The Ontario Teachers’ Pension Plan (Teachers’) may be in for an overhaul, pending a deal between the pension fund and the provincial government.
The Globe and Mail is reporting that pending agreement would freeze pension contributions for five years, meaning a greater proportion of fund’s shortfalls would come out of plan member future benefits instead of provincial coffers. Teachers’ has been battling recurring funding deficits for many years.
Back in February, the Ontario Teachers Federation (OTF) and the provincial government announced changes to the plan that would make inflation protection for pension service accruing after 2013 dependent solely on the pension fund’s status.
“Both partners are hopeful that the strength of the plan will allow retirees to receive full inflation protection in the future,” said OTF President Terry Hamilton.
The plan also filed a balanced valuation with the Ontario pension regulator, a postive move for the plan, claims Hamilton.
“The filing of a balanced valuation as of January 1, 2012 is a positive step toward our plan’s long-term funding stability,” he said. “With the persistence of low interest rates, the plan may continue to experience future deficits. For this reason, the partners intend to study all of the factors that contribute to funding shortfalls, including increased teacher life expectancies, plan demographics and the balance between the average number of years worked versus those spent in retirement. The plan is ahead of many others in understanding the impact of longevity on funding, and [has] already begun to address changes in demographic patterns.”