Childcare workers in Nova Scotia get pensions, wage hikes

Licensed childcare workers in Nova Scotia are about to receive not only pay raises, but pensions and benefits, reports Global News.

The Nova Scotia Minister of Early Childhood Development called the move “a milestone in the professionalization” of the sector, Global reports.

“We understand that having a strong, stable early-learning … system means implementing programs and benefits that support the recruitment, retention and recognition of staff,” Minister Becky Druhan tells Global.

In Nova Scotia, the total cost of the wage/pension/benefits package is estimated to be $111 million, with the province providing $75.7 million and Ottawa providing the rest, the article notes.

Wage increases of “$3.14 to $4.24 per hour” will begin in April, and follow wage increases rolled out in 2022. The goal, reports Global, is “making working in childcare a more attractive option for those considering a career.”

The wage increases, reports the CBC, will help employees with their share of contributions to their new pension plan, operated by the Colleges of Applied Arts and Technology Pension Plan (CAAT).  The benefits plan is operated by “the non-profit Health Association of Nova Scotia,” the CBC article notes.

“Once they’re enrolled, (early childhood educators) will contribute five per cent of their pay to each plan. Full-time child-care workers will see between $66 and $124 deducted for the new health benefits each paycheque, and another $80 to $100 for the pension plan,” the CBC reports.

CAAT’s DBplus pension plan is open to any Canadian employer. Save with SPP spoke with CAAT’s Derek Dobson on the progress of the new plan a couple of years ago.

Offering pensions and benefits to employees has long been viewed as a great way to attract and retain employees.

Did you know that the Saskatchewan Pension Plan’s voluntary defined contribution pension plan is not just for individuals, but can be offered as a company pension plan by Canadian employers?

With SPP, there are multiple options for employers who want to offer a pension plan for their team.

Employers can set up a “start up” pension plan, where a one-time employer contribution is made to individual employee SPP plans. Alternatively, you can set up a “employer match plan” where any contributions made by employees receive a matching employer contribution. There’s the “basic pension plan” option, where the employer offers the plan, and the employees contribute (no employer match), and the “performance pension plan,” an incentive-based retirement program.

Full details can be found here. Find out how SPP can help your employees save for retirement, with a flexible array of plan designs! Check out SPP today.

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More Canadians need access to better pensions: Ambachtsheer

Writing in The Globe and Mail, noted pension expert Keith Ambachtsheer says our ever-growing senior population would be better served if they — and the rest of us — had access to better workplace pensions.

He notes that Canada’s retirement system is ranked 11^th out of 44 countries via the Mercer CFA Institute Global Pension Index. What’s needed to boost that ranking, Ambachtsheer contends, is to make the type of pension plans that public sector workers have widely available to the rest of the population.

“Canada,” he writes, already has “one of the best occupational pension systems in the world for its public-sector workers. Globally admired as `the Canadian pension-fund model,’ it efficiently converts regular contributions into lifetime retirement income streams for its public-sector members. At the same time, investment organizations using the model are at the leading edge of converting retirement savings into sustainable, wealth-producing capital. This system needs to be expanded to everyone else.”

The number of senior citizens, he observes, is on the rise. Citing Peter Drucker’s 1976 book The Unseen Revolution, Ambachtsheer notes that the author foresaw “the young, outsized baby boomer generation of the 1970s eventually becoming an outsized generation of retirees, and advocated creating pension organizations with two key features: legitimacy and effectiveness.”

Ambachtsheer lists governance as an important attribute of the most effective pension plans. “Pension arrangements must be structured to always act in the best interests of the plan risk-bearers,” he explains.

The plans should ideally “have an accumulation pool that focuses on investment return generation, and a separate decumulation pool that provides lifetime income.” You contribute to the investment pool during your working life and receive benefits from the decumulation side when you retire, he explains.

The Canadian model pension plans also feature cost-effective management and “value-adding investment programs that turn retirement savings into wealth-producing capital,” writes Ambachtsheer. Another feature is the ability to provide lifetime pensions to plan members, he adds.

So how do we go from what we have now — a situation where there are many workers without any sort of retirement program at work — to one where most of us are in a Canadian model plan? Ambachtsheer sees three ways to achieve this change.

