A pension plan that’s working
Publication DateThursday, February 23, 2017 - 6:15pm
When it comes to providing workers with a secure and stable income in retirement, nothing works better than a defined benefit pension plan. Great pension plans like OPTrust, HOOPP, OMERS, and the CAAT Pension Plan allow tens of thousands of OPSEU members to look forward to retirement with confidence.
So it’s no surprise that OPSEU staff have a defined benefit pension plan as well. Like the plans OPSEU members belong to, the staff plan is jointly trusteed. The trustees work together to manage the plan, and they’re doing a great job. The plan is working.
But I’ve just learned that Toronto Star reporter Martin Regg Cohn is likely to publish a column about the OPSEU staff pension plan this weekend. Most likely it will say that the plan is in deficit. This is true. But the idea that this is somehow a major problem is false.
As many OPSEU members know, good pension plans are designed for the long term. Sometimes they are in deficit, and sometimes they are in surplus. As it happens, most of our plans are fully funded or in surplus right now. But whether they are in surplus or not, all of them are being managed to ensure secure, stable, predictable incomes for members when they retire.
The same is true of the OPSEU staff plan. Like OPSEU members’ plans, the value of the staff plan is calculated every three years. At its most recent valuation, based on the end of 2013, the plan was 87 per cent funded. Results of the next valuation, based on the end of 2016, will be available in September 2017.
The trustees of the staff pension plan are responsible for managing the pension plan and its investments over the long term. They work to ensure that the plan is sustainable so that it can pay out staff pensions for decades into the future.
It’s not always an easy job – especially these days. Retirees are living longer than they used to, and lower long-term interest rates are increasing pension liabilities and reducing investment returns. That being said, there are many options available for strengthening our staff pension plan. Our trustees, and the members of our two staff unions, will be reviewing those options this year. I have no doubt that, working together, they will come up with a workable long-term solution.
With respect to Mr. Cohn, I can’t explain his interest, but he and I don’t see eye to eye on many things – especially pensions. This month, Mr. Cohn sided with Premier Kathleen Wynne's government’s view that surpluses in the OPTrust and the teachers’ pension plan are government assets. I disagree (see here), and so does Auditor General Bonnie Lysyk. Those assets belong to plan members, and that’s all there is to it.
But Mr. Cohn seems to have signed on to be the chief protector of the Liberals at Queen’s Park. That being the case, I expect we’re not done disagreeing yet.
Meanwhile, the trustees of the OPSEU staff pension plan will continue doing what it takes to ensure the long-term sustainability of the plan -- and keep the pension promise decades into the future.
Warren (Smokey) Thomas
President, Ontario Public Service Employees Union