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List of companies/organizations that offers defined benefit pension

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  • Oct 10th, 2019 5:34 pm
[OP]
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Jun 7, 2005
8937 posts
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List of companies/organizations that offers defined benefit pension

I guess in general, we would agree DB pension plan is better than DC plan. I would like to start this thread to gather the list of companies/organizations that offers defined benefit pension:

- All hospitals
- Three levels of government jobs
- Ontario Power Generation
- Ontario Teachers' Pension Fund
- Some of the big 5 banks (I heard some but not all offer and their DB plan is not as good as public sector. Please correct me if I am wrong)

Please add on the list.

Thanks
25 replies
Deal Addict
Nov 21, 2014
1553 posts
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Atlantic
Not 100% sure but I would expect many crown corporations to have DBs similar to government. For example, liquor boards (LCBO), workers compensation, securities commission, lottery and gaming (OLG) etc.
Member
Oct 31, 2014
227 posts
92 upvotes
Edmonton, AB
Canada Post employees before 2013 have DB
new hires are on DC

A teacher friend in Winnipeg is DB as well
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Oct 14, 2001
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GMA
No I don't agree that DB is better than DC.
[OP]
Deal Fanatic
Jun 7, 2005
8937 posts
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Thanh wrote: No I don't agree that DB is better than DC.
Really ? Why ?

You know most companies (especially those in private industries) are not able to afford DB plan as it guarantees the retirement pension (i.e. ROI from the fund pool has to be guaranteed. It means those organizations with DB need to top up the pension fund deficit if the return is not as expected).

I guess unless your DC plan % is way above the DB plan contribution to mitigate the risk. Still, there is no one from the employer's point of view wants to guarantee the pension fund investment return. The risk and liability is so high ..........

Lot of companies like Bell, Canada Post that used to provide DB plan now all change to DC plan for new comers. Traditionally, mostly companies in public sector are able to "afford" the DB plan.
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May 11, 2014
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Iqaluit, NU
rdx wrote: Really ? Why ?

You know most companies (especially those in private industries) are not able to afford DB plan as it guarantees the retirement pension (i.e. ROI from the fund pool has to be guaranteed. It means those organizations with DB need to top up the pension fund deficit if the return is not as expected).

I guess unless your DC plan % is way above the DB plan contribution to mitigate the risk. Still, there is no one from the employer's point of view wants to guarantee the pension fund investment return. The risk and liability is so high ..........

Lot of companies like Bell, Canada Post that used to provide DB plan now all change to DC plan for new comers. Traditionally, mostly companies in public sector are able to "afford" the DB plan.
It can be argued that it really depends on the benefits. For example, a DC plan with superior matching plus added cash from the employer could yield significantly higher returns than a DB plan. A DB plan doesn't necessarily mean higher amount of benefits, but it reduces the risk for return compared to a DC where a DC plan could theoretically return more cash value, but the risk is entirely on the investments the employee chooses. Because most employees don't want to take on that kind of risk and management, a DB plan for most people is more attractive. DB plans can be tough for companies as if they were not set with sound targets and funding, they become a liability for companies. That being said, some can be run with huge successes such as HOOPP or Ontario Teachers. But keep in mind, part of their success came from keeping benefits on the lower side to reduce initial costs and allow the plan to accumulate assets.


The real answer is it depends on the plan. My old DC plan from Save on Foods was terrible :P No matching, just straight 1% of your salary first year, goes up a percent each year or 2 until you hit 5-6% (can't remember). And your funds to select were expensive +2% Sun Life managed funds. I guess not bad for a part time job during university. I know there are much better DC plans though.

My current DB Federal Public Service Pension Plan is quite amazing and allows me to take greater risk on my individual investments. 2% (including CPP) per year employed of the average of 5 highest earning salary years max 70% with 80% health care coverage at retirement. I have a pretty good DB plan compared to others.
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Newbie
Jan 12, 2012
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TORONTO
I may be mistaken but as of 2019 I don't believe any of the big 5 banks (RBC, CIBC, TD, BMO, BNS) offer DBs to new hires.
[OP]
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Jun 7, 2005
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I am not surprised. Most non public companies who used to offer DB has stopped or already stopped offering DB plan to new hires e.g. Bell Canada stopped that a couple decades ago. Like I said, it is huge liability running the DB plan. Who can/want to guarantee investment return ?
lilmissy wrote: I may be mistaken but as of 2019 I don't believe any of the big 5 banks (RBC, CIBC, TD, BMO, BNS) offer DBs to new hires.
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Apr 23, 2009
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xgbsSS wrote: It can be argued that it really depends on the benefits. For example, a DC plan with superior matching plus added cash from the employer could yield significantly higher returns than a DB plan. A DB plan doesn't necessarily mean higher amount of benefits, but it reduces the risk for return compared to a DC where a DC plan could theoretically return more cash value, but the risk is entirely on the investments the employee chooses. Because most employees don't want to take on that kind of risk and management, a DB plan for most people is more attractive. DB plans can be tough for companies as if they were not set with sound targets and funding, they become a liability for companies. That being said, some can be run with huge successes such as HOOPP or Ontario Teachers. But keep in mind, part of their success came from keeping benefits on the lower side to reduce initial costs and allow the plan to accumulate assets.


