United Church (DB) and
Targeted Benefit (TBP)
There is a legal definition of a TBP and a conceptual definition. The UC is correct that legally they are not a TBP, but the distinctive feature of a TBP is that a benefit is no longer defined -
But the UC plan document allows a decrease in some benefits at will. The defined benefit for some periods of service have been changed into a target, a target that can be lowered (benefits decreased) and with the last amendment (2011) the reason does not have to be that the plan did not perform well.
The UC has adopted the concept of a target benefit by giving itself the power to decrease part of the defined benefit under any circumstance. That part of the defined benefit formula is now a target, it may be expressed as a defined benefit but it is subject to change. However, it does not fit the current legal definition of a target benefit under the PBA because there is no collective agreement.
This is a fundamental shift in how the plan is funded. The United Church is no longer responsible for funding 100% of deficits. It can now lower the "target benefit" so that the funded ratio improves. The United Church is still responsible for 100% of the deficit for those periods of service where the benefit has not been made a target.
So the UC Plan may not be a TBP but it does have part of their benefit that behaves like a target benefit. If there was a legal definition of a Hybrid TBP, then UC Plan would fit that definition.
Dan Clark, Retired Pension Consultant