February 25, 2009
The Honourable Dwight Duncan
Minister of Finance
Attention: Comments on Report of the Expert Commission on Pensions
c/o Pension and Income Security Policy Branch
5th Floor, Frost Building South
7 Queen's Park Crescent
Toronto, ON M7A 1Y7
Dear Mr. Duncan,
Re: Request for Comments - Ontario Expert Commission on Pension Report
The CNIB would like to congratulate the Ontario Expert Commission on its comprehensive, insightful and innovative recommendations in the Ontario Expert Commission on Pension Report. We are of the view, however, that the report does not do enough to support and protect single-employer plans (SEPPs) such as the CNIB Pension Plan.
The CNIB has a single employer plan supported by charitable donations. The recent global economic crisis, unprecedented low interest rates and the catastrophic meltdown of the global equity markets has had a substantial impact on the CNIB contributions and operations and has led to substantial impact on the health of the CNIB Pension Plan.
We believe that to maintain SEPP viability, consideration should be given to eliminating solvency valuations entirely, at least for plan sponsors such as CNIB who share many of the characteristics of Multi Employer Pension Plans (MEPPs) and Jointly Sponsored Pension Plans (JSPPs). The CNIB, like many well established organizations, has a negligible chance of ceasing operations, having plenty of assets outside of its (DB) pension. Why require organizations such as our own to fund solvency deficiencies that will never materialize, and require us to contribute to a Pension Benefits Guarantee Fund that we will never use? Surely the full disclosure of the wind-up position of our (DB) pension plan would be sufficient, as recommended for MEPPs and JSPPs.
As a minimum, there should be a moratorium on the funding of solvency deficiencies for at least five years. Based on recent market performance, allowing us to amortize our solvency deficiency over ten years instead of five years would not be sufficient. Our actuaries have estimated that the solvency deficiency in our (DB) pension plan increased substantially in 2008, and that it would be even higher today. It makes little sense at this time to divert charitable funds that should be directed towards our mission, to support blind and visually impaired Canadians, to fund a solvency deficiency.
If, in fact, we do have to fund our current solvency deficiency over five or even ten years, in all likelihood we will have to completely cease all future (DB) pension plan accruals, and wind-up our (DB) pension plan, which would have a drastic impact on our hundreds of retirees and staff across Canada.
We do support responsible ongoing funding rules, including the ongoing funding of future (DB) pension plan improvements over five years (or for the period of a collective agreement, if shorter), and prohibiting (DB) pension plan improvements if the funded ratio is under 85%.
As a very minimum consideration for not-for-profit plan sponsors, we ask that you permit them to defer increases in contributions to fund deficiencies for up to 12 months, as is currently permitted for JSPPs, given the difficulties that not-for-profits can experience when required to retroactively apply contribution increases.
The issues we face with respect to the CNIB Pension Fund are real and urgent. We need solutions that are substantial and immediate in these unprecedented times. Canadians who rely on the CNIB for support will suffer if these solutions fall short in magnitude and impact on the substantial challenges the CNIB Pension Plan faces.
Thank you for your consideration.
Original signed by
Craig Lillico, CA
Vice-President, CFO and Treasurer