Universities proposing new joint pension plan
November 23, 2018
Queen’s University is working with the University of Toronto and the University of Guelph with the goal of launching a new jointly sponsored pension plan for the Ontario university sector. If given the go-ahead, it would follow the same successful structure as some of the largest and most financially-successful pensions in Canada, such as the Ontario Teachers’ Pension Plan, the Healthcare of Ontario Pension Plan (HOOPP), and the Ontario Municipal Employees Retirement System (OMERS).
The new plan would be known as the University Pension Plan Ontario (UPP), and if approved by the universities’ current pension plan members, will ensure Queen’s can continue to provide sustainable defined retirement benefits to their employees in the future.
Approximately 300 people attended a town hall session in Grant Hall on Thursday, Nov. 22, where they heard from pension experts Allan Shapira and Elizabeth Brown, who have been presenting information on the proposed UPP at town halls at all three universities.
In recent years, there has been a trend across all sectors away from offering defined benefit pension plans. At the same time, years of low interest rates, volatile investment markets, and rising life expectancy have led to funding shortfalls and climbing contribution rates for university pension plans.
“Traditional defined benefit pension plans face significant sustainability pressures,” says Donna Janiec, Vice-Principal (Finance and Administration), who hosted the Queen’s town hall session. “The status quo for existing university pension plans cannot be sustained over the long-term. Some form of change is both necessary and inevitable.”
Queen’s University is holding additional information sessions for all employees and pensioners on the pension plan proposal. Members will be part of a consent process that is expected to begin in early 2019.
Friday, Nov. 30 - All - 10 am-Noon - Grant Hall
Friday, Nov. 30 - QUFA - 2-4 pm - Grant Hall
Friday, Dec. 14* - Pensioners 1-2:30 pm - Ellis Auditorium
*note: This session will be incorporated into the Queen’s University Pension Plan Annual General Meeting.
You will find details of the UPP plan design, information on upcoming events, and have an opportunity to submit questions on the UPP website. Additional information can be found on the Queen’s University Pension Services page.
University administrations believe that the proposed UPP is the best way to protect plan members’ existing accrued benefits while ensuring the survival and long-term sustainability of a defined benefit plan, in a world where there are fewer and fewer such plans.
Jointly sponsored pension plans (JSPPs) are recognized globally as a proven model that can generate higher-return and more stable investment opportunities by pooling funds across a larger membership base. They also provide greater transparency into plan operations, funding and decision-making through joint governance and open information sharing. JSPPs have come to be known as the “Canadian Model” and research has shown that it has led to efficiency and success though an alignment around the shared interest of serving plan beneficiaries.
The Ontario Government and stakeholders at the three universities broadly support the move to a new model and are committed to working together. On Nov. 15, Ontario Finance Minister, Victor Fedeli, released A Plan for the People: Ontario Economic Outlook and Fiscal Review (the Fall Economic Statement). In it, the government stated that it is committed to improving the pension system for the university sector, and that a jointly sponsored plan can help achieve that goal through efficiencies of scale, improved investment opportunities, and savings in plan administration.
If members agree, the creation of the UPP will involve the merger of the existing pension plans at the University of Toronto, University of Guelph, and Queen’s University into a new plan. All pension benefits earned prior to the start of the UPP would be protected, and pension benefits of retired members would not change.
“The UPP offers the best approach to protect members’ existing accrued benefits, reduce volatility in contribution levels, and create a long-term, jointly-governed, financially-sustainable defined benefit plan for our employees,” says Vice-Principal Janiec.
Once created, the UPP will be open to other Ontario universities to join, eventually creating a sector-wide plan and an even larger pool, which will mean greater efficiencies, investment opportunities and better sharing of pension costs and risks.
To help ensure all plan members have the information they need to make an informed decision on the proposal when asked to participate in a consent process in early 2019, information has been shared with employees, made available online, and is being communicated at a series of informational town hall meetings on campus. Additional information will be sent to employees as part of the consent process.
“Engaging our employees about their pensions can be challenging,” says Vice-Principal Janiec. “People have varied familiarity with the terminologies being used. This information-sharing process is all about trying to demystify pensions and help people appreciate that everyone involved is working hard to adapt to the pressures facing our plans and to ensure future plan members’ benefits will be there for them when they choose to retire.”