SUPPORT PENSION IMPROVEMENTS AND LOBBY TO IMPROVE LEGISLATION

JOIN THE CAMPAIGN

We want to make pension benefit improvements to offset the impact of inflation and we need all Locals, committees, active and retired members actively engaged.

Send this letter to your elected officials to show your support in making Pension Improvements for all Millwrights across Ontario.

 
 

Dear Member of Parliament,

Cc: Premier of Ontario Hon. Doug Ford, Deputy Premier of Ontario Hon. Christine Elliott, Minister of Finance Hon. Peter Bethlenfalvy, Financial Services Regulatory Authority of Ontario

I am a resident of Ontario who has spent my working career contributing to the growth and prosperity of this province. I am a unionized millwright with the Millwright Regional Council of Ontario and as a result, I have a pension entitlement from the Millwright Regional Council of Ontario Pension Plan. Our Plan is a private sector Multi-employer Defined Benefit Pension Plan (MEPP) registered with the Financial Services Regulatory Authority of Ontario (FSRA) and Canada Revenue Agency (CRA). The Plan is also designated as a Specified Ontario Multi-Employer Pension Plan (SOMEPP).

As is the case with most private sector pension plans with fixed contributions under the terms of the applicable Collective Bargaining Agreement(s) and the maximums allowed under the Income Tax Act, the fixed level of funding imposes limitations on the level of benefits that can be provided from these types of plans. For example, the high cost of regular cost of living increases makes them prohibitive for our Plan. It can provide for ad hoc increases to accrued benefits and/or pensions in pay but only when the funding position of the Plan will allow such an increase without creating a deficit. The last ad hoc increase that occurred was in 2007.

The Millwright Pension Plan is currently designated a SOMEPP and as such has temporary funding relief which has been extended by the Ontario government many times. Temporary relief which is prolonging the uncertainty with respect to funding requirements is not satisfactory. This uncertainty impedes the plan’s ability to be managed in the best interest of its members.

All members of our Pension Plan understand that it has been impacted by the 2008 financial crisis, market volatility and most recently the COVID 19 crisis. In addition, we know that the liabilities of our Pension Plan have grown significantly due to prevailing low interest rates and increases in life expectancy. But uncertainty over the applicable funding requirements adds another unnecessary challenge. Without ad hoc increases to our accrued benefits and the monthly pension benefits paid to retirees/survivors, my financial health, and that of my dependents, has been and continues to be eroded. According to the Bureau of Labour Statistics consumer price index, there has been a cumulative price increase of over 29% in Ontario between 2008 and today which means that a $1 of my monthly pension in 2007 now has the purchasing power of seventy-cents or less.

I implore you as an MPP with hundreds of constituents who are facing the same financial challenges while they are accruing pension benefits or receiving a monthly pension from a private sector MEPP, that you make outstanding pension legislation a priority including:

1. Release of permanent funding rules for MEPPs with the regulations supporting an implementation period of at least 5 years to allow for efficient implementation.

2. Adoption of the Canadian Institute of Actuaries (CIA) revised section 3570 of the practice-specific standards for pension plans amending the calculation of commuted values from the solvency basis to the going concern basis for plans like ours resulting in an equitable treatment of members leaving the Plan and those continuing as members in the Plan. At a time of unprecedented low interest rates, not allowing the adoption of this standard has resulted and will continue to result in an inequitable treatment of members across different membership groups and in further losses to MEPPs. The calculation method provided by these standards are already permissible for arrangements in BC and Alberta prior to the CIA revisions and has been adopted by most other provinces.

3. Set the basis for the Provision for Adverse Deviation (PfAD), at a reasonable level i.e., in the 5 – 8% range that remains stable year over year i.e., not variable based on external factors like the levels of interest rates. Ideally, the size and application of a PfAD should be left to the Board of Trustees subject to actuarial advice rather than imposed by legislation.

4. Extend the minimum amortization period for unfunded liabilities created by poor experience (including crises) to 15 years;

5. Allow the implementation of benefit improvements, including ad hoc increases, when the MEPP has sufficient contributions to fund the benefits after the improvement, regardless of if the plan is fully funded, including a less than funded PfAD.

Thank you for your time and attention to this urgent matter.


SUPPORT PENSION IMPROVEMENTS AND LOBBY TO IMPROVE LEGISLATION


The Millwright Regional Council of Ontario Pension Plan is a Multi-employer Defined Benefit Pension Plan (MEPP) registered with the Financial Services Regulatory Authority of Ontario (FSRA) and Canada Revenue Agency (CRA). The Plan is also designated as a Specified Ontario Multi-Employer Pension Plan (SOMEPP).

The Fund must be administered in accordance with the terms of the pension plan and the applicable legislation, however we are being restricted by criteria that does not allow us to make pension improvements, such as providing an increase to retirees.

PENSION BENEFIT


We want to make pension benefit improvements to offset the impact of inflation and we need all Locals, committees, active and retired members actively engaged to lobby the Ontario Government to do the following:

  • Release permanent funding rules for MEPPs – removing the requirement to fund on a solvency basis permanently.
  • Release permanent funding rules for MEPPs with the regulations supporting an implementation period of at least five (5) years to allow for efficient implementation.
  • Ontario has not adopted the Canadian Institute of Actuaries (CIA) revised section 3570 of the practice-specific standards for pension plans amending the calculation of commuted values from the solvency basis to the going concern basis for plans like ours, which would result in a savings to the pension plan when paying benefits to former members. At a time of unprecedented low interest rates, not allowing the adoption of this standard has resulted and will continue to result in further losses to MEPPs. The calculation method provided by these standards were already permissible for arrangements in BC and Alberta prior to the CIA revisions and has been adopted by most other provinces since their release.
  • When setting the basis for the Provision of Adverse Deviation (PfAD), it should be reasonable and not excessive i.e., in the 5 – 8% range and should be stable year over year i.e., not variable based on external factors like the levels of interest rates. Ideally, the size and application of a PfAD should be left to the Trustees subject to actuarial advice rather than imposed by legislation.
  • Extend the minimum amortization period for unfunded liabilities created by poor experience (including crises) to 15 years;
  • Benefit improvements may be implemented provided that the MEPP has sufficient contributions to fund the benefits after the improvement whether the plan is fully funded including a less than funded PfAD.

ENGAGE YOUR MEMBERSHIP


This call to action is a priority for all Locals to engage your membership to actively lobby the Ontario government and reach out to your local MPP for change. The landscape is changing every day, with new rules and criteria on the horizon making it more difficult to make the improvements we want.

The time is now for all Political Action Committees to organize and work with politicians to lobby change. The Millwright Regional Council of Ontario is committed to lobbying efforts and providing the best plan achievable for all our members.

Send a letter today.