Post-doctoral fellows (PDFs) at Queen’s have voted in favour of representation by the Public Service Alliance of Canada (PSAC).
Ballots cast last November were counted yesterday, July 13, at the Ontario Labour Relations Board after it was confirmed that the union had support from more than 40 per cent of the bargaining unit when it applied to be certified as their representative in collective bargaining.
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The Ontario Ministry of Labour has advised Queen’s that a “no-board” report was issued yesterday, July 12.
This opens the door to a legal strike or lock-out of members of the Queen’s locals of the Canadian Union of Public Employees (CUPE).
The university and CUPE will be in a legal strike/lock-out position at 12:01 am on July 29, which is 17 days from the date of the “no-board”. The CUPE contracts expired in June 2010 and negotiations for new agreements have been underway for over a year.
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As the leadership of Queen’s local branches of the Canadian Union of Public Employees (CUPE) and the Queen’s University Faculty Association (QUFA) prepare to hold general meetings of their membership this week, the university’s administration is urging employees in both groups to exercise their rights and get involved.
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With contract talks continuing between the university’s administration and representatives of employees who belong to the Canadian Union of Public Employees (CUPE) and the Queen’s University Faculty Association (QUFA), many questions are circulating about one of the key issues at the table – the Queen’s Pension Plan (QPP). And now, the administration is continuing its efforts to respond to these questions.
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Short of reducing the minimum guarantee formula, this is the only option that would reach the savings targets required under the province’s solvency relief plan. That being said, the Queen’s Pension Plan (QPP) is primarily a money purchase plan, so increasing the contribution rate would accelerate individual members reaching an account-based pension that exceeds the minimum guarantee, which is a main goal of the plan.
The increases would be phased in gradually over several years, with each contribution increase being less than 1% of gross salary. The impact on take-home pay would actually be less, since the income tax deduction is factored in by payroll: each additional dollar contributed to the plan would “cost” 69 cents or less after tax depending on income and tax brackets.
Increasing employee contributions appears to be the option of choice for other university plans facing similar significant funding shortfalls:
- Guelph’s CUPE 1334 local recently negotiated changes that will see contributions increase to 7.6%, up to the Year’s Maximum Pensionable Earnings (YMPE, currently $48,300), and 9.9% on salary in excess of the YMPE (Queen’s has recommended its target be 7% up to YMPE, 9% in excess);
- Trent’s faculty plan has increased contributions to 7% permanently and to 9% for a three-year period (2010-13);
- McMaster’s plan has increased to 6.5%, up to YMPE, and 8.75% above for all employee groups.
To compare with another public sector plan outside of the university sector:
- OMERS has announced increased member contribution rates for 2012, which will range from a low of 8.3% up to YMPE to as high as 13.9% above YMPE.
- The Ontario teacher’s plan rates are now 10.2% up to YMPE and 12% above — the plan, which is a jointly sponsored pension plan, requires the funding responsibility to be shared equally between the employer and pension plan members and, as such, contribution rates are set annually by the plan actuary.
Currently at Queen’s, the employer’s total contribution rate (employee money purchase account contributions, minimum guarantee current service cost, and additional special payments) is more than double the employee’s.
In the early 1990s, the QPP, like many pension plans at that time, had an actuarial surplus on its defined benefit (minimum guarantee) side of the plan: $24.7 million at the time of the August 31, 1991 valuation. But new tax regulations that came into effect in 1992 limited the amount of surplus that could be carried forward as a reserve, and required pension plans to use a portion of that surplus to fund regular defined benefit contributions if the surplus exceeded a certain threshold. The QPP was in the position of having to deal with potential excess surplus from January 1, 1992 through February 29, 2004.
After consulting with all employee groups, the “savings” (funds from operations that would have been contributed to the QPP if not for the tax regulations) were allocated to employees in several ways – some received additional salary, while faculty created a dental plan. This period also saw a number of plan changes – recommended by the Pension Committee and agreed to by all employee groups – including improvements to the minimum guarantee formula, increases to the university money purchase contributions, and a reduction in the factors applied to the minimum guarantee on early retirement (6% per year was reduced to 2% for the five years prior to normal retirement). The net impact of these improvements reduced the surplus by several million dollars.
In addition, employee groups agreed to temporary employer contribution holidays on two occasions. During Ontario’s Social Contract years (1993 through 1996), employer contributions to the QPP were reduced by $2 million annually, and these funds were used to negate potential income and position losses resulting from the province’s wage freeze and unpaid holiday requirements.
Money from a second holiday (1997 through 2003) was used to pay for plan improvements proposed in part to mitigate Canada Pension Plan (CPP) changes, which led to higher contributions and lower pensions through the CPP.
Quick action is required to reverse the underfunding of the plan and make the most of the solvency relief options that have been put forward by the Ontario government. The plan’s actuaries have confirmed that the university needs to have a remediation plan in place as quickly as possible to help prevent the problem from escalating to unmanageable levels.
The law requires the valuation of pension plans every three years.
The QPP is due for its next valuation at the end of next month – on August 31, 2011. The valuation is a “snapshot” of the financial state of the plan on that date. August 31 is, therefore, critical because the state of the plan on that date will determine what additional contributions the university will be required, by law, to make over the next three years. Those additional contributions are required to bridge the gap between what the plan has in it and what the provincial law says must be in it – and the larger the payments, the greater the impact on the university’s operating budget.
If nothing is done, and the government’s solvency conditions aren’t met, the university’s contributions would have to rise to over 30% of payroll to meet our funding obligations (right now, the university contributes about 10% of payroll while employees contribute 5% of their pay). That would mean an additional $70 million annually would be drawn away from the Queen’s operating budget. The current total operating budget is just under $400 million.
Contract talks between the university and Queen’s employee groups represented by the Canadian Union of Public Employees (CUPE) entered a new phase on Wednesday as the university requested a “No Board” report from the Ministry of Labour.
The request signals an end to the conciliation phase of the negotiations, which began in April, and sets the stage for a strike/lock-out deadline. Either side must wait until the 17th day from the date of the “No Board” report before beginning a strike or lock-out.
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