Under current pension law, our actuaries must perform two types of valuations to check the General Synod Pension Plan’s (GSPP) funding level:
- a going concern valuation, intended to ensure funding of pensions over the long-term; and
- a solvency valuation, which checks the plan’s ability to pay out all of its pension commitments, assuming the plan ends on the date of the valuation.
The GSPP’s going concern funding level is very strong with a large surplus. But, we do have a solvency funding shortfall.
The provincial government is considering an extension of our temporary funding relief. With an extension, we will have a three-year exemption from having to make special payments to cover a solvency shortfall.
A YES vote by more than 2/3 of plan members will mean that we can continue to keep our contributions within the tax limits with no benefit reductions. It will also mean that members support permanent solvency relief for the future.
A NO vote by more than 1/3 of plan members will mean that benefit reductions may be required if the plan ends with a solvency deficit.
Please vote yes, and vote as soon as possible. We must receive your vote no later than March 23, 2018.
Going forward, how will we find a permanent solution for solvency funding?
The General Synod Pension Plan (GSPP) is classified as a defined benefit (DB) pension plan. It is important to note that DB plans’ solvency funding requirement is geared more toward single employer corporate plans that face a much bigger risk of closing down. Not only this, the GSPP effectively operates as a target benefit plan (TBP) and we are working to be formally classified as one.
The Ontario government is committed to working to develop a framework for plans like the GSPP. TBPs will receive a different set of rules and permanent solvency funding relief, eliminating the current issue faced by the GSPP.
While we seek to be recognized as a TBP, we continue to work on raising our funding levels. Due to prudent plan governance and favourable investment markets, our funding levels have dramatically improved in recent years. The next test of the plan’s financial health will be in three years. Even in the event of a market correction, we think our funding health can hold strong.
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