Pension plan for Ontario colleges earns 11.8% return, doubles reserves to $347 million, stands 103% funded

TORONTO, April 17, 2013 /CNW/ - The Colleges of Applied Arts and Technology (CAAT) Pension Plan today announced an 11.8% rate of return for the year ended December 31, 2012, which increased the Plan's net assets to $6.3 billion from $5.6 billion the previous year.

In its most recently filed valuation, the CAAT Pension Plan is 103% funded on a going-concern basis with a funding surplus of $347 million.  The valuation is as at January 1, 2013, and has been filed with the Financial Services Commission of Ontario.

The 11.8% rate of return is gross of investment fees and expenses totaling 50 basis points. Since the economic crisis of 2008, the CAAT Pension Plan's well-diversified investment portfolio has earned an average annual rate of return of 11.1% before expenses and 10.5% net of expenses.

Contributions to the CAAT Plan, shared equally by employees and employers of the Ontario college system, were $332 million in 2012, while income from investments was $624 million. The Plan paid $332 million in pension benefits for the year.

The CAAT Pension Plan has 21,400 members employed in the Ontario college system, which is made up of 24 colleges and five affiliated non-college employers, and 12,600 retired members with an average annual lifetime pension of $22,700. In 2012, members on average retired at age 62 after 24 years of pensionable service. The 630 members who retired last year collected an average annual lifetime pension of $36,800.

Created at the same time as the Ontario college system in 1967, the CAAT Plan assumed its current jointly sponsored governance structure in 1995. CAAT is a contributory defined benefit pension plan with equal cost sharing. Decisions about benefits, contributions and investment risk are shared equally by members and employers. The Plan is sponsored by Colleges Ontario, OCASA (Ontario College Administrative Staff Association) and OPSEU (Ontario Public Service Employees Union).

The CAAT Plan seeks to be the pension plan of choice for single-employer Ontario university pension plans interested in joining a multi-employer, jointly sponsored plan in the sector. The postsecondary education alignment and similar demographic profile of university and college employees makes the university plans an ideal fit with the CAAT Plan's existing asset and liability funding structures. CAAT has been in exploratory discussions with individual universities, employer and faculty associations, and with government officials, about the feasibility of building a postsecondary sector pension plan that leverages CAAT's infrastructure and experience, reducing costs and risks for all stakeholders.

"The proposal we've been discussing offers an immediate solution for those universities with pension funding problems or who want to better manage their risk. It builds a postsecondary education pension plan without recreating an administrative infrastructure and its associated costs and risks," says Derek Dobson, CEO of the CAAT Pension Plan. "Our idea is a ready-made, long-term solution that limits contribution rate volatility and risks for universities and for colleges."

The 2012 CAAT Pension Plan Annual Report will be available on the Plan website later this spring.

SOURCE: CAAT Pension Plan

Media Contact:
John Cappelletti
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416-673-9040
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