The Challenge
In Pursuit of Pension Security and Lower Risk
St. John Ambulance sponsored its own pension plan consisting of a closed defined benefit (DB) plan and an ongoing defined contribution (DC) plan. After the DB plan closed in 2014, employees were only able to accrue benefits under their DC plan moving forward. With the DC plan, employees had to make their own investment decisions, and their retirement income ultimately depended on how those investments performed.
This was not an ideal arrangement for St. John Ambulance. The non-profit wanted to enhance pension security for its employees, while still ensuring cost certainty for the organization. Additionally, St. John Ambulance was concerned about attracting and retaining top talent and was eager to find a solution that provided similar pension benefits as public sector healthcare workers.
The Solution
DBplus Breathes Life into Pension Plan
CAAT's DBplus pension plan design met all of St. John Ambulance’s criteria. Not only could it merge a closed DB plan into CAAT, but employees would receive predictable lifetime pension income, early retirement options, conditional inflation protection, and survivor benefits from DBplus. Members would also have the opportunity to purchase pension service under DBplus, if applicable. With this, they could use their DC funds to increase their DBplus pension, adding to their total lifetime pension amount.
The transition to DBplus would also benefit the organization’s business objectives. CAAT, being a large jointly sponsored pension plan (JSPP), would deliver DB pensions far more cost-effectively than a single-employer pension plan. Moreover, CAAT would take on most pension administration responsibilities, such as investment, risk management, and governance tasks.