The head of one of Canada's largest - and lowest-profile - pension plans is urging the Ontario government to make it easier to operate multiemployer pension plans to help workers who change jobs often during their careers.
John Crocker, chief executive officer of the Hospitals of Ontario Pension Plan (HOOPP), told a pension symposium yesterday the province should adopt reforms recommended in an expert report in November to encourage the creation of more innovative forms of pension plans.
"It should be easier for workers to change jobs and still keep their pension benefits whole," he said.
Under multiemployer pension plans - including HOOPP - workers can join a pension plan that covers an industry rather than just a single employer, and can retain their pensions as they move among employers. HOOPP manages $30-billion of pension assets for 321 participating employers with 255,000 workers in the health care sector.
A task force headed by Harry Arthurs, former president of York University, concluded in November that Ontario should encourage the creation of larger pension plans such as multiemployer plans because research shows they typically have higher returns, pay lower fees on their investments and manage risk better to provide more stable funding for workers. He also recommended the province should give multiemployer plans more flexibility in funding their pension obligations.
Mr. Crocker urged the province yesterday to support "specialized" pension rules to accommodate the "unique" structure of multiemployer plans. He said HOOPP is an example of how a multiemployer plan can minimize the upheaval when an industry is changing by making it easier for employees to switch jobs.
For example, he said an increasing number of health care workers are no longer employed by hospitals but by other community-based health organizations. Workers have been able to shift to new employers without losing their pensions, allowing "a greater amount of mobility for workers in an environment that is anything but static."
Mr. Crocker, who has long maintained a low profile despite running Canada's fifth-largest pension fund, has recently decided to join a growing chorus of voices urging governments across Canada to adopt reforms to protect the declining reach of traditional defined-benefit pension plans.
A survey conducted for HOOPP by the Gandalf Group between Nov. 26 and Dec. 4 found 50 per cent of Ontarians over age 55 reported they have a defined benefit pension plan. Only 25 per cent of those under 45 had a traditional pension.
The survey found two-thirds of respondents are concerned about not having enough money for retirement with the concern highest among those between ages 45 and 54.
Mr. Crocker said a traditional defined-benefit pension plan pays far greater returns to workers than a personal retirement savings plan.
For example, he said a typical 59-year-old HOOPP pensioner who contributed $57,000 to her HOOPP pension over 18 years will receive $345,000 in pension payments if she lives to age 81.
If the same $57,000 were contributed to a personal registered retirement savings plan instead, it would earn a return of $96,000 based on the historical rates of return, Mr. Crocker said.
The chorus is growing for governments to adopt reforms to protect the declining reach of traditional defined-benefit pension plans.
How concerned are you about having enough money for retirement?
Very concerned: 31%
Somewhat concerned: 35%
Slightly concerned: 19%
Not at all concerned: 15%
Don't know: 1%
How important would the offer of a defined benefit pension plan be to your decision to accept one job over another?
Very important: 24%
Not at all important: 17%
Don't know: 11%