The UPP is a jointly sponsored pension plan (JSPP) designed to enhance the long-term sustainability of university pension plans in Ontario. Over time the UPP will serve other Ontario universities who wish to join, with the support of their pension plan members.
The JSPP model means shared governance between the employer and employee sponsors, giving members a new level of involvement and control over the governance of their pension plan. There are two sponsors of the UPP: the Employer Sponsor and the Employee Sponsor, each of which has one vote. The Employer Sponsor and the Employee Sponsor have each created a six-person committee to determine how that sponsor’s vote will be cast.
The two Sponsors are jointly responsible for making all decisions about the terms and conditions of the UPP, any amendments (including benefits and contributions), and its funding policy. The two Sponsors are also responsible for the appointment of the Board of Trustees, which is the legal administrator of the UPP.
The UPP Board of Trustees, established as plan administrator through a trust agreement between the Joint Sponsors, was officially constituted on January 1, 2020. It is made up of 14 individuals with varied experience and deep expertise in areas important to the administration of the UPP. The Board includes six trustees selected by the Employer Sponsor, six by the Employee Sponsor, one by non-unionized members, and a Chair selected jointly by the Employee Sponsor and Employer Sponsor.
The Trustees are collectively responsible for making decisions about the administration of the UPP, including the preparation of actuarial valuations, ensuring compliance with all applicable laws, investment of the UPP assets, and payment of pension benefits to members. Joint sponsorship and governance will ensure a high degree of accountability and transparency while putting the interests of plan members at the centre of every decision the Board of Trustees makes.
Under the Ontario Pension Benefits Act, a jointly sponsored pension plan must be a contributory (ie., members of the plan contribute) defined benefit plan with a formula based on the members’ earnings.
The design of the UPP is intended to ensure full funding of the benefits earned under the UPP. The cost of benefits earned in the UPP will be shared 50/50 between the employers and employees. After a transition period, employers and employees will share in new losses and gains for benefits transferred to the UPP. As a defined benefit pension plan, any pension benefits transferred to or accrued in the UPP cannot be reduced while the plan continues to exist. It is expected that the funding rules applicable to Ontario’s other multi-employer JSPPs will also apply to the UPP.
All pension plans in Ontario 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 different scenarios.
At the time of conversion of the current university plans to the UPP (anticipated to be July 1, 2021), each of the pension plans sponsored by Queen’s University, University of Guelph, and University of Toronto will undergo a valuation on a standardized basis. Any funding shortfall based on going concern funding rules that exist at that time will be the responsibility of that university and will be funded through fixed payments over 15 years.