MYTHS ABOUT OUR PENSION PLAN (4)

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MYTH

“These significant additional contributions are expected to continue into the future under the pension’s current structure”

FACT

This is not true. The most recent actuarial report shows that University contributions have already come down significantly, with further reductions projected for the coming years. For example, in 2017, the employer required contribution to the plan was 16.14% of payroll. In 2018, the rate has fallen significantly to 12.84%. The rate is projected to be 12.05% in 2023 and then 11.37% in 2027 on wards. The Union’s pension proposal, which the University rejected, would bring this rate down even further to about 9%.

 

Labour Relations Board Update!

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Labour Relations Board Update!

The Saskatchewan Labour Relations Board has ruled that CUPE Local 1975 is allowed to withdraw from the Scope application, LRB File No. 120-12. This removes one of our legal barriers to taking job action.

The Union  will be in front of the Essential Services Tribunal on March 26-28. CUPE’s position is that the University of Saskatchewan does not meet the criteria of an essential services employer under the Saskatchewan Employment Act. We will update you after the hearing concludes.

The parties are returning to the bargaining table on April 5th to further discuss the union’s pension proposal.

 

MYTHS ABOUT OUR PENSION PLAN (3)

cupe1975Pensions

MYTH

“The university did not take a contribution holiday.”

 FACT

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).”

CONTEXT

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.

 

MYTHS ABOUT OUR PENSION PLAN (2)

cupe1975Pensions

MYTH

Public sector workers like University workers have “gold plated pensions”

FACT

The plan pays a modest average annual pension of $18,100.

The plan also does not provide guaranteed cost-of-living increases for retirees (also known as “indexation”). Indexation is provided on an ad hoc basis and has generally been delivered out of surplus, when surplus exists. As the cost of living increases each year, retirees under the plan do not know if their pension cheques will keep pace each year. The employer does not bear any pension liabilities associated with this risk. Pensioners have actually not seen an increase since 2008. Their pensions have since lost nearly 20% of their real value by not keeping pace with the rising cost of living. Most University plans in Canada offer better inflation protection.

 

MYTHS ABOUT OUR PENSION PLAN (1)

cupe1975Pensions

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.

March 19, 2019 Rally in the Bowl: Media Links and Photos

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Hello Everyone

Thanks for making yesterday’s rally such a success. I think it sent a strong message.
Listed below Media articles and photos.
Here the web story from
Photos:

President Peter Stoicheff – We are ready to meet and talk with the Board of Governors – Give us a chance!

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Photo taken at the Board of Governor’s reception on campus on March 18th.  Craig Hannah, President CUPE Local 1975 and Peter Stoicheff share greetings.

CUPE 1975 Members: Please join your Negotiation team today at our noon hour rally!  If we make a little noise someone might just listen to us!   Meet at Nobel Plaza in front of the Peter McKinnon Building at noon.  

We need to get the message to the Board of Governor’s that this University works only because we do!