What is the reason behind the assets/liabilities gap? The stock market has experienced remarkable growth since 2008 (around 15% per year), and the management fees have shrunk across the market. After such a rally, one would expect the assets to be much larger than the liabilities.
Management of the pension plan is the University’s responsibility, not WLUFA’s. Oversight of the pension is by the Board of Governors Pension Committee, which has just two WLUFA members. Questions about performance of the pension plan are better directed there.
That being said, pension plans have legally imposed diversification requirements that mean that they may not match stock market returns. It should also be noted that while the NASDAQ has grown by 14.6% per annum between January 2010 and January 2022, the TSX Composite only grew by 5.0% per annum. The range of assets that the pension plan could invest in limited returns well below what would have been available if the plan could have invested an US Index fund alone.
Can you explain the CPI indexing of pensions again? The slide mentioned a 100% pre 2013 rate and 50% post 2013 rate. Is this timing related to when you retire or is it pro-rated based on how many of your years of service fall in each category?
The portion of your Laurier pension earned on pre-2013 contributions will be indexed at 100% of CPI. That portion of your Laurier pension earned on post-2013 contributions will only be indexed at 50% of CPI, up to a maximum of 4% per annum.
Where can we access information on health (incl. dental) insurance plans retirees can buy?
Unless a retiree withdraws the commuted value of their pension, they will receive retiree benefits under Laurier’s plans. If a retiree withdraws their commuted value, they are not eligible for retiree benefits and they will have to source benefits elsewhere. Members should consult HR on this as WLUFA does not have the capacity to advise on post-retirement benefits.
Why are additional duties such as overload teaching not included in pensionable income? For lower salary individuals this can be a large portion of their income.
The Laurier Pension Plan has been designed to exclude additional income, such as administrative stipends and overload teaching. This design feature of our Single Employer Plan could only be changed through bargaining. Any change in the definition of pensionable income must take place before a plan converts.
Can you please re-clarify who is eligible for the supplementary plan?
Supplemental plans apply to individuals whose contributions exceed the limit in contributions and lifetime benefits payable from a registered pension plan as prescribed under the Income Tax Act (Canada). The maximum pensionable salary – the portion of your earnings on which pension contributions are made – is adjusted annually. For 2022 the salary cap is $190,470. Laurier’s Supplemental Pension Arrangement is a non-funded benefit to which only the employer contributes. It is not subject to the same regulations or protections as a pension plan. Under the Laurier SPA, the university contributes the same amount each month to the member’s Money Purchase Account that it would under the Pension Plan had the member’s income not exceeded ITA limits.
Please explain what is meant by a spouse.
Pension plans use different terminology to refer to individuals with whom plan members have a spouse-like relationship. The definitions are particular to each individual plan. No matter how the terms are defined, partners have special rights when it comes to pensions. They must be provided with a Joint and Survivor benefit unless they specifically waive that right.
Under the Laurier Pension Plan’s rules (amended 2017), a “Spouse” shall mean a person who, at the relevant date of determination under the Plan, is:
(a) is married to the Member and is not living separate and apart from the Member, or
(b) is living with the Member in a conjugal relationship
(i) continuously for a period of not less than one (1) year, or
(ii) in a relationship of some permanence, if they are the parents of a child, as set out in section 4 of the Children’s Law Reform Act.
A member can designate a beneficiary (or beneficiaries) who are not their “Spouse” according to Laurier’s definition, but that individual (or individuals) would not qualify for Joint and Survivor Benefits. Rather, they could be designated a beneficiary and would receive payments if the member deceased within the guaranteed period they chose.
For FT faculty members who were once CTF, does their contract teaching (LTAs or course by course contracts) count towards years of service?
Prior service, in terms of pension benefits, would mean the number of years a member contributed to a plan (not the number of years employed). The Ontario Pension Benefits Act establishes the minimum eligibility requirements for membership in a pension plan.
The eligibility requirements for Part-time employees (sections 31(3), 31(5) and 32 of the PBA) are:
A part-time employee is entitled to become a member of a single-employer pension plan after completing 24 months of continuous part-time employment if the employee satisfies, in each of the two consecutive calendar years immediately prior to membership in the plan, one of the following two tests (whichever is satisfied first): 1) earnings of not less than 35 percent of the Year’s Maximum Pensionable Earnings (YMPE) as defined under the Canada Pension Plan (earnings test); or 2) 700 hours of employment (hours test).
Laurier’s Pension Plans employs the PBA definition of eligibility. However, pension plans may have less stringent eligibility requirements than those that the employee would be required to satisfy under the PBA (they cannot be more stringent).
The UPP pools the years of pension service that a member contributed to all the universities that are plan members according to the eligibility requirement of each prior plan (the Single Employer Plan prior to conversion). So, when calculating years of service for pension purposes, one has to calculate the years paid into a plan at each different institution where the member worked.
It is possible to negotiate different eligibility requirements with WLU before entering the UPP. If eligibility requirements are broadened prior to conversion, it will change who is eligible to contribute to the pension plan and receive pension benefits for Laurier employees going forward, but it will not change the eligibility requirements at the other universities where a member might work or prior service for members who were not already plan members.
