The Healthcare of Ontario Pension Plan (HOOPP) is encouraged by today’s announcement, in the Ontario budget, of a new pension solution for Ontarians.
HOOPP President & CEO Jim Keohane says that the proposed Ontario Retirement Pension Plan “is a step in the right direction” for what he calls the real issue of pension reform – Ontarians who lack a workplace pension. He applauds the decision to make the plan a defined benefit (DB) program, modelled on the Canada Pension Plan.
“At a time when we have an aging population, one that will grow more dependent on government services like healthcare, it is alarming that more than 60 per cent of the population has no workplace pension coverage,” says Keohane, who is a member of Ontario’s Technical Advisory Group on Retirement Security.
Keohane says “the vast majority of people are better served by a structure such as a defined benefit (DB) pension plan.”
He says he is pleased that the new Ontario plan will use the DB model, which is “the best and most efficient way to deliver retirement security.” The made-in-Ontario plan will feature mandatory contributions, investment pooling, and expert professional management, and will be run as a not-for-profit entity independent of the government.
HOOPP, with more than $51.6 billion in assets, is one of Canada’s largest DB pension plans and is currently fully funded with a growing surplus.
Keohane says increased retirement security is beneficial to the economy. “When you know how much pension income you are going to have – when the amount is defined – you can spend with more confidence,” he says. “You know you are getting a cheque each month, a set amount.”
He cites a recent study of defined benefit (DB) pensioners by the Boston Consulting Group that showed Ontario DB pensioners spend about $27 billion a year on goods and services, paying $3 billion in income taxes. A further $3 billion of their spending goes to sales and property taxes.
“Retirement security means less dependence on taxpayer-funded income support programs,” adds Keohane. HOOPP has been speaking about the value DB plans play in delivering that security. To learn more, follow HOOPP on Twitter – the handle is @HOOPPDB.
About the Healthcare of Ontario Pension Plan
Created in 1960, HOOPP is the pension plan of choice for Ontario’s hospital and community-based healthcare sector with over 470 participating employers. HOOPP’s 286,000 members and pensioners include nurses, medical technicians, food services staff and laundry workers, and many other people who work hard to provide valued Ontario healthcare services.
As a defined benefit plan, HOOPP provides eligible members with a retirement income based on a formula that takes into account a member's earnings history and length of service in the Plan. Once eligible members start receiving a pension, they receive it for life. About 80 cents of every pension dollar paid out comes from investment returns.
HOOPP is governed by a Board of Trustees with representation from the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses' Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees' Union (OPSEU), and the Service Employees International Union (SEIU). The unique governance model provides representation from both management and workers in support of the long-term interests of the Plan.