Pension Security and Value

By Derek W. Dobson, CEO and Plan Manager, CAAT Pension Plan

At CAAT, we know how important your defined benefit (DB) pension is to you. No matter what the economic environment is around us, you can count on the CAAT Pension Plan to safeguard your pension until you are ready to retire.

CAAT is known for its steady and prudent management, and last year was no different. Our strategy of building up reserves helped to maintain contribution stability and strengthen benefit security despite market volatility.

The Plan started 2022 in a strong position with a robust funded ratio of 124%, which I am pleased to announce remains the case today. As at January 1, 2023, the Plan remains resilient and well-funded with $1.24 in assets for every $1 of pension promised today and in the future. We increased funding reserves to $4.7 billion to bolster resilience against any future economic headwinds, with a total of $18.2 billion in assets. Based on the strong funding position and investment market outlook, the Plan is extending conditional benefit enhancements through to 2026, including conditional inflation protection enhancements in retirement.

We are proud of our tradition of long-term security and stability because we know members need to have confidence that their pension will be paid every month, no matter what is happening in the investment markets. Our long-term focus on risk management and prudent investment strategy has led CAAT to become one of the highest performing and most sustainable pension plans in Canada.

What does this mean for members like you? It means you can rest assured that your pension is secure and will be ready to pay out when your future self is ready to retire. And, as of January 1, 2025, you can look forward to even more value.

Enhancing the DBplus Pension Factor and Reducing DBprime Contribution Rates

Based on the Plan’s funding policy and investment market outlooks, the Plan is moving confidently from Funding Level 4 to Funding Level 5. As a result of the strong funding position, the Plan governors have approved a net 1% drop in DBprime contributions for employers and members, and an increase in the annual pension factor for DBplus from 8.5% to 9.5% on a go-forward basis. Both changes will take effect January 1, 2025. More importantly, both changes mean more pension value for your contribution dollar.

Achieving this position to decrease DBprime contributions and increase the DBplus pension factor reflect the health of the Plan today and into the projected future. These changes make our pensions more valuable for members and employers. Along with CAAT’s recruitment toolkit, articulating the enhanced pension factor and the assurance of lifetime retirement income under the CAAT Plan can improve the colleges’ recruitment, retention, and wellness efforts.

I hope that you were able to join CAAT’s Annual Webinar on May 11, 2023 for a presentation of the year-end results and long-term outlook. A recording will be posted in the coming weeks on CAAT’s YouTube page (www.youtube.com/@ CAATPensionPlanYoutube), so please stay tuned. You can learn about the Plan Amendments on CAAT’s website (www.caatpension.ca/ about-us/caats-promise), and more details on our efforts to support your payroll administrators with these changes will be shared in the coming months.

Making Pensions Easy and Growing the Plan

Although workplaces are changing, the need for valuable, secure pensions is not. We have been working tirelessly to make our valuable modern DB pension easy for employers to provide to their employees, regardless of size or location.

Plan membership grew by 80 employers in 2022, including the first participating employers from the Northwest Territories and the Yukon. Who were some of these employers who recently joined? They include Jamieson Laboratories, Rio Tinto, City of Whitehorse and Reuters among many others. At the end of 2022, membership totaled 82,900 individuals across 291 employers and 15 industries, with the earned support of 18 unions and associations.

Expanding and diversifying membership improves the Plan’s longterm health, and we are passionate in our mission to provide secure, valuable and sustainable workplace retirement solutions. Unified in our purpose to improve retirement income security for Canadians, our team will continue working to make pensions simple for members and employers.

The good news is that both employers and employees agree that a valuable workplace pension makes all the difference in the ability of Canadians to save adequately for retirement. Across all income levels, most Canadians (77%) and employers (70%) say that employers have a responsibility to offer a pension plan so that employees can have adequate retirement income.

We want your help to spread the message that every Canadian deserves to build a secure stream of retirement income and enjoy less stress in the workplace, wherever they work. CAAT’s latest member survey showed that 94% of active members and 97% of retired members with an opinion agree with CAAT making lifetime retirement income accessible to more Canadian workers and workplaces.

Many of the employers who have joined CAAT have come to us through word of mouth. Informed CAAT members and leaders, like you, can raise the possibility of a secure, fixed cost and valuable pension to broader networks and be a collective force for a great good. If you know of a group who would benefit from joining CAAT, please show them the business case for better pensions at www.pensionsmatter.ca and introduce them to me or my team.

Become a Plan Ambassador

We recently launched the Plan Ambassadors program, where members and pension advocates gain exclusive access to curated content on Canadian retirement and updates on how the Plan is expanding pension coverage across the country.

As a CAAT member, you can sign up to become a Plan Ambassador on our website at www.pensionsforeveryone. ca. You will also get a free t-shirt just for signing up. If you are really passionate about pensions for everyone, post a photo of yourself on Facebook wearing it and mention @CAAT Pension Plan. We would love to share it!

Since expanding outside of the Ontario college sector and becoming the only national DB pension plan open to employers of all sectors and sizes, I have been inspired by the scale of support for our purpose among Plan members and the broad community of pension advocates and business leaders. Together, we can show more employers and employees what the Ontario college sector has known for decades: everyone deserves access to a valuable pension plan. 