First, “existing Canadian pension-fund model organizations” could “offer their pension management infrastructure to private sector employers,” he notes. This is already being done by a few larger pension funds, such as Ontario’s Colleges of Applied Arts & Technology Pension Plan (CAAT).

Save with SPP interviewed CAAT’s Derek Dobson on this topic a few years ago.

Another approach would be to have “a government entity decide to create a Canadian pension-fund model organization for private-sector workers and retirees,” an idea that has worked in some U.S. states and in Great Britain, he writes.

Finally, he suggests that the private sector create “one or more new Canadian model offerings,” making better pension plans available to the private sector. He writes that Common Wealth and Purpose Investments offer programs that provide end-to-end coverage, including lifetime pensions.

Our own Saskatchewan Pension Plan, which is open to any Canadian with available registered retirement savings plan (RRSP) room, already has some of the Canadian model features — investments are pooled, professionally managed and governed at a low cost. SPP offers, through its annuity features, a lifetime pension for its members. If you don’t have a pension plan at work, you can join SPP as an individual — or, if you are an employer, you can look into offering it as a pension for your employees. Check out SPP today!

Great news — the savings opportunities with SPP are now limitless! You can transfer any amount you want into SPP from an RRSP, and you can make contributions based on your entire available RRSP room. It’s a great way to build your SPP retirement nest egg more quickly!

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A new study has found that every $10 of public sector pension that is paid out to a retired member returns $16.72 of activity in the Canadian economy.

The study was produced by the Canadian Centre for Economic Analysis on behalf of the Canadian Public Pension Leadership Council.

Save with SPP spoke with Derek Dobson, CEO and Plan Manager of the Colleges of Applied Arts & Technology Pension Plan (CAAT) and a Co-chair of the Council, to further explore the survey’s results, and to talk generally about the value of pension programs.

He notes that the study is “agnostic” about what type of pension plan is producing the $10 spent by its retired members.

“Any plan that uses experienced investment professionals, and pooling – I include the Saskatchewan Pension Plan as an example of that – is delivering pensions efficiently,” he explains. So whether the $10 is produced by an efficient defined benefit (DB) plan or an efficient defined contribution (DC) plan, the economic benefits are the same.

The study noted that – looking at public sector pension plans only — $82 billion of economic activity was generated in 2019, “supporting 877,100 jobs and $33 billion in wages for Canadians,” according to the study’s executive summary. Governments gain $21 billion in tax revenue, the study notes. Collectively, Canadian public sector DB plans have an eye-popping $1.27 trillion in assets.

While the study found pension spending generally benefited all Canadians, one interesting aspect was that rural businesses seemed to derive more positive gain from local public sector pensioners.

Dobson says part of the reason for this may be the current trend towards a migration from expensive city living to more affordable smaller centres. “The housing is more affordable in smaller cities and towns,” he says. “We also found that those living in smaller towns tend to spend more locally than those in cities – so that is part of the reason the economic benefits of pensioners had a 6.5 per cent bump” in rural areas when compared to urban centres.

Given the “win win” nature of having a good pension plan – the retired member gets the steady, predictable income, while the economy benefits from it being spent – we asked Derek Dobson if there should be wider availability of good pension plans for those who lack them.

CAAT’s own DBplus pension plan, a program that offers a strong, secure lifetime pension program, has grown in just two years to include 200 participating employers. “We are trying to remove barriers to access to good pensions,” Dobson explains.

A good pension, he explains, has the added benefit of helping employers attract and retain good employees. It delivers twice the retirement benefits per dollar saved than investing independently in Group RRSPs, and helps employees reach their retirement goals faster with employer-matched contributions. Dobson says it is a shame to see well-trained healthcare workers and engineers leave the country for jobs elsewhere – a good pension program can keep them here in Canada.

Another advantage for employers is that if a pension plan is offered by a third party rather than being administered and funded by the employer, it’s a time, risk and funding relief for the employer. “No Chief Financial Officer in the private sector wants to see pension liabilities on their balance sheet,” he explains. With DBplus, the employer’s pension cost is a fixed amount.

“Many studies have shown that year after year, more and more Canadian workers are willing to forego more pay in order to get a better pension,” he says.

