Torstar pension plan members first to join CAAT’s innovative DBplus design
(Toronto: October 1, 2018) The members of Torstar Corporation’s defined benefit (DB) pension plans have overwhelmingly approved the merger of Torstar’s DB plans with the CAAT Pension Plan.
Under the voting process, the merger, which is effective today, received 97% support from Torstar’s DB Plan members.
Active Torstar DB plan members are the first to be covered by CAAT’s new DBplus plan design that provides defined benefits at a fixed cost. DBplus features include a guaranteed lifetime pension with conditional inflation protection, survivor pension benefits, and early retirement options.
Under the terms of the merger, approximately 3,000 active and retired members of Torstar’s eight DB pension plans will receive pensions based on the Torstar plan provisions for their service accrued before the effective date of the merger, and pensions based on DBplus provisions on contributions made after that date.
In the coming months, application will be made to the Financial Services Commission of Ontario for its consent to transfer the DB pension assets of approximately $900 million from the Torstar pension plans to the CAAT Plan.
“The overwhelming support from Torstar and its pension plan members for this merger shows that the DBplus plan design is a viable solution for employers and employees looking for secure and sustainable lifetime pensions at a fixed contribution rate – regardless of whether the organization is public, private or not-for-profit,” says Derek W. Dobson, CEO of the CAAT Pension Plan.
The CAAT Pension Plan is open for growth in membership where it is mutually beneficial, from any of the public, private or not-for-profit sectors in Canada. This includes workplaces currently offering defined benefit pension plans, defined contribution plans, group RRSPs, and those with no current workplace retirement savings plan.
Quick facts about the CAAT Pension Plan
- Created in 1967, the CAAT Plan has been jointly governed by members and employers since 1995.
- The DBplus plan design was approved by the CAAT Plan governors and took effect on June 1, 2018.
- DBplus features include a guaranteed lifetime pension with conditional inflation protection, survivor pension benefits, and early retirement options. These benefits are provided at a contribution rate that once set does not vary. As organizations join DBplus they can select a rate between 5% and 9% of pay for members, matched by their employer. The higher the contribution rate, the greater the benefits.
- The CAAT Plan is a Modern Defined Benefit (MDB) pension plan with 50/50 cost sharing by members and employers. Decisions about benefits, contributions, and investment risk are also shared equally.
- Originally established for the 24 Ontario colleges, the Plan has grown to include 18 other employers and is open to organizations from the broader public, private, and not-for-profit sectors.
- Interested organizations can explore merging an existing or prior pension plan with the CAAT Plan. The CAAT Plan’s merger with the Royal Ontario Museum’s pension plan in 2016 was the first of its kind in the province.
- In Ontario, regulatory approval of a plan merger requires a vote by the transferring plan members with at least a two-thirds majority of active members voting in favour and no more than one-third of retired members voting against it.
- For the 2017 year-end, the Plan had $10.8 billion in assets, with an annual rate of return of 15.8% and a five-year annual rate of return of 11.4%.
- The CAAT Plan is 118% funded on a going-concern basis with a $2.3 billion funding reserve.
- The Plan’s Funding Policy requires the building of appropriate funding reserves. By having such reserves, the Plan enhances its resilience against economic and demographic shocks and reduces the probability of a deficit.
Derek W. Dobson, CEO and Plan Manager, CAAT Pension Plan
“DBplus is an elegant solution for providing working Canadians with valuable lifetime pensions that include inflation protection, survivor benefits, and early retirement options – all at a fixed contribution rate. For employers, there is no accounting volatility and minimal administration. DBplus really offers the best of DB and DC or group RRSP plans for both members and employers. I don’t think you can match DBplus for value and simplicity.”
Lorenzo DeMarchi, Executive Vice President and Chief Financial Officer, Torstar Corporation
stated in the Torstar Corporation news release issued on September 28, 2018: “We believe this merger represents an important step forward for Torstar and for our registered defined benefit pension plan members. We are pleased that members have provided a strong endorsement of the merger.”
Paul Morse, President of Unifor Local 87-M
“Members of Unifor Local 87-M are pleased to be joining the CAAT Pension Plan. Combined with the professionalism of the CAAT Pension Plan staff, DBplus offers a fantastic plan design that includes inflation protection, survivor benefits and early retirement options, while ensuring the security and sustainability of past and future benefits. This merger secures the pension benefits for our members today and in the future.”
John Cappelletti, Manager Stakeholder Relations, CAAT Pension Plan
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