It’s a lesson he learned firsthand. At 14, he wasn’t thinking about the long-term effects of trying out a friend’s dirt bike, but motorcycling still fascinated him. “I try not to look at the actuarial charts when it comes to riding, but it taught me something about risk awareness.”
This lesson was repeated in the late 1980s when Malaket was an analyst with an outside pension manager. “From that early age I learned that people are behind the numbers we talk about.”
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In the early 1990s he joined the Pensions Committee of the now defunct Financial Services Commission of Ontario, an experience that sparked his interest in shaping the rules of the sector. “It has been 25 years and I am now a member of a technical advisory committee for the [Financial Services Regulatory Authority of Ontario].”
After a few years as a consultant, he was hired as Corporate Pension Manager at George Weston Ltd., the parent company of Loblaw Inc. and one of the largest private sector employers in Canada with more than 15 pension programs.
In 2015, Malaket joined InBenefits, a nonprofit organization that provides administration and investment management services for two major target benefit plans. For these annuities, plan sponsor contributions are based on negotiated rates. Unlike traditional defined benefit plans, directors can vote to reduce benefits, although this is not the case with InBenefits plans.
“It’s a win-win-win situation. Otherwise, from an employer perspective, the cost of providing these benefits could be prohibitive, and the Target Benefit Plan reduces the employer’s financial and fiduciary risk. From a member perspective, they benefit from the power of pooling, which reduces their longevity and market risks, and receive more stable performance than a typical defined contribution or group [registered retirement savings plan]. From the unions’ point of view, they can secure new advantages for the members.”
Read: The report finds a disconnect between the regulation and administration of target benefit plans
The union officials’ concerns are particularly relevant to InBenefits because its largest plan sponsor client, the $2.6 billion nursing home and related industries pension plan, is funded jointly by the Canadian Union of Public Employees, the Ontario Nurses’ Association and the Service Employees International is sponsored Union and Unifor. Its second largest client, the Multi-Sector Pension Plan, is sponsored by CUPE.
“Founding NHRIPP has meant so much to our nurses,” he says. “Previously, some only retired because of accumulated sick leave. Now many are getting $1,000 a month.”During his tenure, InBenefits worked with a third party to develop a bespoke pension administration solution. It also began diversifying its investment approach. “We are active in real estate, private debt and infrastructure. Climate is an area on which both bodies focus. . . . It’s a criterion we use to evaluate investment managers, but it’s not used as the primary filter.”
Going forward, Malaket is committed to InBenefits demonstrating the benefits of TB pensions. “I understand why so many employers have backed out of the DB plans. I have seen contribution rates triple in a single year. But the DC plans place the responsibility on members to take care of all their investment decisions.”
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One challenge he is working to address is the regulatory environment for TB plans. “A rule prevents [the pensions of non-profit organizations] from a share of more than 10 percent in a TB pension. Speaking to regulators, it seems that this was only intended to prevent big public sector plans from joining them. . . . We are trying to have the definition checked.”
With both the NHRIPP and MSPP based in Ontario, Malaket is also concerned about how the province will review its adverse deviation rule provisions. “If that’s set too high, it’s detrimental and compelling [TB] plans to cut pension accrual formulas. . . . Many industry groups have come together to challenge this and the province seems to be listening. It’s one of our concerns that’s on the horizon.”
Gideon Scanlon is the editor of the Canadian Investment Report.