The interests of the UPP ’s participating employers and members would be represented by two boards with separate and distinct mandates:
Highlights of the Sponsor Board include:
- Representation by employer and plan members
- Each side gets one vote
- Initially set with six seats for each of the employers and the plan members
- Responsible for such tasks as setting contributions, establishing plan terms, and establishing a funding policy.
Highlights of the Board of Trustees include:
- Manage administrative aspects of the UPP
- Trustees appointed by Sponsors (number of Trustees still to be determined)
- Implement direction given by Sponsor Board, e.g., funding policy.
Both boards will have representation of members and employers and be responsible for ensuring the plan’s long term security, and that the plan is professionally and effectively run.
A joint sponsorship arrangement gives members and employers shared responsibility for funding the pension plan. This means members and employers are responsible for ensuring the plan has enough money to meet its long-term pension obligations.
At the time of conversion, each of the three university’s pension plans would undergo a valuation on a standardized basis. On conversion, any funding shortfall would be the responsibility of that university and would have to be paid down over 15 years.
After a transition period, employees and employers will share in new shortfalls and surpluses for benefits earned under the UPP, which may mean adjusting contributions and/or future benefits for active employees.
Funding regulations for Ontario’s large JSPPs are different than those for single-employer Defined Benefit plans in Ontario. All plans are required to complete a formal valuation of plan funding at least once every three years and file it with the Ontario regulator. This valuation tests the plan’s financial health based on two scenarios:
- which assumes the plan will continue to operate as expected for many years to come; and
- which assumes the plan ends on the date of the valuation.
For a single-employer pension plan, any going-concern or solvency shortfall reported in the valuation must be paid off within a set period. As a JSPP, however, the UPP would be exempt from solvency funding. Any going-concern shortfall in the UPP must be addressed by increasing contributions or decreasing future benefits paid to active members.