Is the supplementary plan voluntary or required (if above that limit)?
If a Member’s salary exceeds the limits prescribed under the Income Tax Act, the income above the limit does not count as pensionable earnings. The SPA is non-contributory and non-funded: the University makes all the contributions. Members with earnings over the ITA maximum are automatically members of the Supplemental Pension Arrangement. Note that the SPA has only been available to faculty and librarians since 2003. Prior to that it was available only to high-earning administration members.
For part time employees who are not currently using the WLU benefits can we opt into benefits when we retire?
No. You must be a member of the Laurier Pension Plan and you must have made contributions in order to receive pension benefits when you retire.
For part time employees who are not currently using Laurier’s health and dental benefits can we opt into benefits when we retire?
Contract Faculty must meet eligibility requirements in order to purchase health and dental benefits under the Laurier plan for CF. If they do, they can opt in which places them in the plan in the following calendar year. Members must requalify each year, so if a CF Member retires, they will lose their health and dental benefits.
Won’t the UPP be more complicated than the Laurier Pension Plan because there are more universities involved?
There are now four universities involved in the UPP, and there may be more as time goes on, but the UPP is a single plan. The participating universities jointly created a governing body that administers the plan, so it is really no more complicated than the Laurier Pension Plan.
If you retire before any merger is completed, I assume you are under the LPP plan and benefits even if administered by the UPP.
That is correct. All of the LPP terms and conditions that are in place when a Member retires remain the same under the UPP. The only difference will be that the pension payments will come from the UPP.
Just curious: Who started this idea of a UPP for the Ontario University sector? Faculty members at another university? A University administrator group? The government of the day? All three groups at once?
The idea of creating a JSPP in the post-secondary sector has been around for decades, but the current UPP originated in 2010 when the idea for a unified university pension plan was first advanced by OCUFA. In 2014 a joint working group with OCUFA, COU, CUPE, OPSEU, OSSTF and other unions was created with the financial backing of the Ministry of Training, Colleges and Universities to design a sector-wide plan. That group produced a 2015 consensus report which established the basic principles. A decision was then made in the summer of 2015 to try to refine the plan at six universities. Laurier was one of these. COU and OCUFA sponsored the initiative. The idea was to create a plan which other universities could sign onto in the future.
That group of six made major progress on pre-inception liabilities, and on the cost envelope for a university plan. But discussions broke down with a debate over the representation of non-unionized employees (COU wanting 3 sponsors, OCUFA and the unions wanting only unions and employers). In January 2017, unions and employers at UT, Guelph and Queen’s decided to press on alone and they established a conditional agreement in July 2017. That conditional agreement included a role in governance for non-unionized employees, something that had held up earlier efforts.
The UPP began operations 1 July 2021 with three employers and a number of union groups administering what had been 5 pension plans. In May 2021, Trent’s Faculty Association voted 99% in favour of converting their pensions to the UPP and on 1 January 2022 Trent became the fourth university member.
If retirement eligibility is based on an 80 factor (age + years of service) then will this make it very difficult for CTF who are part of the UPP plan to achieve an 80 if years of service are calculated in a way that makes it challenging to hit that 80 mark.
The 80 factor for the UPP is only to access the unreduced early retirement provision. The formula for calculating pension benefits will be the same for CF as it is for FT members, but their will be a formula for calculating their years of service because it isn’t straightforward. This would be the same in the LPP.
Thinking ahead – Would it be reasonable then to think of the UPP as similar to the federal public service PSPP?
The PSPP is not a multi-employer pension plan, and it is governed by federal pension regulations. The UPP is like the Ontario Teachers’ Pension Plan or the Ontario Municipal Employees Retirement System (OMERS) which spans multiple employers (school boards, in the case of OTPP, municipalities in the case of OMERS). It is governed by Ontario legislation.
What’s in it for the University? Why does our administration find this attractive? (one less thing to worry about?)
The main advantage of converting to a Jointly Sponsored Plan for the university is that it would get out of the pension business. It would make significant savings on plan administration, and it would be free from having to pay down Going Concern and Solvency deficits. It would formally share risk with the employees rather than holding all the risk itself. It would also profit from being a member of a JSPP because those plans are more stable. The university will probably use its membership in the UPP as a selling feature when recruiting staff, faculty and administrators.
As noted in the presentations, the idea that the employer bears all the risk in the current Laurier Pension Plan is a fiction. As we have seen, deficits are paid down through cuts to operations, which means faculty and staff shoulder them, often indirectly and sometimes in the form of rising contribution rates and reductions in benefits. Unlike employers with large reserves they can draw upon to cover pension losses, Laurier makes cuts to operating budgets when its pension costs rise.
Does the UPP consider environmental/social/governance issues in its investment strategy (carbon footprint of the investments, for example)? Do members or member universities have any say on where funds are invested? Have you been discussing this issue with the UPP representatives?
