A professional responsible for, among other things, performing valuations of the assets and liabilities of pension plans and calculating the costs of providing pension benefits. In Canada, a person must be a Fellow of the Canadian Institute of Actuaries (CIA) to be recognized as an actuary.
The fiduciary body responsible for managing the plan in accordance with plan terms and applicable legislation, including collecting contributions, investing plan assets, interpreting the provisions of the plan documents and paying pensions.
A statutory pension plan in which all working Canadians are required to participate. The CPP provides a monthly benefit to eligible Canadians, normally beginning at age 65; the benefit is calculated based on age, years of participation and how much the individual and employer contributes.
A pension plan that defines the contributions made by the employer and, where applicable, the employees. Contributions are deposited in an account set up in the member’s name and, typically, are invested by the member based on the investment options offered under the plan. At retirement, the money accumulated in the account is used to provide a pension.
A legal relationship of trust where one person (the fiduciary) holds and/or controls property for the benefit of another person – for example, the relationship between a JSPP administrative board and the JSPP members.
A document addressing the allocation of contributions between employees and employers, treatment of gains/losses, conditions to withhold conditional indexing for retiree pensions, actuarial aspects of funding and thresholds to guide decisions related to contribution increases/decreases and benefit improvements/reductions.
When a plan has more liabilities (the value of pensions earned by members) than assets, as determined by a going concern valuation. Currently, in Ontario, a going concern shortfall must be paid off over 15 years.
The value of plan assets and liabilities assuming the plan will continue to operate indefinitely into the future Indexation – periodic adjustments to pension benefits to reflect increases in the cost of living (typically linked to Canada’s Consumer Price Index), usually starting from the member’s retirement date.
A defined benefit pension plan in which the employees (often through their bargaining agents) and employers share responsibility for the plan’s governance and funding. The employers and employees are jointly responsible for the governance of the pension plan, including all decisions about the terms and conditions of the plan, any plan amendments and the appointment of the plan administrator, among other things.
The value of plan assets and liabilities assuming the pension plan stops operating on the date of the valuation. It is meant to determine if a plan has sufficient assets to pay out all pensions that members have earned to date.
In respect of a SEPP, this is typically the employer. In respect of a JSPP, a Sponsor Board is the organization of the employers and plan members that create the JSPP and who typically retain certain authority over the plan, relating to plan provisions, contribution rates, funding and policies, etc. Under a JSPP, employers and employees typically each have 50% control of the Sponsor Board.
The termination or discontinuation of a pension plan, usually at the decision of the pension plan sponsor. This often results from bankruptcy, corporate restructuring or downsizing. For a multiemployer JSPP to wind up, the sponsor board must agree to the windup.