Over the past 73 years, the Co-operative Superannuation Society Pension Plan (CSS plan) (No. 60 on Benefits Canada’s 2012 Top 100 Pension Funds Report) has weathered many storms. Since its launch in 1939, global markets have been rocked by a number of economic crises, and most pension plans have seen their assets rise and fall sharply as a consequence.
But the CSS plan—a DC plan whose members include 41,000 active and retired employees of co-operatives and credit unions—has an 8% rate of return over the life of the plan. According to general manager Bill Turnbull, that success is partly due to the fact that the CSS plan has long included design elements many DC plans have only recently begun considering. “We see a lot of things changing in the rest of the DC sector that we’ve been doing for decades.”
For one, says Turnbull, the plan has made membership mandatory after two years of employment “for many years.” Members also have internal access to both a RIF-style and annuity option at retirement, which allows them to remain in the plan if they wish.
The plan’s recommended matched contribution rate for its sponsor employers is 6% of pay, for a total contribution rate of 12%. “For DC, that’s high. But the rest of the DC sector is now talking about whether we can expect plans to produce [adequate retirement savings] if we’re not putting in meaningful contributions.”
But despite seven decades of success, Turnbull says the CSS plan’s staff of 12 and its 36-member delegate body know the retirement savings picture is changing, and the plan can’t expect to rest on its laurels.
After offering just one investment option for its first 65 years—a balanced fund that currently has a traditional 60/40 split of equities and fixed income—the plan added a second investment option, a money market fund, in 2005. And in 2011, it introduced both an equity fund and a bond fund.
Turnbull says the new funds were added to offer members greater choice, and to give those nearing retirement the option of more downside protection on their assets. He says that member acceptance of the new fund options has been slow—of the $3 billion in plan assets, about $2.4 billion remains in the original balanced fund. By the end of the first year, members had put about $45 million into the bond fund, and $25 million into the equity option. “That’s not a surprise,” comments Turnbull. “In the research we’ve done, that’s typical. We know it’ll be a long process to get members to understand and use the options they have.”
To that end, the CSS plan has begun the process of revamping its member communications so that members understand all the funds available to them, and how to use them effectively based on their needs. There is an increased focus on creating targeted communications, so that members just starting out, those who are mid-career and those within five years of retirement have a sense of how much to save, how to save and when to concentrate on protecting the retirement assets they’ve built up.
In addition to existing retirement income workshops aimed at educating members around age 50 about the options available to convert their pension savings into retirement income, and a series of retirement planning seminars for members around age 60, the CSS plan is developing videos and other electronic-based communications to educate members who prefer new media.
While the changes are ongoing and its too soon to determine how successful they will be, Turnbull says the CSS staff and delegates—all of whom are members of the plan—are confident they are continuing to present a pension offering that will stand the test of time.
“What we try to give [plan members] is what we want to get as plan members,” he says.
Neil Faba is associate editor of Benefits Canada. neil.faba@rci.rogers.com
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