The UPP is engaged in discussions regarding its investment strategies and has a section on its FAQ page devoted to ESG (https://myupp.ca/members/faqs/) or you can go directly to their responsible investing page (https://myupp.ca/investments/responsible-investment/). They have a Responsible Investing Policy and have committed to investing in a manner that is transparent and can be assessed by plan members.
You mentioned some contract faculty may be prevented from participating. Are there contract faculty at WLU who currently participate in pension plan who would not be eligible, if so which ones?
We have received clarification that contract faculty who are eligible for the LPP will be eligible to participate in the UPP. In fact, if a CF member teaches at more than one UPP institution, they will be able to pool their teaching under the UPP. This has two advantages for CF. Firstly, all of their income from these institutions can be used to increase their pensions and, secondly, if they don’t meet the eligibility bar at one institution, they may be able to reach the bar with their combined teaching from more than one institution.
Part of my pension benefits include health coverage (for which I pay a percentage). What would happen to this health benefit if we moved to the UPP?
There will be no changes to benefits for members who are already retired.
If we change to the UPP, then I want to clarify how the defined benefit is computed with something like, for example, 15 years at WLU with the LPP, then 20 years at WLU with the UPP. Would the yearly pension benefit be computed by combining the 15 years with the LPP portion (under the LPP terms) plus the 20 years with the UPP portion (under the UPP terms) and then the 4-year average best salary computed at retirement?
That is correct. For the WLU service pre-conversion, the benefit will be based on the LPP terms (1.37% below YMPE and 2% above YMPE). For the WLU service post-conversion, the benefit will be based on the UPP terms (1.6% below YAMPE and 2% above YAMPE). The 4-year average best salary will be calculated based on salary at retirement.
Is there a mechanism in place for increasing the size of the sponsor committee as the UPP grows?
That was a suggestion by the employer side, but it was agreed that the sponsor committee would remain at 12 (6 employer sponsor committee members and 6 employee sponsor committee members). This question can be revisited in the future if the number of universities in the UPP increases substantially and there is a desire to do so by both sides.
Do Research Chair stipends count towards the pension?
University of Guelph Faculty Association was able to get an agreement with their administration that all “academic stipends” will count toward pensionable income. This includes Research Chair stipends, Department Chair (or equivalent) stipends and so on, but not overload stipends. None of these stipends count toward pensionable income in the LPP.
Are WLU’s staff/Management Group also looking at joining the UPP or is it just WLUFA members?
At Laurier, all employees are in the same pension plan. Therefore, if there is a vote to convert to the UPP, all employees will become members of the UPP. Note that 2/3 of all active pension members must vote yes and no more than 1/3 of retired pension members can vote no in order for Laurier to convert to the UPP.
Is creating distance over control of the plan a bad thing? The pension seems to be something the university uses against us in bargaining. Could anyone who has had experience on the negotiating committee over the years recall a situation where the pension being a part of collective agreement negotiations has worked in our favour?
In any rounds of collective bargaining where pensions have been an issue, the administration has used the situation against faculty and librarians. For example, limits on wage increases and freezes on hiring have been imposed.
How are the 80 points calculated?
The UPP has an early retirement provision where, as long as they are at least 60 years old at the time of their retirement, a member’s pension will be unreduced if their age + years of service add up to at least 80.
How strong/stable are the other universities? What kind of risk do they pose?
The UPP is a separate entity from its member universities, and it manages its own investments. So the individual member universities don’t pose a risk to the UPP. If one university went bankrupt, the UPP would continue to manage the funds under its control and would continue to pay out pensions. A major reason to join the UPP is that it is more stable and there is less risk to your pension.
Another aspect of this question is what happens to any debt a prior plan brings into the UPP. Laurier members will not be responsible for retiring any prior debt from any university that converts to the UPP. The debt remains the responsibility of the university and it must retire the debt within a proscribed period through additional payments.
For single retirees, is there an equivalent to spouse that would garner that 50/50 payout (e.g. children dependents?)
Unfortunately, this does not exist under the Laurier Pension Plan. However, a member can extend the guarantee period of 15 years and designate a beneficiary who is not their spouse. If they decease within 15 years of retirement, the remaining benefit would be paid to the beneficiary. The UPP does offer Survivor Benefits for Dependent Children. According to the UPP: “If you have dependent children at retirement, you may be able to provide them with an income from UPP when you pass away. Your options are affected by the age of the children and the nature of their dependence.” Members are advised to consult with one of its pension administrators.
What are the differences between FT and PT members under UPP?
Full-time faculty and librarians are all members of the LPP and will be members of the UPP if the choice is made to convert. Contract faculty and part-time librarians are eligible, but not required, to joint the LPP if their hours of work and/or compensation reach the minimum set out in the part-time collective agreement. Their service under the LPP will continue to count as service in the UPP. There will be a formula used to count years of service when calculating a part-time member’s pension, whether in the LPP or the UPP, but it is not clear what that will be.
When we heard from other members of UPP, they mentioned having negotiated more tenure track hires as part of negotiation, Is this something we would do?
The negotiating team is interested in this idea.