|January 22, 1999||Volume 6, Number 9|
Pension consultant to present her recommendations on the disposition of the Academic Pension Plan
Retirees express dissatisfaction with the contraints they say the actuarial evaluation has put on the consultant's recommendations.
Wednesday, January 27, promises to be an important day for all those with a stake in the University's Academic Pension Plan (APP).
On that day, at 4 p.m. in Place Riel Theatre, Professor Eileen Gillese, dean of Law at the University of Western Ontario, will present the recommendations she has produced for the Joint Committee on Pension Reform concerning how the APP's assets (which exceed $518 million) and surplus (which exceeds $19 million) should be allocated.
Having received substantial input of data and perspective from each of the interested parties - the University, the Faculty Association, retirees, members who cashed out of the APP after 1993, and ASPA and various out-of scope members - following the signing of an MOA on pension reform by the University and the Faculty Association last February, Dr. Gillese produced a draft report in December.
An Alberta-born lawyer who studied law at Oxford on a Rhodes Scholarship, Gillese has been teaching the only course in Canadian law devoted exclusively to the law of pensions. She has published widely; served on, and chaired, the Pension Commission of Ontario; overseen the adjudication of hundreds of pension disputes; and is much sought as a speaker, arbitrator, and consultant in pension matters.
Her final report to the Joint Committee, dated December 18, 1998, succeeds further discussions with all parties' legal and actuarial counsel and with David Wild, the province's superintendent of pensions, in Regina.
So on January 27, Gillese will present her recommendations on the splitting of the Academic Pension Plan (APP) into two separate plans (with identical rules) as a prior step to amending the "New Pension Plan" to establish a separate money-purchase plan, and she will field questions on them. Wild will also be present to answer questions.
In her executive summary of the report, which was included with a letter from the Joint Committee to all APP stakeholders mailed January 15, Gillese urges readers to keep in mind that none of the nine recommendations is to be considered in isolation.
"All of the issues, and therefore the recommendations, are interrelated. To ensure that all parties have been fairly and equitably treated, consideration of the overall effects of adoption of these recommendations as a whole is required."
The recommendations touch on questions pertaining to valuation date of the Pension's assets, interest rate assumption, contingency reserve, reserve for difference between future contribution and future benefit accrual values, the P-55 Amendment (on the 1% hold-back), the P-63 Amendment (on the removal of the 1% hold-back for contributions made before December 31, 1981), implications of marital breakdown, reserve for future interest, and indexation.
The recommendations she presents are based, she says, "on the view that it is necessary to ensure a fair and equitable distribution to all parties...." She goes on to note that "they are, of course, constrained by the law...governing the splitting of a pension plan, by the Plan provisions including all valid amendments thereto, and by the Memorandum of Agreement."
Following Gillese's presentation on January 27, the Joint Committee - co-chaired by Professor Peter Dooley, USFA, and Vice-president Tony Whitworth - will, with an eye to Gillese's recommendations, negotiate the terms for dividing the assets and liabilities of the current Plan. These terms must receive final approval by the Board of Governors and the Faculty Association.
Commenting on the recommendations, Dr. Whitworth says that Dr. Gillese "has summarized the views of the different parties very well."
And he adds: "The report should help us move to a speedy resolution of the outstanding issues."
ASPA spokesman Syl Gaudet says he's pleased with the recommendations.
"When we look at the issues that were there and the position we took on them, we came out pretty good. ASPA went in looking to adopt a middle ground and that's where [the recommendations] came out."
The response of the pensioners, however, is not so sanguine.
Professor Doug Knott has no quarrel with Gillese's recommendations, but he says the actuarial evaluation for the splitting of the Plan doesn't implement the recommendations she made.
Part of the reason for that, he says, is that "to a considerable extent, the February 1998 memorandum of agreement [between the University and the Faculty Association] sets out what the results are going to be. In other words, the consultant was constrained. Her recommendations say one thing, but she was then constrained by the MOA in carrying out these recommendations."
Because of the way the actuarial evaluation has been done, he says, the active members are slated to receive $30 million more than is required to remove the 1% interest rate hold-back, while the pensioners receive $10 million less than is required to pay for future indexation.
"So that's the kind of contrast I'm talking about. The recommendations are fine - you give the retirees indexation and the active members get their 1% holdback - but then the money that the actuarial valuation provides is $30 million more for the active members but $10 million less for the pensioners."
Knott says he hopes that the Joint Committee will reconsider the recommendations and produce what, from the pensioners' point of view, will be a fairer outcome. "That's all we want - a fair and equitable split of the pension."
Professor Peter Dooley , co-chair of the Joint Committee, declined to comment on the report, noting that he wants the Association members to hear about it from the USFA executive first.
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