“The university did not take a contribution holiday.”
The University took 17 years of partial contribution holidays between 1993-2009. The University is required to file papers with pension regulators each year, which clearly show these holidays. The Union has copies of all of these records.
During this period, the employer diverted funds from the pension fund surplus to reduce the contributions the University would have been otherwise required to make to the plan under provincial law. Members continued to pay their full contribution obligation under the plan each year. The University did match these member contributions but was required under the law and the terms of the plan to contribute more than members to fully fund the plan’s benefits. However, the University chose to fund these additional required contributions to the plan from the plan fund’s surplus, instead of making actual cash contributions to the plan. We call this a “partial contribution holiday.”
2009 Non-Academic Plan “Annual Information Return” was filed with provincial and federal regulators. Note $2,048,872 in “surplus” assets used to reduce the “required employer contributions”
In nominal terms, these 17 years of partial holidays totaled nearly $28 million. Accounting only for inflation, they would represent more than $36 million in today’s dollars. Accounting for lost investment returns that could have been realized on these contributions – had they been made – would push a total figure even higher.
It is also worth highlighting the 2009 partial holiday. The year after financial crisis (when the plan lost 16%) and the year after the last cost-of-living increases to retirees were delivered, the University used $2 million of plan surplus to cover a portion of its own contribution obligation (see above).
These decisions were not only unwise. The Union believes at least one and likely more of these holidays were illegal and violated the pension plan text. We have filed a grievance on this issue which we put into abeyance in a good faith effort to settle a collective agreement regarding pension.
NOT A MYTH, BUT CONTEXT NEEDED
The University has paid an “additional $29.8 million in contributions beyond normal contributions over the past decade ($3.1 million in 2018).”
The Union has always acknowledged the cost of these additional contributions, which were largely the result of the 2008-09 economic crisis, the worst economic downturn since the Great Depression. In this spirit, in the 2013-14 round of bargaining, the Union offered changes to the plan that would have seen Union members shouldering about half of the University’s special pension payment obligations – but the University rejected this proposal. And our current proposal would see any future deficits and pension costs shared on a 50/50 basis. This proposal was similarly rejected.
And, as we detail below, these additional contributions have come down significantly in the past year, with further reductions projected in the coming years.
The University should not be selective when discussing the plan’s history. To repeatedly only reference a challenging period following a historic economic downturn, when University contributions to the plan were higher than normal, is narrow and potentially misleading. The University should also speak about the 17 year period before the downturn, when the pension was in surplus and their contributions were reduced by using this surplus to take partial contribution holidays.
And we should also speak about a better future. The Union believes we should learn from this history and allow more plan surpluses to remain in the plan. This would allow future plan surpluses to function as a reserve against future downturns, in the hope of preventing future increases in contributions.