OPTrust Select Enrolls 1000 New Members

OPTrust just announced it has enrolled 1000 new members in OPTrust Select:
OPTrust Select has welcomed 38 organizations and over 1,000 members have joined the defined benefit pension offering from OPTrust since enrollment began in early 2019. OPTrust Select is designed specifically for organizations in the nonprofit, charitable and broader public sectors in Ontario and brings the advantages of OPTrust’s large scale and investment expertise to organizations that did not previously offer a defined benefit pension. The people who have joined OPTrust Select provide a range of critically important services including healthcare, community support and environmental advocacy.

“Nonprofit workers are essential to the wellbeing of our province, which means that their wellbeing is essential too,” said OPTrust President and CEO, Peter Lindley. “The need for security and predictability has never been greater, and by joining OPTrust Select, the vast majority of these workers will have access to the income security of a defined benefit pension for the first time.”

Some of the most recent workplaces to join the Plan employ workers who are represented by OPSEU, making these the first OPSEU members of OPTrust Select. An additional fifty organizations from across Ontario are in the process of applying to join and organizations have continued to apply throughout the COVID-19 pandemic.

“This isn’t just a victory for the new members of OPTrust Select, it’s a victory for nearly a million workers across Ontario who don’t yet have the security of a defined benefit pension plan, including 25,000 OPSEU members working in the broader public service,” said OPSEU President, Warren (Smokey) Thomas. “When OPSEU first proposed this idea more than a decade ago, it was because we believed then, as we do now that all workers deserve to have access to a secure and dignified retirement, and OPTrust Select is making that a reality.”

OPTrust Select is the recommended pension plan of choice for the Ontario Nonprofit Network (ONN), the independent network of the nearly 58,000 organizations and one million nonprofit workers in Ontario. Further details on OPTrust Select can be found at optrustselect.com.

"Nonprofit workers are committed to serving their communities, and a pension plan is a way for organizations to commit to decent work practices for the long term,” said ONN Executive Director, Cathy Taylor. “A defined benefit plan like OPTrust Select provides stable income for life after retirement. We are thrilled that so many nonprofits have joined OPTrust Select, and we continue to hear from more interested organizations every day."
Indeed, nonprofit organizations in Ontario and the rest of Canada are essential to the wellbeing of the country and offering them a secure retirement is definitely a step in the right direction,

This morning, I had a chance to talk to Peter Lindley, President & CEO of OPTrust.

I want to thank Peter for taking the time to talk with me as well as Claire Prashaw and Jason White of the communications team for setting up this conference call.

Before Peter joined the conference call, I asked Claire and Jason how it's going working remotely. Jason said it's going well and people are now used to it. He asked me how I feel as I've been doing it for years, and I told him the truth: "Once you get into your rhythm, time flies by, you just need to stay focused and disciplined, build a routine. I miss some of the office interactions but I definitely don't miss waking up at an ungodly hour to take public transit into the office." (I also don't miss petty office politics and useless meetings that go nowhere and waste my time).

Even when I was working as an economist at the National Bank or senior investment analyst at the Caisse and PSP, I was always working in a small team and pretty much on my own. I didn't have time to waste, a had to keep producing research reports, so working in isolation comes second nature to me but it's not the case for everyone (many people hate it).

Anyway, then we talked about COVID-19 and how many of the young folks aren't taken it seriously. I told them a couple of nights ago, I drove by the Orange Julep off the Decarie was struck by how many young adults were congregating at the parking lot there and the McDonald's next to it, basically eating fast food and smoking up now that it's legal in Canada (it shows you where the younger people are spending their $2,000 a month CERB stimulus checks, on pot and fast food!).

"Not exactly the smartest thing to do in the middle of a pandemic but they don't care, they see COVID-19 as a risk for seniors and senior home residences, not a risk to them." I added: "I realize you can't control what others do, so I wash my hands often, wear my mask and practice social distancing when I go to crowded public places, stay home as much as possible and take plenty of vitamin D."

Claire and Jason agreed, said the same thing is going on in Toronto where most younger adults aren't wearing a mask when in public and they're congregating as if there's no pandemic going on.

Alright, Peter Lindley joined the conference call right when I started asking them about the press release and how this still represents a small fraction of the total nonprofits in Ontario.

Let me get to the main points of our conversation:
  • There are over 58,000 nonprofit organizations in Ontario with over 1 million workers. 
  • 80% of these workers are women making a modest salary (pension poverty discriminates based on gender, more women than men succumb to it for a lot of reasons). 
  • They are very pleased to have onboarded 1000 new members from various nonprofit organizations (see full list here), offering them retirement security.
  • Peter told me they are now talking to over 50 other organizations and are well ahead of their projections in terms of onboarding new members. "The demand for OPTrust Select remains very strong".
  • They project they will be able to onboard 1000 to 1500 new members a year over the next five years taking their total members over 100,000.
  • He said COVID didn't stop their ability to onboard new members but they still need to make the calls, get payroll data and other data to onboard them properly.
  • In terms of advertising OPTrust Select, they rely a lot on Cathy Taylor and the Ontario Nonprofit Network (ONN)."Cathy is great, we are very lucky to have her and her team as partners for this new venture."
  • Peter did admit that COVID has hit a lot of nonprofits hard as "many of these organizations are small, they don't have an IT department so their workers can't work remotely, and their funding dried up." But he said the Ontario Government will likely step in to support nonprofits with a $680 million stabilization fund (see details here).
  • He said it's "really gratifying" to offer workers in the nonprofit sector a secure retirement as "most of them are women making a modest income doing very important work." 
I agree and told Peter there's a misconception out there that having your money in the stock market is the same thing as having it managed by a well governed, well diversified, professionally managed pension plan.

