Report updates Queen’s Pension Plan deficit
February 22, 2018
An actuarial valuation on the Queen’s Pension Plan (QPP) has been completed as of August 2017 and will be presented for approval to the Pension Committee of the Board of Trustees at their upcoming meeting in March. This report updates the results from the previous report issued in early 2015, as of August 2014. Under provincial regulations, actuarial valuations must be filed with the provincial pensions regulator every three years.
The valuation examines the financial state of the pension plan on both a “going concern” basis, which assumes the plan continues to operate normally, and a “solvency” basis, which assumes the plan is closing today. As the plan sponsor, the university is required to make special payments into the plan if a deficit exists under either approach.
The 2017 valuation results set the QPP’s going concern deficit at $32 million, a large decrease from the $175 million in the 2014 report. Much of this improvement is due to strong investment gains on pension plan assets over the past several years. The solvency deficit remains significant, increasing slightly to $313 million from $285 million in 2014.
Under the solvency relief provisions, the university’s estimated annual special payments are expected to be $19 million per year starting in 2018, down slightly from the current $20.7 million per year. Annual special payments of approximately $50 million per year would be required if no solvency relief program was in place.
“It’s important that Queen’s has a viable pension plan for all current and retired employees and Queen’s has been taking the necessary steps to ensure that the long term financial sustainability of the plan is being addressed in a responsible manner,” says Donna Janiec, Vice-Principal (Finance and Administration). “At the same time, the university will continue to benefit from partial solvency relief from the province which will allow us to address our ongoing pension obligations while investing in other important university priorities, such as faculty renewal, inclusivity and diversity initiatives, and deferred maintenance.”
The university has been building a special reserve fund over the past three years to offset the impact of future solvency deficit payments or to potentially ease the transition to a new university sector jointly sponsored pension plan (JSPP). Contributions to the pension reserve will continue during the 2018-19 fiscal year, with a decision on future years to be made as part of the 2019-20 budget process.
At the same time, Queen’s is continuing to work with two other universities, including participating employee groups, and the provincial government on the creation of a multi-employer, jointly sponsored pension plan for the university sector in Ontario. Queen’s, the University of Toronto, and the University of Guelph are now looking to finalize the outstanding design and governance elements of the project. All Ontario universities will have the option to join the JSPP once established.
More information about the Queen’s Pension Plan is available on the Human Resources website. Anyone with pension related-questions may contact Bob Weisnagel, Director, Pension Services by email or at ext. 74184.