Defined benefit resilience

The strength and stability of defined benefit (DB) pension plans provide enduring security and confidence - even in times of short-term volatility.   

Amid geopolitical tensions, economic headwinds, and evolving regulatory demands, the Municipal Pension Plan (MPP) of British Columbia—Canada’s seventh-largest pension plan, with an investment portfolio of $86.9 billion—stands out as one of the most resilient and well-governed DB plans in the country. 

MPP serves more than 470,000 active, inactive, and retired members, representing local government, social services, health care, policing, firefighting, and non-teaching education staff. 

Strong governance, shared responsibility  

The plan operates under a joint trusteeship model, governed by a Joint Trust Agreement between the Government of British Columbia and the Union of BC Municipalities, and the Municipal Employees’ Pension Committee. Together, the plan partners appoint a 32-member Municipal Pension Board of Trustees, including both primary and alternate trustees, responsible for managing the plan and its fund.  

This shared governance model ensures the plan partners share responsibility for governance as well as the risks and rewards of plan sponsorship.    

Plan changes are implemented in accordance with fiduciary duty, actuarial funding policy, and contribution constraints for members and employers. This disciplined approach helps maintain member trust and reinforces long-term plan security.  

Defined benefit stability in a shifting environment  

Defined benefit plans like MPP provide members with certainty in an increasingly volatile economic environment.  

For more than 85 years, MPP has provided pension income determined by a defined formula—based on salary and years of service—rather than market performance. This predictability helps members plan their retirement with confidence. The plan also manages risk collectively through professional fund management and by pooling investment and longevity risk.  

Plan design that supports the future  

In 2021, the Board introduced key plan design changes, including removing the link between contributions and benefits, and the Canada Pension Plan (CPP). Previously, members contributed and accrued benefits at different rates above and below the Year’s Maximum Pensionable Earnings (YMPE). Now, contributions and accrual rates are uniform across income levels, improving equity and transparency.  

Complementing the 2021 plan design changes, the board also made a proactive, forward-looking decision to establish the Rate Stabilization Account (RSA), using part of the 2015 valuation surplus to help limit future contribution rate increases.

Prepare for tomorrow, today

The Municipal Pension Board of Trustees takes a long-term view, guided by a clear strategic principle: What should we do today to ensure pension security tomorrow?  

This forward-looking approach is reflected in:  

• Plan design changes that reinforce long-term stability  

• Actuarial valuations are conducted at least every three years to ensure sustainable funding  

• An inflation adjustment account that helps retirees maintain purchasing power through cost-of-living increases.    

This combination of strong governance, sustainable funding, and long-term strategy has allowed the plan to successfully navigate global downturns, from the 2008 financial crisis and through the COVID-19 pandemic, without ever compromising member benefits.  

Scale, stability, and strategic investment  

MPP’s $86.9 billion in assets—managed by British Columbia Investment Management Corporation (BCI), the plan’s investment agent—provides the scale to access high-quality investment opportunities and achieve cost-efficient management through lower-than-average management fees.  

Approximately 75 per cent of pension funding is generated through investment returns. MPP’s diversified, long-term investment strategy is designed to mitigate volatility and position the plan to capture long-term growth opportunities.   

BCI pools pension contributions and invests in public and private companies, real estate, and infrastructure assets across Canada and internationally. These investments generate stable, long-term returns that support consistent retirement income for members across British Columbia.   

Strengthening awareness and inspiring action  

In addition to investment strategy, MPP prioritizes communication that builds member confidence, increases pension literacy, and inspires action. As part of its strategic goals, the board is committed to:  

• Telling the story of responsible investment   

• Producing communications that improve understanding and participation  

• Persuasively articulating the value of the plan  

These efforts ensure members are not only informed but empowered. One in 10 BC residents of working age is a member of MPP. Members can look forward to a lifetime-guaranteed retirement income.  

With its responsible investment strategy, robust governance, and focus on member value, MPP demonstrates the enduring strength of a well-managed defined benefit plan. 

Gary Yee is chair at the Municipal Pension Board of Trustees and leads pension initiatives across British Columbia. He has served as a trustee with the MPP Board of Trustees since 2014.