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University Pension Project making progress

Representatives from the university and employee bargaining units recently met to receive an update on the University Pension Project (UPP) from Allan Shapira, one of the actuaries working on the province-wide pension initiative.

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At the meeting, the bargaining units presented the university with a pension cooperation agreement that they recently signed, which is directed at pursuing a coordinated and proactive approach to long-term pension sustainability.

With many Ontario universities, including Queen’s, facing significant deficits in their pension plans, the UPP is currently examining the feasibility of a new multi-employer, jointly sponsored pension plan (JSPP) for the university sector in Ontario.

“We had a very productive and respectful meeting with the bargaining units that allowed us all to get to the same level of understanding on the status of the UPP and the key issues that will have to be worked out regarding the specifics of the plan,” says Caroline Davis, Vice-Principal (Finance and Administration). “The university looks forward to continuing discussions about how best to ensure secure retirement benefits for employees through a pension plan that is sustainable over the long term.”

"The university looks forward to continuing discussions about how best to ensure secure retirement benefits for employees through a pension plan that is sustainable over the long term.”

- Caroline Davis, Vice-Principal (Finance and Administration)

Mr. Shapira, a senior partner at the actuarial firm Aon Hewitt, gave a presentation on the progress made so far by the UPP and the remaining work that needs to be done. He discussed the set of shared principles for a new JSPP, already agreed to by all parties in the project, and provided an overview of the pension regulatory environment in Ontario. He also spoke to the key issues the project’s participants still need to resolve.

Solvency deficit sits at $285 million

Queen’s currently has a pension deficit of $285 million on a solvency basis, a hypothetical scenario that assumes Queen’s closes its doors and terminates the pension plan. The university is required to pay down that deficit, which will significantly impact the operating budget.

However, Queen’s recently received stage two solvency relief and has opted to defer payments on the solvency deficit for three years and then pay down the entire balance over the following seven. The university will still have to make payments on its $175-million going concern deficit of $20.7 million annually, beginning in September.

“Like other universities, Queen’s has a significant deficit in its pension plan and is looking at all options that could lead to a permanent exemption from funding the plan on a solvency basis,” says Vice-Principal Davis. “No matter what ultimately happens, pensions that are already being paid are guaranteed never to be reduced.”

Any changes to Queen’s existing pension plan would be subject to collective bargaining. A key principle of the UPP process is that participation would be voluntary for each university. Any move to a new or existing JSPP would have to follow the Ontario government’s legislative framework for employee and retiree consent.

The UPP is being led by the Council of Ontario Universities and the Ontario Confederation of University Faculty Associations, with the active participation of individual universities and bargaining units. The project has received funding from the Government of Ontario and a final report to the government is due in the fall.

More information about the Queen’s Pension Plan and the solvency issue can be found on the Human Resources Website, or by contacting Bob Weisnagel, Director, Pension Services, by email or at ext. 74184. Further information about the University Pension Project is available here.