t register a multi-employer pension plan until you have at least two employers willing to go in. We think we’re going to have three at this stage who will be initial employers within that.”

He also notes self-employed individuals have expressed interest in joining the PRPP.