The real answer is it depends on the plan. My old DC plan from Save on Foods was terrible :P No matching, just straight 1% of your salary first year, goes up a percent each year or 2 until you hit 5-6% (can't remember). And your funds to select were expensive +2% Sun Life managed funds. I guess not bad for a part time job during university. I know there are much better DC plans though.

My current DB Federal Public Service Pension Plan is quite amazing and allows me to take greater risk on my individual investments. 2% (including CPP) per year employed of the average of 5 highest earning salary years max 70% with 80% health care coverage at retirement. I have a pretty good DB plan compared to others.
The biggest problem with DC is the crappy fund choices they offer. Loaded with high fees and mostly segregated funds.
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May 11, 2014
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ruchir wrote: The biggest problem with DC is the crappy fund choices they offer. Loaded with high fees and mostly segregated funds.
That's not necessarily true. It depends on the plan. I have seen some very competitive ones where the fees are similar to most index funds and are also segregated which provides principle protection which is something you can't get on your own without paying exorbitant fees. Or some really good active funds including Mawer New Canada etc.

The companies can sponsor plans which pay for a lot of the fees.
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xgbsSS wrote: That's not necessarily true. It depends on the plan. I have seen some very competitive ones where the fees are similar to most index funds and are also segregated which provides principle protection which is something you can't get on your own without paying exorbitant fees. Or some really good active funds including Mawer New Canada etc.

The companies can sponsor plans which pay for a lot of the fees.
My current work matching is a 0.315 mer for a US S&P 500 index fund. Its the only index fund offered but a lot better than the last provider which had 2.5%+ mer on all their funds.
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Chance7652 wrote: My current work matching is a 0.315 mer for a US S&P 500 index fund. Its the only index fund offered but a lot better than the last provider which had 2.5%+ mer on all their funds.
Exactly, and depending on the plan, that index fund might also be a segregated fund which acts as an insurance if you end up with a loss. Long term, meaningless, but if you are close to retirement, that means you can increase your investment risk.

Also, even though index investing is the way to go for lowest MER, sometimes these active funds under these plans are also really good because they are cheap. Most active funds underperform precisely because of the fee, so looking at all your options can find you some great investment choices.
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Dec 21, 2005
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xgbsSS wrote: Universities like University of Toronto do. I know Enbridge offers one. Desjardins, CIBC does too.
Western University = DC
:idea: :) :lol: :razz: :D
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Sep 1, 2013
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rdx wrote: Really ? Why ?

You know most companies (especially those in private industries) are not able to afford DB plan as it guarantees the retirement pension (i.e. ROI from the fund pool has to be guaranteed. It means those organizations with DB need to top up the pension fund deficit if the return is not as expected).

I guess unless your DC plan % is way above the DB plan contribution to mitigate the risk. Still, there is no one from the employer's point of view wants to guarantee the pension fund investment return. The risk and liability is so high ..........

Lot of companies like Bell, Canada Post that used to provide DB plan now all change to DC plan for new comers. Traditionally, mostly companies in public sector are able to "afford" the DB plan.
Exactly. Public sector DB plans are just another way that taxpayers are hosed by public sector unions.

https://www.fraserinstitute.org/studies ... erspective
Taking investment risk is a legitimate tactic provided that those who bear the risk also reap the reward. This is not what happens in Canada’s public sector DB plans. Consider the plans covering employees of the federal government. Plan members, whose interests are ably represented by powerful public sector unions, are handsomely rewarded for investment risk taken by their pension plans and borne by the public. The public, whose interests are poorly represented by the federal government, receives no reward for bearing this risk.

Public sector DB plans cite their independence from government as a key to their success. We argue that this independence is a flaw, not a virtue, of public sector pension governance. The plans take investment risk to advance the interests of plan members while the interests of taxpayers, who ultimately bear this risk, are ignored. These practices are best described as moral hazard, not good governance.
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Jun 27, 2006
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rdx wrote: Really ? Why ?

You know most companies (especially those in private industries) are not able to afford DB plan as it guarantees the retirement pension (i.e. ROI from the fund pool has to be guaranteed. It means those organizations with DB need to top up the pension fund deficit if the return is not as expected).

I guess unless your DC plan % is way above the DB plan contribution to mitigate the risk. Still, there is no one from the employer's point of view wants to guarantee the pension fund investment return. The risk and liability is so high ..........

Lot of companies like Bell, Canada Post that used to provide DB plan now all change to DC plan for new comers. Traditionally, mostly companies in public sector are able to "afford" the DB plan.
And some of those companies are known to let staff go just before the employee qualifies for the full pension.
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Jun 2, 2017
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CIBC is the only bank remaining with a DB plan for new plan members.
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Dec 25, 2015
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Canada
Considering real rates are negative, most interest rates are negative, I'd take a DB plan guaranteeing me 6-8% per annum ANYDAY.

If you take the close of Dec 1998 and do a CAGR return to today on the S&P 500, including dividends, you get a CAGR of ~4%.

I mean take the last 2 years of the S&P 500, we are slightly up...

There is VERY good chance we are in a decade of VERY low returns IMO.

The DB plans I've seen are VERY generous, often covering 2/3 of your 5 years best salary. That's a lot of cash.

From what I recall many DB plans are underwater, given bond yields went from 6% to sub 2.

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