Tuesday, September 3, 2024

Happy Retirement!

For over 50 years, the CLAC Pension Plan has helped secure members’ retirement needs. It’s well-equipped to reliably serve members for years to come

Guide Magazine

By Cathy Miehm

IT SHOULD COME AS NO surprise that Peter Van Duyvenvoorde has been enjoying his retirement. After all, retirement had been the focus of most of his 30-year career at CLAC, so he’s something of an expert.

Peter was the representative who convinced CLAC to continue with the pension plan that it had adopted when the Christian Trade Unions of Canada (CTUC) merged with CLAC in 1979. CTUC was a sister union that had splintered off from CLAC 21 years earlier.

Now, after 50 years and more than $1.5 billion in assets, there’s no doubt that keeping the plan was the right move.

“It was supposed to be my job to get rid of the pension plan,” recalled Peter in June at an event held in Beamsville, Ontario, to celebrate the plan’s half-century milestone.

Due to widespread corruption and scandal among union-administered pension plans common at the time, CLAC’s leaders were wary of running one themselves. Peter was instructed to carefully dismantle the plan, if possible. But when he examined the pros and cons of running a pension plan, he was convinced it was something that CLAC could do—and do it well.

“I had long discussions with the higher-ups and was able to convince them that keeping the plan was a good thing.”

He was so convincing that he was appointed manager of the plan—a position he held until he retired in 2006 on his 65th birthday.

“Retirement has been wonderful,” says Peter, who is still youthful in his 80s. “My only regret is that I didn’t do it sooner!”

A SIMILARLY HAPPY RETIREMENT IS within reach for all members of the CLAC Pension Plan, which began as a modest plan for Local 6 construction members in Ontario. Under the guidance of Jack Wagensveld, a representative for the CTUC who established the plan in 1974, and Peter, the plan quickly strengthened and grew.

“I remember in those early days, the Ontario Nursing Home Association had an agreement that no nursing home would voluntarily agree to having a pension plan in their collective agreements with any union,” says Peter. “Well, somehow, I was able to negotiate a five-cent per hour employer-paid contribution to the CLAC Pension Plan with a Hamilton-based nursing home. About 50 nursing home employees were enrolled in the plan. The dam was broken, and many more nursing home agreements followed suit.”

Peter took over as sole manager of the plan in 1990 following Jack’s retirement. Under his direction, the plan grew 1,000 percent over the next 16 years until his retirement. But he is even more impressed with the growth of the plan in the last 18 years under the stewardship of Jim Doornbos, CLAC benefits and retirement director, and the efforts of his team.

“When I left in 2006, the plan had $150 million in assets,” says Peter. “And now, it’s over $1 billion. It’s mind-boggling.

“Several factors have contributed to this success. The CLAC Pension Plan Board of Trustees has always been very careful with how the money is invested, and CLAC has a great staff that looks after things very well. It is a great union that really supports the plan and brings in new members all the time.”

At the June celebration, Jim, who started his career with CLAC in 1996 as an administrative assistant working under Peter’s tutelage, detailed the chronology of the plan’s success over the years.

“The plan began on September 1, 1974, with one employer and three plan members,” Jim told the crowd in Beamsville. “At the end of that year, its assets were just short of $13,000. By the end of 1982, plan assets had increased to just over $1 million.

“The $5-million mark was crossed by the end of 1989. Only two years later, the plan’s assets had doubled to just over $10 million.

“By 1999, the plan’s assets topped $50 million. Six years later that had doubled, hitting $100 million.

“In 2014, the $500 million threshold was reached. It took only six years after that to reach $1 billion.”

That’s not to say there weren’t a few bumps along the road. Worldwide market factors in the early 2000s took their toll. After the dot-com bubble burst in 2000, the CLAC Pension Plan experienced its first negative return. It happened again following the financial crash of 2008 and in 2022 with the market downturn created by the COVID-19 pandemic.

“There have been many stressful and challenging times throughout the plan’s 50-year journey,” says Jim. “However, learning and the desire to continue to evolve have led us to where we are now.”

THE PLAN’S GROWTH OVER THE last 16 years has been exponential. It currently ranks as the 12th largest defined contribution plan in Canada, with over 120,000 individual members.

The plan is managed by a dedicated board of trustees, which includes employer, employee, and union representation. The board is responsible for governance and investment decisions and is advised by various external professionals.

According to Jim, “The plan’s core investment philosophy remains the same as many years ago: providing the best possible investment returns for plan members, while minimizing risk and cost. Total contributions to the plan in 2023 alone topped $140 million. Another milestone: this year we expect to have the first plan member with over $1 million in their own account!”

Wayne Prins, CLAC executive director, says the robust pension plan has been an important factor in attracting and retaining members.

“The fact that we’ve averaged eight percent returns per year over the life of the plan is just incredible,” he told the audience at the 50th anniversary celebration. “We have confidence that it will continue to serve members reliably for years to come.”

Wayne noted that the pension is becoming more popular each year with members in western Canada, where RSPs were traditionally the norm. Now, Wayne says, the pension plan is the preferred option.

“When we survey members, as we do every couple of years, time and time again it comes back that the pension plan is one of the key drivers of loyalty and satisfaction.”

With exponential growth, a history of solid returns, and a professional Retirement Team administering it, the CLAC Pension Plan is well-equipped to help tens of thousands of members today and into the future secure a happy retirement in their golden years. Here’s to the next 50 years!

It Pays to Save for Retirement Early

Saving for retirement may not be a top priority when inflation and spiralling cost-of-living expenses make paying the monthly bills a challenge. But it’s important to look beyond the immediate horizon if you want a secure future in your retirement years.

