The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management

Back Issues

September 2007

A Conversation With… Heather Gavin

To mark its 15th year of publishing, Benefits and Pensions Monitor is featuring a series of conversations with people who have made a significant contribution to the industry.

Heather Gavin is uniquely qualified to head up the OPSEU Pension Trust. As a member of OPSEU’s senior staff, she was a lead negotiator in establishing the trust prior to its launch in 1995 and served on its board for 10 years. Today, OPTrust administers one of Canada’s largest plans with 77,000 plan members and pensioners and assets under management exceeding $13.1 billion.

The following is an edited version of the conversation between Gavin and Benefits and Pensions Monitor Executive Editor Joe Hornyak.

BPM: You’ve actually come full circle. You worked on the labour side, helped with the creation of this plan, and now you’re heading up the administrative side.

Heather Gavin: Actually, it’s funny when you think about it that way. I moved from advocacy at the sponsor level to the other side, to the board of trustees. I was a board member up until shortly before I decided to throw my hat into the ring for this job. I left the board so that I could do that without a conflict. Then, I was lucky enough to be chosen to be the administrator of the plan in January 2006.

When I started out with OPSEU, the Ontario Public Service Employees’ Union, I worked very closely with the membership, specifically, on pensions and benefits issues. In the ’90s, there was a lot that was happening with public sector plans and OPSEU was in the lead in the areas of governance, plan design, and the running of large plans. I spent a lot of my time dealing with those issues.

BPM: How much have things changed during your time in the industry?

HG: I think that pensions and Defined Benefit plans, in particular, have certainly come a long way since the ’80s. There were laws and regulations, but with the 1987 rewrite of the Pension and Benefit Act, I really think that spurred the development of specialization in the industry.

Plans have become larger and more complex to try and meet the needs of the individual members and, from the company perspective, to offer something to help attract and retain employees.

My experience has been with public sector plans which are, by and large, very different. They have always been designed as Defined Benefit plans and there has always been more of a public policy perspective with these plans.

BPM: Do employee attitudes towards pension plans differ in the public sector, compared to the private sector?

HG: I have yet to hear anybody say they came to work for the government because they have a good pension plan. What you will discover is that they later come to understand the value of having a good secure pension for their retirement in the future.

In large measure, I think that’s because, and this is not uncommon in public sector plans, there is a matching employee contribution which creates a real sense of ownership. They put a significant amount of their wages into their pension and they see that coming off their pay cheque. It’s not uncommon in these plans for that employee contribution to be anywhere from eight to 10 and, these days, 12 per cent.

BPM: How else do you feel that your background at OPSEU has helped you?

HG: I have an in-depth knowledge of both of the sponsors. Our board has two – the union and the government. I know what the needs of both sponsors are. I know their bargaining history, their approaches to pension governance, and how decisions that would affect the plan would likely be made. I think that certainly has helped.

BPM: In terms of the dividing line between sponsor decisions and your administrative decisions, do you find it’s always clear cut or are there mechanisms in place here that ensure that they’re clear cut?

HG: At OPTrust the roles and responsibilities of the sponsors, the trustees, and management are clearly defined based on the sponsorship agreement that the government and OPSEU worked out way back in the early stages. For instance, responsibility for questions such as the plan design, benefit levels, funding decisions, and the allocation of surplus falls specifically on the sponsors.

The trust, through our board of trustees, is responsible for the plan’s funding valuations, the investment decisions to meet the pension obligations, and administering the benefits, as well as advising the sponsors on questions of plan design.

It is very clearly articulated as to who does what and it works out very well.

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