MYTHS ABOUT OUR PENSION PLAN (1)

cupe1975Negotiations/Bargaining, Pensions

MYTHS ABOUT THE PLAN

 MYTH:

The pension plan is not sustainable

FACT

Your pension plan is sustainable. Your plan is not broken, nor is it in crisis. Language like this is used by employers to convince you that we need to abandon the pension to save the pension. This is untrue ideological language that the Employer is using to advance their bargaining agenda of attacking your retirement.

  • Funding Level Improved. Like virtually all pension plans, your plan did fall into deficit following the global financial crisis of 2009 (the worst crisis since the Great Depression). This did not mean the plan was broken. The pension system is designed to bring plans back into balance over time. The plan’s funding health has since been steadily improving since the downturn, and the 2017 valuation shows that the plan is now back in a small surplus on the actuary’s best estimate.
  • University Costs Significantly Declining. The 2017 valuation also allowed University contributions to decline significantly in 2018, with further reductions projected in the coming years.
  • History of Plan Surpluses. The challenging period since 2009 follows a long period in which the pension plan was in surplus. As described in more detail below, the University used significant portions of this surplus to reduce their own contributions to the plan (“partial contribution holidays”).
  • Actuarial Basis Safer. Over the past decade, the University has accounted for the fact that Canadians are living (and will continue to live) longer and has made its actuarial assumptions more conservative, which lowers the risk of future deficits. These costs have already been factored into the plan.
  • CUPE 1975 Reasonable Pension Partner. CUPE 1975 has always recognized the fact that the period after the downturn required the University to make extra contributions to the plan. In this and the last round of bargaining, we offered changes to the plan that would have significantly mitigated these cost increases. These proposals were all rejected by the University. Our offer in the current round would ensure that the burden of any future downturns would be shared on a 50/50 basis, on top of reducing annual University costs by millions. The University has rejected this offer.
  • Solvency Funding Exemption. In 2013 the provincial government changed pension funding rules to exempt the University permanently from its “solvency” funding obligation, which makes the plan’s funding requirements much more stable over time, helping the University to fund the plan. CUPE publicly supported this exemption.
  • Pension Costs in Perspective. The University cites pension costs in the millions in the hopes that members will be convinced that abandoning the DB plan is necessary to the institution from a financial perspective. The University’s budget is about one billion dollars. The total cost of your plan to the University is not even 1% of the budget. The extra contributions the University has made to the plan over the past decade is an even smaller number. Our pension proposal would shave these fractions even further. The University can afford our modest DB plan.