{"id":19482,"date":"2020-09-04T08:36:58","date_gmt":"2020-09-04T12:36:58","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/plan-sponsor-week-db-benefits-for-dc-members-at-halifax-port-ilahea-pension-plan-149307"},"modified":"2020-09-04T08:36:58","modified_gmt":"2020-09-04T12:36:58","slug":"plan-sponsor-week-db-benefits-for-dc-members-at-halifax-port-ila-hea-pension-plan","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/09\/04\/plan-sponsor-week-db-benefits-for-dc-members-at-halifax-port-ila-hea-pension-plan\/","title":{"rendered":"Plan Sponsor Week: DB benefits for DC members at Halifax Port ILA\/HEA pension plan"},"content":{"rendered":"
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Yaelle Gang, the Canadian Investment Review<\/span> | September 4, 2020 <\/p>\n

The Halifax Port ILA\/HEA found a way to provide its defined contribution pension plan members with a defined benefit upon retirement \u2014 and it\u2019s been doing so successfully for 35 years.<\/p>\n

As a private sector multi-employer plan, the pension has about 450 active members, 300 retirees and about $210 million in assets. The DB plan was closed to current service in 1984. Also in the \u201880s, the plan was capped at 25 years of service, whereas many members were working for much longer than that, said Blair Richards, the Halifax Port ILA\/HEA\u2019s chief investment officer.<\/p>\n

\u201cThey effectively could work half of their career without accumulating any higher pension. It was a real problem,\u201d he said during a session at Benefits Canada<\/em> and the Canadian Investment Review<\/em>\u2019s 2020 Plan Sponsor Week in mid-August.<\/p>\n

Read: Blair Richards moves to CIO of Halifax Port ILA\/HEA pension plan<\/a><\/strong><\/p>\n

After capping out their available DB service, plan members could take advantage of the DC plan, which was introduced in 1985. However, as is the case with DC plans, members didn\u2019t know what retirement income they\u2019d receive from the DC benefit, said Richards. \u201cFrom early on, we were [determined] to try and ease people\u2019s minds about just exactly what the pension would mean to them when the time came.\u201d<\/p>\n

To address this challenge, plan members can use all or a portion of their DC balance to purchase an annuity from the DB plan. \u201cWe\u2019ll commute DC balances into the DB formula and offer that to people. What it means is, at retirement, for anybody who had DB service, it\u2019s so much per month per year of service by a maximum of 25 years, so we can show that easily and then we\u2019ll take the balance in the DC and apply that same formula [and] add them together to show them one number.\u201d<\/p>\n

As well, although the DB pension plan has a surplus, Richards said he doesn\u2019t want to lock that in because it\u2019s important to protect plan members against inflation. <\/p>\n

Read: DC pension industry must shift focus to adequate retirement income<\/a><\/strong><\/p>\n

Allowing DC benefits to be rolled into the DB plan is beneficial for the plan in addition to DC members, he added. Back in 1984, it was predicted that the DB plan would exhaust assets over a relatively short period of time. \u201cThe truth is, it\u2019s 36 years later, we have almost exactly the same amount of money in the DB plan as we did in 1984 and a reason is we\u2019re rolling money in there. Everybody\u2019s enjoying the economies of scale and people are seeing that keeping the game going has given them the opportunity to stay ahead of cost of living, which is largely absent in any pension plan, particularly in the private sector now.\u201d<\/p>\n

Currently, while many pension plans are looking to annuity buy-ins, buyouts or transferring their assets and liabilities to other plans, Richards notes the Halifax Port ILA\/HEA\u2019s solution works.<\/p>\n

\u201cThe fact is that we have been delivering on this method with respect to our retired employees through historically low interest rates, prescribed historically low solvency values, through liability hits, through increases to longevity, the [group annuity mortality] tables, [mark-to-market accounting rules], market crashes. I mean, we\u2019ve survived a lot of serious exogenous shocks \u2014 and some self-inflicted \u2014 but we\u2019re still delivering this.\u201d<\/p>\n

All of the 2020 Plan Sponsor Week sessions are available on-demand at benefitscanada.com\/webinars<\/a>.<\/strong><\/p>\n

Read: Where can pension funds find returns in a low interest rate environment?<\/a><\/strong><\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Yaelle Gang, the Canadian Investment Review | September 4, 2020 The Halifax Port ILA\/HEA found a way to provide its defined contribution pension plan members with a defined benefit upon retirement \u2014 and it\u2019s been doing...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/19482"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=19482"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/19482\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=19482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=19482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=19482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}