“If your workplace offers a retirement savings plan—be it a pension plan or a group RRSP with matching contributions—and you’re not participating, you’re essentially saying no to free money,” says Connie Liu, CLAC retirement plans specialist.

Connie regularly attends conferences and annual general meetings for CLAC’s locals to explain to members the merits of the CLAC Pension Plan and how to maximize its benefits. She also coaches representatives on how to negotiate with employers to devise the best plans. It’s not always an easy sell, especially to younger members.

“A pension plan is meant for retirement, and one of the things that I see—especially with younger members—is they think it’s too restrictive,” says Connie. “They often prefer registered retirement savings plans [RRSPs] over locked-in pensions because they have access to that money and can pull it out to help buy a house or other big-ticket items.

“I’ve had members tell me they are using RRSP money to buy a car, go on a vacation, or pay golf or hockey registration fees. There is a lot less discipline, whereas the pension forces you to keep that money in.”

As members move into their 40s and 50s, their focus shifts to the long game, and they begin to appreciate the retirement wealth they are accumulating.

“The older members I’ve talked to are grateful for their pensions,” says Connie. “They see they actually have something to support them when they retire.”

The number of Canadians with workplace retirement savings plans has dwindled to 38 percent from a high of 46 percent less than 50 years ago. That decrease is due almost entirely to a decrease in private-sector plans.

Even among those with retirement savings plans, less than half believe they will have enough money to retire comfortably if inflation continues to rise. That figure drops to 27 percent among people with no retirement savings plans. The harsh reality is that people will either have to save more, retire later, or reduce their expectations of what they’ll be able to afford in retirement.

“We’re starting to see people who want to retire at 65 but realize they will have to work into their 70s,” says Connie. “It’s unfortunate.”

The CLAC Pension Plan and CLAC Group RRSP give members the means to avoid these pitfalls through the power of regular contributions and compounding interest. And because the pension is a defined contribution plan, as opposed to a defined benefit plan, your money is safe because it’s always your money—it isn’t used to pay other people’s pensions. Put simply, it’s a safe bet and the best thing you can do for your future.

“You’re only going to get so much from the government,” says Connie. “I advise members to try to maximize their workplace retirements savings plans—sign up for matching contributions, sign up for voluntary contributions. You should always try to pay yourself first.”

Speaking about the CLAC Pension Plan . . .

“We talk a lot about the dignity of the worker. For us to be able to provide the promise of a secure and reliable income through retirement is a really critical feature of honouring the dignity of those workers.

“The plan is in very capable and reliable hands. The CLAC Retirement Team, led by Jim Doornbos, has helped turn it into one of the most notable pension plans in the country.”

—Wayne Prins, Executive Director

“The best thing to know about the CLAC Pension Plan is that the money that’s in there is never lost. For those who are young, start contributing now. You won’t even miss it!”

—Peter Van Duyvenvoorde, former Plan Manager

“In 1974, CLAC had 13 employees—for the entire organization! This is substantially less than the number of staff who work exclusively on the CLAC Pension Plan now. We always keep in mind that we are stewards of members’ hard-earned retirement funds.”

—Jim Doornbos, Benefits and Retirement Director

An RIA Can Simplify Your Retirement

In 2023, the CLAC Pension Plan rolled out its new retirement income account (RIA), which gives plan members the option of receiving regular pension payments for life, directly from the plan.

5 Advantages of an RIA

Professionally managed investment funds
Investment-management fees that are considerably lower than fees charged by most Canadian mutual funds
Ability to consolidate and transfer-in any existing registered funds you may have when you open an RIA, including locked-in and nonlocked-in funds that you hold within the CLAC Group RRSP or at a different financial institution
Continued access to all the financial resources available from Wealthgoal
Ability to transfer out RIA funds to another financial institution at any time, even once payments have started

Members can choose the frequency of their payments and how much money they would like to receive, within minimums and maximums set out in the Income Tax Act. These limits ensure the money will last long enough to support you in your retirement years.

The Year That Was 1974

The CLAC Pension Plan was established on September 1, 1974. Here’s a look at some notable events from Canada and around the world 50 years ago.

January 6 – Global Television becomes Canada’s third English-language television network.

February 4 – Patty Hearst, 19-year-old daughter of publishing magnate William Randolph Hearst, is kidnapped by the Symbionese Liberation Army.

February 21 – Ice hockey legend and donut franchise founder Miles Gilbert “Tim” Horton is killed after losing control of his sports car.

March 3 – Turkish Airlines Flight 981 crashes in Ermenonville Forest near Paris, taking the lives of all 346 passengers and crew on board.

March 9 – The last Japanese soldier from World War II surrenders—29 years after the war ended.

April 8 – Henry “Hammerin’ Hank” Aaron hits his 715th home run, surpassing Babe Ruth as Major League Baseball’s all-time home run leader.

May 23 – Women can apply for regular police duties with the RCMP for the first time.

June 1 – The Heimlich maneuver for choking victims is published in a medical journal.

July 8 – Following a vote of nonconfidence on May 8, the minority Liberal government of Pierre Trudeau wins a majority in the subsequent election.

August 9 – Richard Nixon resigns as president of the United States following the Watergate scandal.

October 30 – Muhammad Ali knocks out George Foreman in the eighth round in Kinshasa, Zaire—The Rumble in the Jungle—to regain the world heavyweight boxing title.

December 19 – The Man with the Golden Gun, the ninth James Bond film, premieres in London.

Sources: onthisday.com, wikipedia.com