The QPP is in bad financial shape and the plan will continue to deteriorate, the longer it takes to reach agreements on required changes.
The university and employee groups have a shared goal: to ensure the long-term sustainability of the plan.
While being approved for stage two solvency relief is important and provides more time to reduce the plan’s deficit, this in itself won’t fix the plan’s underlying structural problems.
Changes to the plan are also required. This has been acknowledged by all employee groups and discussions about how to do this started in 2005.
On August 31, our mandated valuation date, the plan’s actuaries will take a financial snapshot of the plan. This valuation determines the size of the additional payments that are required by law to start closing the gap between what the plan has in it and what regulatory authorities say must be in it.
Should changes be made to the plan sometime after August 31, the university can file what’s called an “interim cost certificate” or “interim valuation report”. While this would reduce the university’s payment requirements on a go-forward basis, the reduction wouldn’t be retroactive, so any reductions that could have been achieved starting August 31 would be lost.
The longer it takes to address the plan’s underlying structural problems, the worse off the plan will be at the next valuation in 2014, and the larger the long-term impact on Queen’s operating budget, which is already in deficit.
In the pension world, the longer you delay solving a problem, the worse it will get.
Putting off decisions about changes doesn’t allow the university to limit the financial hit that is coming.
It’s important to note that meetings with all employee groups about the need for plan changes have been ongoing since 2005 with no agreement, despite the plan’s deteriorating financial position.
All employee groups have been aware of the August 31 valuation date and the university’s specific proposals for changes to the plan since a meeting last November.
The changes and the urgency were reviewed and reiterated by the university at a multi-employee group meeting in May.
These changes include increasing employee contributions, an approach which has been implemented at other universities.
Employee groups have had months to study, discuss and respond to the proposed changes.
QUFA has publicly acknowledged that increased employee contributions are necessary and the university is ready to continue these discussions in conciliation later this month.
The university’s goal is to reach negotiated settlements with all employee groups.