Background: Pensions and Nonprofits

Pensions background

A record of ONN’s engagement with pensions for the nonprofit sector

ONN has been working to secure the development of a sector-wide pension plan for Ontario nonprofits since 2015, as part of its work to build a decent work movement in the nonprofit sector. This page provides background information and key findings from ONN’s original pensions task force (PTF 1.0).

ONN’s original Pensions Task Force

In March 2017, ONN’s original pensions task force (PTF 1.0) released A Roadmap for a Pension Plan for Ontario’s Nonprofit Sector. PTF 1.0 was formed in October 2015 with a mandate to develop recommendations on the design of a sector-wide pension plan for Ontario’s nonprofits and charities. PTF 1.0 consisted of nonprofit sector leaders and pensions/policy experts with an interest in seeing the nonprofit sector gain access to a pension plan to improve the retirement income security of nonprofit sector workers and to create a powerful recruitment and retention tool for nonprofit employers. PTF 1.0 refined that mandate to provide a framework for a pension plan that is affordable for workers and nonprofits and that shares risks carefully, provides adequate benefits, and is easy to administer.

The PTF 1.0 report made it clear that a sector-wide approach could provide a much more efficient vehicle for retirement income security, offering workers greater benefits and a more secure retirement income than organizations could achieve on their own with comparable contribution rates (e.g., through a single-employer plan or a Group RRSP arrangement). Their recommended approach was intended to balance employer and worker needs and highlight the importance of the sector to play a role in governing a plan that would be developed with the nonprofit sector’s needs in mind.

A roadmap for a pension plan for Ontario’s nonprofit sector

ONN’s first pensions task force was mandated to develop recommendations on the design of a sector-wide pension plan for Ontario’s nonprofits and charities.

They refined that mandate to provide a framework for a pension plan that is affordable for workers and nonprofits and that shares risks carefully, provides adequate benefits, and is easy to administer.

By the end of the year-long work of the task force, it was clear that a sector-wide approach could provide a much more efficient vehicle for retirement income security, offering workers greater benefits and a more secure retirement income for comparable contribution rates—and offering employers a powerful recruitment and retention tool.

The Task Force determined that a multi-employer pension plan was a good vehicle to take advantage of our sector’s scale while keeping the administrative burden low.

Key findings from the first report received specific attention from ONN’s second pensions task force. These included:

That Ontario nonprofit workers should have access to a sector-wide pension plan
That a nonprofit sector pension plan, together with public plans, should aim to provide workers at the average industrial wage for Canada with a 70 percent income replacement rate during retirement
That participation in a sector-wide plan should be mandatory for all employees (including management and contract/part-time workers above a threshold) where the plan is to be available in a workplace
That to meet the aim of seeing the average worker reach the 70 percent adequacy threshold employers and employees should each contribute 3 to 5 percent of earnings per year
That plan design allow for ancillary benefits, that it use a simple career-average benefit formula and that the plan should permit incoming transfers of pension assets to provide a safer and more efficient retirement vehicle for members’ pension assets earned in previous jobs or previous plans
That the plan structure limit the future liability of nonprofit employers, including boards of directors
That the plan be available to non-unionized and unionized workplaces
That the plan allow for portability between contributing employers
That there should be employer, employee, and retiree representation in the administration of a nonprofit sector plan
That the nonprofit sector plan be structured to allow for mergers with existing plans
That there be a comprehensive education/outreach program to help employers and employees in the sector understand the advantages (and risks) of a sector-wide plan and work with partners to improve pensions literacy in the nonprofit sector

> Read about OPTrust Select, the ONN-recommended pension plan

Resources

We’re grateful for the financial support of the Atkinson Foundation and Status of Women Canada, which is helping us to explore and build decent work in Ontario’s nonprofit sector.