In a small town on a windswept prairie in western Saskatchewan sits the home of Canada's only public defined contribution plan accepting participants from across the country.
The town is Kindersley, a community of 4,500 that is headquarters to the C$475 million ($351 million) Saskatchewan Pension Plan, a 30-year-old DC plan begun in 1978 by the Saskatchewan government as a supplemental plan for spouses who weren't in the labor force. It since has opened itself to those anywhere in Canada who want to participate, starting in 1996.
Why such a plan has grown in Saskatchewan is no surprise. The province is an outpost of defined contribution in a country where defined benefit plans predominate.
“There's a pioneer spirit” in Saskatchewan, said Denise Kehler, portfolio strategist and senior investment consultant, Willis Towers Watson PLC, Montreal. From January 2007 to April 2014, Ms. Kehler was director, investment services, at the Saskatchewan Public Employee Benefit Agency, which oversees the C$8.9 billion Saskatchewan Public Employees Pension Plan, Regina — the country's largest DC plan, private or public.
“The province was originally built on agriculture, which developed that do-it-yourself attitude,” Ms. Kehler said. “But there's a pragmatism there as well — the pragmatism to be collective if it works and to be individual if that works. Saskatchewan was the early home to defined contribution plans, but it also was where public health care in Canada was started. For a small place in terms of population, a lot of innovation comes out of there.”
Along with being the largest DC plan, the Saskatchewan Public Employees Pension Plan is also among Canada's oldest DC plans, begun in 1977. The country's oldest DC plan is also in the province — the C$3 billion Co-Operative Superannuation Society Pension Plan, Saskatoon, which began in 1939.
While defined contribution plans are popular in Saskatchewan, they are dwarfed by public defined benefit plans across Canada in terms of both participants and assets. According to Statistics Canada, Ottawa, 4.5% of Canadian public retirement plan members are in defined contribution plans vs. 93.7% in DB plans and 1.8% in other plans, including hybrid DB/DC and shared-risk plans. Canada's overall DC plan assets, at C$181 billion, are only a fraction of the C$1.8 trillion in overall Canadian retirement assets.
But Katherine Strutt of Saskatchewan Pension Plan and John Hallett of the public employees plan say DC is right for their participants.
Saskatchewan Pension Plan “is a model of what a pooled plan could be,” said Ms. Strutt, general manager. Added Mr. Hallett, assistant director, pension programs, at PEPP, “I think the government was looking at something more stable” than a defined benefit plan when PEPP was created 39 years ago. “Employees were interested in it as well. I think people thought they'd get a better deal with a defined contribution plan. Almost 40 years later, it works.”
Both plans have seen recent asset growth. SPP assets rose 6.8% for the first 10 months of 2016, while PEPP's assets have risen 6% from March 31 through Nov. 28.