Features
of the Plan
A Plan that Guarantees the Payment of Promised Pensions
The plan provides security and stability by guaranteeing the payment of a pension for life, regardless of investment returns. Thus, even after a year of financial crisis, the plan will continue to pay ongoing pensions without any reduction—an important advantage compared to an RRSP or VRSP.
To ensure that the plan will be able to pay the promised pensions, the pension committee has developed two policies: an investment policy and a funding and use-of-surplus policy. The pension committee is also required to periodically request an actuarial valuation. This actuarial valuation determines whether the fund’s assets are sufficient in relation to its obligations—that is, the pensions promised to all plan participants.
A Secure Plan
The entire plan is designed to achieve, in order, the following three objectives:
Ensure the payment of the earned pensions
Aim for a stable contribution rate (avoiding special contributions)
Subject to meeting the previous objectives, ensure the indexation of pensions and pension credits
Caution when developing pension formulas, reserve levels, and the other management policies established by the pension committee allow us to state that our approach is secure and based on careful risk management.
A Collectively Shared Risk
The risk is collectively shared by all participants. A significant portion of the contribution is paid into an indexation reserve which, during more difficult times, absorbs financial shocks while remaining available to index pensions when the financial situation is good. In times of unfavorable economic conditions, the conservative nature of our approach and the indexation reserve may not be sufficient to absorb the shock. In such a case, additional contributions (special contributions) would need to be paid by active participants. However, the payment of current pensions and the rights already acquired by participants, retirees, and beneficiaries would not be affected in any way. The strength of the group protects the individual.
