OPTrust Select Enrolls its First Members

OPTrust recently announced that it has enrolled the first nonprofit organizations to OPTrust Select, the new defined benefit pension offering:

In total, seven employers and 215 members are joining OPTrust Select. An additional seventy organizations from across Ontario have applied and are in the process of joining those already enrolled in the Plan.

Employees of the following organizations are joining OPTrust Select:

• Ontario Nonprofit Network (Toronto, ON)
• Barry’s Bay and Area Senior Citizens Home Support Services (Barry’s Bay, ON)
• Community Food Centres Canada (Toronto, ON)
• Contact Brant (Brantford, ON)
• LiveWorkPlay (Ottawa, ON)
• Newcomer Centre of Peel (Peel Region, ON)
• People for Education (Toronto, ON)

The organizations joining OPTrust Select provide a range of essential services within the nonprofit sector, including disability supports, settlement services and care for seniors. In September, OPTrust Select became the first and only sector-wide pension plan recommended by the Ontario Nonprofit Network (ONN). Employees of the ONN are the first members to officially join OPTrust Select.

OPTrust Select, which offers a defined benefit pension at a moderate cost, will provide members with a steady stream of secure, reliable retirement income for life. The plan is targeted to Ontario workplaces in the broader public sector, charitable and nonprofit groups that do not have a workplace defined benefit pension plan but may have a defined contribution plan, a group RRSP or no retirement savings arrangement at all.

For more information about OPTrust Select, visit optrustselect.com. The ONN Pensions Task Force Report is available at theonn.ca/pension. 

Yesterday, I had a chance to talk with Dani Goraichy, OPTrust’s vice-president of actuarial services and plan policy. I thank him for taking the time to speak to me.

Dani also spoke with Yaelle Gang of the Canadian Investment Review and he discussed some of the same points we talked about:

• The OPTrust Select won’t be managed as a segregated fund, so the new members will be able to take advantage of the pension fund’s investments and governance structure
• New plan members will contribute three per cent to the OPTrust Select, which will be matched by the employer. This compares to the OPTrust’s core plan members, who contribute on average about 9.9 per cent each for employer and employee.
• Upon joining the OPTrust Select members will have the ability to buy back service for the period of employment with the current employer using funds from a registered retirement savings, a locked-in retirement account, their employer’s closed defined contribution plan, cash or a combination of these options. Buying back service can also be amortized over up to 10 years for cash payments made through online banking or payroll deduction.
• Employers interested in the plan go through an application process, submitting key information to the OPTrust such as audited financial statements and membership data. In cases where it is in the best interest of members to join the plan, they will proceed to accept new members, but in cases where it isn't (high turnover rate), then they will not.

On that last point, Dani told Yaelle: “We do an actuarial assessment of it and then we do a review of their financial statements to make sure that they have sources of funding, that they’ve been in existence for a significant amount of time and we need to also make sure that the level of turnover, as well as a whole bunch of other things, are acceptable for the plan itself, that they will actually get a benefit out of the plan.”

What Dani told me is the biggest problem with RRSPs and defined-contribution plans is the decumulation phase. "OPTrust Select provides a solution for these members, one that is more effective and a lot cheaper than buying an annuity."

The way OPTrust Select was designed is to maintain a defined-benefit no matter what but sometimes the cost of living adjustment will not be paid out. Dani told me "6 times out of 10, benefits will be paid in full but 4 times out of 10, they won't."

OPTrust Select offers a much-needed retirement solution for employees working in Ontario's broader public sector and non-profit organizations who do not have a defined-benefit plan.

Claire Prashaw, OPTrust's Manager of Public Affairs, was on the call and told me there are a million employees working at 58,000 non-profit organizations in Ontario. As stated above, OPTrust is reviewing applications to see where they can enhance retirement security and the financial well-being of potential members.

Cathy Taylor, Executive Director of ONN was spot on when she stated:

"[OPTrust Select]  is a game-changer, not just for the million employees in Ontario's nonprofit sector, and their families, but for the sector as a whole. By adopting this pension, nonprofit employers will demonstrate their leadership in the decent work movement, living their values of supporting their staff as well as the people they serve. With this pension, the sector will attract and retain more high-calibre professional staff with the skills and knowledge to deliver huge public benefit to the people of Ontario for years to come."

I couldn't agree more and commend OPTrust and CAAT Pension Plan for starting initiatives to offer defined-benefit plans to more Canadians.

Below, a clip discussing OPTrust Select, a defined benefit (DB) offering, designed to enhance retirement security to employees who work for charitable, not-for-profit and broader public sector organizations in Ontario – at a moderate cost.