Worse still, I talk to many investors and brokers who are convinced the Fed will always save the day and there won't be another stock market crash.

So, if the Fed will ensure that stocks only go up (so-called "Fed put"), why invest in private equity, infrastructure and real estate? Pensions should only invest in stocks and people should never worry about their retirement. Hell, just keep buying the dips on the Nasdaq (QQQ) forever!

I'm being facetious but Peter was dead serious when he replied: "There is increased uncertainty in a post-COVID world and we are doing our part to introduce more retirement security."

He told me he remembers meeting two HOOPP members who had just retired. "Both were beaming happiness and told me they can now retire with peace of mind" (knowing they have a safe pension they can count on).

What else? We spoke a little about how things have changed at OPTrust in a post-COVID world:
  • He was pleased to see how quickly people adapted working from home and said "productivity levels are high".
  • He admitted however there are "external realities" some employees need to deal with like children at home.
  • As far as remaining engaged, he told me: "I did two Town Hall meetings recently, one in the morning and one at night because I wanted to connect with all our employees all over the world."
  • As far as due diligence on investments: "We don't like relying on third parties so that is more challenging. We have committed to management teams we know well and have already conducted due diligence on but yes, this is an issue for newer funds."
  • As far as returning back to the office: "We are taking a wait and see approach, for selfish reasons, we want to see how others are doing it and learn from them. We are not going back to the office before Labor Day. The truth is we are missing interactions that can only happen in an office setting but there are many logistical issues like deep cleaning, social distancing, etc. that make it hard. Some people want to come in to the office, others aren't ready. We need to ensure the health and safety of all our employees. Flexibility is critical."
On that last point, I told him I had a chat with OMERS CEO Blake Hutcheson last week and he told me: "It's very hard to build culture when people aren't at the office."

I replied: "Yes but it offers more flexibility and allows you to attract top tech talent and to hire people with disabilities which are often marginalized at workplaces."

Both Blake and Peter agreed with me on that last point, working from home fits some people a lot more than others.

Let me be more blunt: there's absolutely no reason for any organization to discriminate against someone with a disability in a post-COVID world (and yet it still goes on!). If anything, organizations should view this as an opportunity to go out and hire more people with disabilities.

There are many nonprofit organizations in Ontario and the rest of Canada helping people with disabilities and they can be tapped as a resource to attract talent to organizations.

Lastly, I spoke with Peter about expanding OPTrust Select to the rest of Canada and he said: "I'd love to but my sponsors won't be behind it. The Ontario Government doesn't want to contribute to the pensions of people living outside the province."

I also mentioned that I read Canadian law firms will join CAAT’s DBPlus pension plan:
Lawyers Financial has inked a deal with the Colleges of Applied Arts and Technology pension plan to offer law firms the chance to join the CAAT’s DBplus.

The organization, which is a brand of the Canadian Bar Insurance Association, started looking into pension options for the legal community back in 2016. Over the past few years, a task force delved into which plan design to choose. Ultimately, it opted for the CAAT’s DBplus, which was launched in 2018 and allows employers outside of the college sector to join.

“We started talking to CAAT because all the research we had done and all the decisions we had made on what kind of plan it should be and what kind of contributions we should make and what kind of benefits at the end of retirement should look like, CAAT checked all those boxes,” says Dawn Marchand, president and chief executive officer of Lawyers Financial.

After doing a deep dive into the options, Marchand says being able to offer staff at Canadian law firms a DB plan over a defined contribution plan was seen as key because the former offers a guaranteed benefit for life. Also, DBPlus handles the administrative side and takes on the fiduciary risk, she adds.

Lawyers Financial is set to promote DBPlus this spring, with the DB plan expected to be available for law firms by July. But even before the promotional push, Marchand says the excitement for the DB plan is already palpable. “The appetite is huge; at this point, I’m getting four to five calls a week and it’s increasing all the time.”

The hunger for a plan like DBPlus is so large because many in the Canadian legal community, from administrative staff at a small-town firm to partners at big-city outfits, don’t have any pension at all, she says.

While there is intense interest, the details of how DBPlus would serve the diverse legal community is still being worked out. Partners at law firms and solo practitioners, for example, aren’t usually considered employees, says Marchand, noting that both groups would likely have to have a professional corporation set up and then the corporation would be considered the employer and the partner would be the employee.
I told Peter this is great news as it expands DB coverage to more Canadians via DBplus (see my coverage of CAAT Pension's 2019 results here).

He agreed: "We view CAAT DBplus as an additive venture not a competitor. They are focused on existing DB pensions and group retirement plans, we are focused on Ontario's nonprofit  sector but the end result is the same, more retirement security for Canadian workers."

I really enjoyed talking to Peter Lindley this morning, he's very nice and a real gentleman who understands the issues.

I can say the same thing about his peers across Canada and told him they all need to update an older study on the benefits of Canada's top ten pensions.

Now more than ever, we need to expand DB coverage to more workers across Canada.

And as a friend of mine reminded me recently, we probably ought to create new funds which are governed like our large DB plans but manage assets to take care of our healthcare needs. "Most people require tremendous healthcare resources toward the end of their life and the current pay-as-you-go healthcare system is a disaster waiting to happen as aging demographics will crush it."

Below, what does your pension mean to you? Does it mean security and stability in retirement? For most members and retirees, a pension from the OPSEU Pension Plan is one of their biggest assets and a valuable pillar of their financial future. Watch this clip, behind every pension, there's a person looking to retire in dignity and security.