The University of Southampton
University of Southampton Institutional Repository

A model for better governance and greater stability of collectively-bargained Canadian pension plans using a multiple employer structure

A model for better governance and greater stability of collectively-bargained Canadian pension plans using a multiple employer structure
A model for better governance and greater stability of collectively-bargained Canadian pension plans using a multiple employer structure
This report deals with the Canadian pension regulatory environment and specifically Ontario. It proposes that unrelated employers be permitted to amalgamate their pension plans into a single plan using a multiple-employer structure, provided that all of the members of the single plan are represented by a union and the union has consented to the arrangement. It provides recommendations on how plans adopting this multiple-employer structure should operate in order to ensure that risks are appropriately allocated among stakeholders and that that there is strong governance.

The pension formula would be defined benefit. The basic structure of the plan would be that the participating employers are required to contribute at a negotiated cents-per-hour rate based on the hours worked by covered employees. This would be the only financial obligation of the participating employers. The legal Administrator of the plan would be a joint board of trustees.

There are a number of problems with the way in which Canadian multi-employer pension plans that are jointly trusteed and that are of the defined contribution – defined benefit type operate, especially with respect to governance. This paper makes a number of recommendations to improve plan governance, including only selecting independent experts to act as trustees and the compensation of trustees. In order to ensure the security of member benefits, the benefit formula would specify an ultimate benefit. With respect to the ultimate benefit, very conservative investment strategies would be employed and the benefit would be funded on a risk-free basis. Excess benefits would be provided to the extent that plan performance permitted. These excess benefits could be adjusted upward or downward depending on plan performance.

This pension design would not be permitted in the current Ontario and Canadian regulatory environment. This report identifies a number of legislative and regulatory changes that would be required.

The recommended plan is assessed using the measurement framework developed as part of the Retirement 20/20 project. The recommended approach scores very highly with respect to how risks are allocated. It also scores highly on governance.
administrator, annuitization, basel accord, board member selection, enterprise risk management, governance, investment policy, minimum funding standard, multi-employer pension plans, multiple-employer structure, pension protection fund, pension plan design, retirement 20/20, risk mapping, solvency ii
University of Southampton
Andrews, Doug
3b935e2a-6043-45da-b9f9-bd24d4346480
Andrews, Doug
3b935e2a-6043-45da-b9f9-bd24d4346480

Andrews, Doug (2009) A model for better governance and greater stability of collectively-bargained Canadian pension plans using a multiple employer structure Southampton, GB. University of Southampton 42pp.

Record type: Monograph (Project Report)

Abstract

This report deals with the Canadian pension regulatory environment and specifically Ontario. It proposes that unrelated employers be permitted to amalgamate their pension plans into a single plan using a multiple-employer structure, provided that all of the members of the single plan are represented by a union and the union has consented to the arrangement. It provides recommendations on how plans adopting this multiple-employer structure should operate in order to ensure that risks are appropriately allocated among stakeholders and that that there is strong governance.

The pension formula would be defined benefit. The basic structure of the plan would be that the participating employers are required to contribute at a negotiated cents-per-hour rate based on the hours worked by covered employees. This would be the only financial obligation of the participating employers. The legal Administrator of the plan would be a joint board of trustees.

There are a number of problems with the way in which Canadian multi-employer pension plans that are jointly trusteed and that are of the defined contribution – defined benefit type operate, especially with respect to governance. This paper makes a number of recommendations to improve plan governance, including only selecting independent experts to act as trustees and the compensation of trustees. In order to ensure the security of member benefits, the benefit formula would specify an ultimate benefit. With respect to the ultimate benefit, very conservative investment strategies would be employed and the benefit would be funded on a risk-free basis. Excess benefits would be provided to the extent that plan performance permitted. These excess benefits could be adjusted upward or downward depending on plan performance.

This pension design would not be permitted in the current Ontario and Canadian regulatory environment. This report identifies a number of legislative and regulatory changes that would be required.

The recommended plan is assessed using the measurement framework developed as part of the Retirement 20/20 project. The recommended approach scores very highly with respect to how risks are allocated. It also scores highly on governance.

Text
ANDREWS_Retirement_2020_2009_[Final].doc - Author's Original
Restricted to Repository staff only
Text
ANDREWS_Canadian_MEPPs_Framework_[2].doc - Other
Restricted to Repository staff only

More information

Published date: December 2009
Keywords: administrator, annuitization, basel accord, board member selection, enterprise risk management, governance, investment policy, minimum funding standard, multi-employer pension plans, multiple-employer structure, pension protection fund, pension plan design, retirement 20/20, risk mapping, solvency ii
Organisations: Statistics

Identifiers

Local EPrints ID: 151715
URI: http://eprints.soton.ac.uk/id/eprint/151715
PURE UUID: a1f91eb5-483c-47a3-99ca-c868c334682c

Catalogue record

Date deposited: 12 May 2010 12:58
Last modified: 14 Mar 2024 01:20

Export record

Contributors

Author: Doug Andrews

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×