Two Toronto-based public pension funds have become disrupters in the retirement world by taking a page from the past: developing new defined benefit plans at a time when closing or freezing plans has become the norm.
The plans — the C$20.3 billion ($16.1 billion) Ontario Public Service Employees Union Pension Plan, managed by OPTrust, and the C$10.8 billion Colleges of Applied Arts and Technology Pension Plan — this spring introduced new defined benefit plans for employers that do not offer retirement plans, handling all investment and administrative duties.
The view of Toronto as a retirement disrupter doesn't come from within the city but from outside, said Hugh O'Reilly, president and CEO of OPTrust, relaying how a U.S. pension fund executive once described Toronto as the Silicon Valley of retirement plan development.
"Here's what's interesting about Toronto," said Mr. O'Reilly, a vocal proponent of DB plans. "We all believe the jointly sponsored pension plan, similar to U.S. public pension plans, is the highest form of delivering defined benefits and successfully developing expertise." He said the evidence is in the amount of internal asset management done by OPTrust, as well as the Toronto-based C$189.5 billion Ontario Teachers' Pension Plan, the C$95 billion Ontario Municipal Employees' Retirement System and the C$77.8 billion Healthcare of Ontario Pension Plan. OPTrust manages 70% of the OPSEU pension plan internally, while the other plans manage most if not all of their assets with internally based management teams.