Canadian universities introduce jointly sponsored retirement plan
Canada’s University Pension Plan (UPP), a new jointly funded retirement plan for Queen’s University, the University of Guelph, and the University of Toronto, launched on July 1. The plan brings together more than 35,000 members and five retirement plans under a single administration with total assets of approximately $ 10.5 billion ($ 8.4 billion).
The three universities said they had decided to combine their retirement plans to cut costs and improve efficiency and investment opportunities. According to UPP’s backers, years of low interest rates, volatile investment markets and increasing life expectancies have led to funding bottlenecks and increased contribution rates for university plans. They say the current model for individual employer plans is unsustainable, and combining multiple plans will allow universities to focus on educating students rather than devoting resources to managing their retirement plans.
âUPP was born out of the extraordinary efforts of the employees, board members and directors of our founding universities, all of whom are committed to strengthening performance-oriented performance [DB] Pensions, âsaid Gale Rubenstein, Chairman of the UPP Board of Trustees, in a statement. “We start on a strong foundation with an excellent board and management team that is oriented towards the values ââand needs of our members.”
The UPP is a DB pension plan based on the best average earnings of its members and the number of accredited years of service after joining the UPP. Pension benefits from existing university pension plans are retained.
At the Beginning, the UPP pension for credited years of service acquired after joining the UPP is calculated as follows: 1.6% of the average income below the average maximum annual pensionable income (YMPE), multiplied by the credited service, plus 2% of the average income above the average YMPE , multiplied by performance credited. Average earnings are based on average earnings over the best 48 months of eligible employment, and average YMPE is based on average YMPE over the last 48 months of eligible employment. The YMPE for 2018 was $ 55,900 ($ 44,933).
For example, if a participant has an average salary of C $ 75,000 in the last 48 months of eligible employment and 20 credit years of service after joining the UPP, the average YMPE over 48 months is C $ 54,925. And, as with all registered retirement plans, the UPP pension benefit is subject to the maximum pension limits under Canadian Income Tax Law.
The new fund will be led by Barbara Zvan, President and CEO. She previously worked for the Ontario Teachers’ Pension Plan for 24 years.
Although the UPP will initially cover three universities, other universities in the Canadian province of Ontario are open to joining. The UPP follows the model of other multi-employer plans such as the Ontario Teachers’ Pension Plan and the Ontario Municipal Employees Retirement System (OMERS).
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Tags: Barbara Zvan, JSPP, Queen’s University, University of Guelph, University of Toronto, Co-Funded Pension Plan, University Pension Plan, UPP