The only three organizations he currently sees as trying to bring pension coverage to underserved sectors are CAAT, through its DBplus program, the OPSEU Pension Trust, through its similar OPTrust Select plan, and the Saskatchewan Pension Plan through its voluntary, open defined contribution program.

Dobson concludes by saying that Canada has become known around the world for the efficiency of its pension system, the “Maple Model” of pension plan that feature pooling, low administration costs, expert investing, and joint governance where members and employers have an equal say in how the systems are run.

“Public service pension plans are an amazing and unique asset for Canada. So the more people that can be brought in, the better – pensions really help workers, retirees, their families and the economy.”

We thank Derek Dobson for taking the time to speak with us.

Did you know that the Saskatchewan Pension Plan has, according to its 2020 Annual Report, has more than $528 million in assets and 32,613 members? This growing open defined contribution plan is designed specifically for those without a workplace pension – a made-in-Saskatchewan solution to the problem of retirement saving for individuals and businesses. Check them out today.

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We often hear how scarce good workplace pensions are, and how many employers, notably those in the private sector, have given up on offering them altogether.

But, according to Derek Dobson, CEO and Plan Manager of the Colleges of Arts and Technology (CAAT) Pension Plan, there is an option for any Canadian employer that doesn’t want to go through the effort and expense of managing a pension plan for their employees. That option is CAAT’s DBplus plan.

Dobson tells Save with SPP that there are three main themes as to why some employers – with or without their own pension plan – might want to look at DBplus.

Running what is called a “single employer” defined benefit (DB) plan means the risk of ensuring there’s enough money invested to cover the promised benefits rests on the shoulders of one employer. In a multi-employer plan, however, many employers are there to shoulder the load – the risk is shared.

As well, he notes, it might be a chance to upgrade pension benefits. “A lot of organizations want to have access to something better for their people… some employers offer nothing, or a group RRSP. Now they can move to a modern DB plan,” Dobson explains. One study by the Healthcare of Ontario Pension Plan (see this prior Save with SPP post) found that most Canadians would take a job with a good pension over one that pays more, Dobson notes.

A final benefit, he says, is the ability that DBplus has to move all employees to a common retirement benefit platform. “In many organizations, you may find that one group of employees has nothing, one has a defined contribution plan, others have a DB plan that is now closed to new entrants… DB plus allows you to put everyone on the same platform,” he says.

Noting that another large pension plan – Ontario’s OPSEU Pension Trust – has launched a similar program for non-profit organizations, Dobson says the idea of leveraging existing pension plans to deliver pensions to those lacking good coverage “is great…the long and the short of it is that there’s a general belief that these larger plans want to put up their hands to help where they can.”

“It’s the right thing to do,” he says.

Why are pensions so important?

Dobson points out some key reasons. “The average person these days will live to age 90, and on average, they retire at age 64 or 65,” he explains. “That’s 25 years in retirement. So having a secure, predictable income, one with inflation protection and survivor pensions, and that is not being delivered for a profit motive – that’s why these plans are so powerful.”

Another great thing about opening up larger plans to new employers is that it addresses the problem of “pension envy,” Dobson says. Instead of pointing out who has a good pension and who doesn’t, now “everyone has access to one, to the same standard.”

Those without a pension have issues to face when they’re older, he warns. “The Canada Pension Plan and Old Age Security systems weren’t designed to be someone’s only source of income,” he explains. “We had a three-pillar system in the past – CPP, OAS, and the third pillar, your workplace pension plan and your private savings,” Dobson says. But a large percentage of Canadians don’t have pensions at work, and a recent study by Dr. Robert Brown found that the median RRSP savings of someone approaching retirement age is just “$2,000 to $3,000,” Dobson says. Yet the same study found Canadians are willing to try and save 10 to 20 per cent of their income for retirement.

Dobson says he is energized by the goal of bringing pensions to more Canadians. “It’s a way of making Canada better,” he concludes.

Here’s a video about how the CAAT pension plan delivers on benefit security.

We thank Derek Dobson for taking the time to speak to Save with SPP.

If you don’t have a workplace pension, or the one you have offers only modest benefits, don’t forget the Saskatchewan Pension Plan. SPP allows you to decide what your savings rate will be, grows those dollars at a very low management rate, and can convert the proceeds to a variety of lifetime pensions when you retire. Check them out today.

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