There is a pension plan that offers a fixed and “secure for life” annuity, “protection against inflation”, a “survivor’s benefit” and the possibility of leaving the labor market at age 50. All this, hold on tight, “without risk for the employer” or administrative burden. You weren’t aware?
Posted at 6:30 a.m.
In addition, this plan is accessible to businesses of all sizes and in all sectors (private, parapublic and public). Currently, it has more than 200, representing 75,000 employees and retirees from one end of the country to the other. They have access to a wealth of well-populated information on a user-friendly, bilingual website.
Assets reached 17.5 billion. The fund is capitalized at 119%.
If you recognized the DBplus diet, created and administered by CAAT, you deserve three robot pieces.
First designed for employees of the Ontario college system 54 years ago, the CAAT Multi-Employer Plan is now open to everyone. Or almost. Because in Quebec, this type of pension plan called “spouse” (Jointly Sponsored Pension Plans in English) is not authorized by Retraite Québec.
Quebecers who work for companies established elsewhere in the country can still contribute thanks to the exceptions that have been granted. This is the case for the employees of St-Jean Ambulance and The Canadian Press, for example.
I also learned that GE, which operates a plant in Bromont, will end the defined benefit (DB) plan for non-unionized employees at the end of 2023 in order to “stay competitive” and have a “more predictable” cost structure. and more stable. The multinational then wishes to join the DBplus plan, if Retraite Québec agrees.
But CAAT aims to increase its recruiting possibilities much more.
By consulting the Registry of Lobbyists, I saw that three people wanted to “obtain an orientation from the Ministère des Finances and Retraite Québec on the possibility of enrolling Québec participants and employers in the CAAT Pension Plan”. They are an actuary from Mercer and representatives from Mercure Conseil, a public relations firm.
There are two solutions so that all Quebec companies have access to this new type of defined benefit plan, explained to me the head of legal and regulatory affairs for the CAATs, Evan Howard. That the laws of Quebec change or that certain aspects of the plan are modified. “At the end of the day, the important thing is that all participants have access to the same benefits, that no one is disadvantaged based on their province. »
Now, the big question: what is the magic recipe of CAATs, which prides itself on having “revolutionized the retirement community in Canada” by bringing together the advantages of defined benefit and defined contribution plans?
To understand, you have to remember how DB plans work. Typically, these impose on employers the responsibility of providing the missing sums for the payment of pensions promised to retirees. Since no one can predict the yo-yo of the stock market and its effects on the financial health of a DB plan, companies can find themselves with an immense burden.
To cope with years of low stock market returns, the DBplus plan maintains a large reserve instead. This prevents him from slashing pensions or requiring additional contributions, but the amount of promised pensions is affected. Also, indexation after retirement (75% of the consumer price index), like other benefits, is only offered if the plan can afford it.
In this sense, the DBplus resembles – apart from a few technical differences – the member-funded pension plan (MFPP) recognized by Quebec since 2008. It is also a defined benefit plan with no surprises for the employer, which may combine several (the FTQ has created one for its members) or just one (Rio Tinto Alcan).
The CAAT plan requires contributions totaling between 10% and 18% of salaries, divided equally between employers and employees. The maximum of 18% currently gives entitlement to a pension of 1.5% per year, while the minimum of 10% provides 0.85%.
Thus, after 30 years of service, a retiree would be entitled to 45% of his salary by contributing the maximum (30 x 1.5%) and to 25.5% of his salary if he contributed the minimum (30 x 0 .85%).
By way of comparison, the RRFS for community and women’s groups (900 Quebec employers and 10,000 participants) allows the accumulation of a pension of 1.8% for an overall contribution of 18%. And this, “while aiming for full indexation of pensions at retirement,” underlines actuary Pierre Bergeron, of PBI Actuarial Consultants. The DBplus is therefore not overwhelmingly generous.
In addition, the RRFS offer “similar risk management mechanisms, even superior, in terms of intergenerational equity to that of the CAATs”, judge Mr. Bergeron. The big difference “lies in a more aggressive, elaborate and structured communication strategy for DBplus, whereas in Quebec, we seemed rather hesitant to promote the implementation of such plans”.
With increasing life expectancy and galloping inflation, there is no doubt that solutions must be found to improve the financial health of retirees while respecting the financial capacity of employers. Multi-employer DB plans and the new target benefit plan are definitely among the tools to consider. And those of Quebec should deserve our full attention.