All-Union Pension Discussions Update to our Members

Report
Proposals for Amendments to the
York University Pension Plan
CUPE 1356 – CUPE 3903 – IUOE 772 –
OHFA – YUFA – YUSA
April 30, 2013
Proposed without prejudice pending review of the Ontario 2013 Budget and without prejudice to YUPG
proposing additional, new and/or amended proposals in the course of these discussions.
4/30/2013
1
York University All-Union
Pension Group (YUPG)
• Includes representatives of
 Canadian Union of Public Employees, Local 1356
 Canadian Union of Public Employees, Local 3903
 International Union of Operating Engineers, Local 772
 Osgoode Hall Faculty Association
 York University Faculty Association
 York University Staff Association
• Retains independent actuary (from Eckler) and legal advisor
(from Sack Goldblatt Mitchell), with additional expert advice
provided by CUPE - National
4/30/2013
2
YUPG and
All University Pension Committee (AUPC)
YUPG
AUPC
# of Active Members
YUFA
YUFA
1376
OHFA
OHFA
53
Research Associate/Assistant
Research Associate/Assistant
50
CUPE 3903 Units 1&2
CUPE 3903 Units 1&2
278
YUSA Units 1&2
YUSA Units 1&2
1387
CUPE 1356
CUPE 1356
416
IUOE Local 772
IUOE Local 772
18
OPSEU Local 578
18
CPMEA
721
Senior Execs , YUFA-E, OHFA-E
59
(as at March 22, 2011)
York University Retirees Assoc
4/30/2013
3
Proposed Protocol for Plan Changes
Excerpt: D. Brown/SGM for YUPG, Letter to G. Brewer 23April13
• All University proposals related to changes in Plan provisions and Plan
actuarial and administration practices be disclosed to the AUPC prior to
presentation to the Board of Governors together with supporting
documentation that explains:
– the rationale for the change,
– the cost/benefit/administration implications, and
– a blackline of the relevant YUPP provisions showing the current and proposed
changes.
• The other members of AUPC have a corresponding opportunity to present
proposals to the University on the same basis as above.
• That sufficient time is allocated to the AUPC/University as applicable prior
to the proposed implementation date of a Plan amendment to allow for
analysis, discussion and the presentation of alternative proposals, if any.
4/30/2013
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Current Issues
Stage II Solvency Relief
Status/Proposed Process
Seek agreement on changes necessary to meet Stage II
Solvency Relief before any discussion of structural
amendments.
18March13: Email communication to YUFA/A. Hilliker
from B. Miller proposing compliance changes
Ontario Pension and Benefits and Income Tax Acts:
recent changes require compliance
23April13: D. Brown/SGM for YUPG, Letter to G.
Brewer identifying changes beyond compliance and
proposing protocol for Plan amendments
1.
Administrative issues: need mechanism for review of
controversial administrative practices
Structural amendments to advance the longer-term
affordability of the Plan
4/30/2013
2.
3.
Identify key personnel to participate in these
discussions.
Identify protocol for reaching agreement on
amendments to Plan administration practices.
Review administrative practices , including timing
and sequencing of key decisions and calculations.
Postpone discussions until after Stage II Solvency Relief
requirement has been met
5
YUPG Mandate to discuss Plan amendments for
Stage II Solvency Relief
(Excerpt from YUPG Protocol approved by YUPG Union Executives)
• In the interest of promoting an open, transparent
and consultative process, the Unions participating
in the YUPG agree that the YUPG shall be
delegated with authority to approve Stage II
Solvency Relief Plan Amendment proposals on
behalf of all participating unions.
• The Unions shall submit the proposal agreed
upon by consensus within the YUPG to their
respective memberships for approval.
4/30/2013
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YUPG and University Guiding Principles
Agreement - Similarities - Differences
YUPG
• Open, transparent,
consultative process
• No changes for existing
pensioners
• Protection of accrued
benefits (per pension law)
• Maintain hybrid nature of
plan
4/30/2013
University Application for Solvency
Relief March 22, 2011
• Open, transparent,
consultative process
• No changes for existing
pensioners
• Protection of accrued
benefits (per pension law)
• Maintain hybrid nature of
plan conditional on limiting
University’s downside risk
7
YUPG and University Guiding Principles (cont’d)
Agreement - Similarities - Differences
University Application for Solvency
Relief March 22, 2011
YUPG
•
•
Ensure plan affordability
Meet savings target for solvency
funding relief
•
•
Ensure plan sustainability
Meet metrics for solvency funding
relief (savings target, reduce plan’s
risk)
•
Protect initial pension as at date of
retirement
Provide demographic equity
•
Protect initial pension as at date of
retirement
Provide demographic equity
•
•
•
•
Maintain the current benefit structure •
even if increases in the level of
member contributions are required
Include a mandatory Plan amendment
review clause triggered upon the Plan’s
attainment of full funding on a going
concern and solvency funding basis.
4/30/2013
Change plan governance to reflect
risk sharing structure
8
Possible Changes to the Plan
Agreement - Similarities - Differences
YUPG Proposals
•
•
•
•
•
•
Increase employee and University
contributions to Money Purchase
Eliminate University contribution to
non-reduction guarantee (=3%
member contributions)
Conversion of MP balance to
pension: ensure reasonable
mortality assumptions
No change in non-reduction
guarantee
Lengthen indexation averaging
period – only if additional savings
required to meet Savings Target
Normal Form: no changes
4/30/2013
University Proposals
•
•
•
•
•
•
Increase employee and University
contributions to Money Purchase
Retain University contribution to nonreduction guarantee (= 3% member
contributions)
Conversion of MP balance to
pension: elements identified but not
costed (Interest rate, mortality rates)
Remove non-reduction guarantee
post retirement only (initial pension
guaranteed)
Lengthen indexation averaging period
Normal Form: change 50% joint-andsurvivor pension to life only or life
guaranteed 10 years
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YUPG Mandate
Approved by Executives of : CUPE 1356, CUPE 3903, OHFA, YUFA, YUSA, IUOE Local 772
PROPOSAL FOR PLAN AMENDMENTS:
On a 50/50 sharing basis as is necessary to meet
the savings targets for Stage 2 Solvency Relief,
increase both Member and Employer Money
Purchase Contribution Rates to a maximum of
6.75% up to the Year's Maximum Pensionable
Earnings (YMPE) and a maximum of 9.15% above
the YMPE.
4/30/2013
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Contributions @ 6.75%/9.15% (50/50 shared)
Employer contributions to non-reduction reserve eliminated
Indexing @ 4-year average
As of December 31, 2011
($millions)
CURRENT PLAN
REVISED PLAN
CHANGE
Going Concern Unfunded Liability
$283.0
$225.3
($57.7)
Solvency Deficit
$386.5
$386.5
$0.0
Member Contributions
$20.1
$31.1
$11.0
- money purchase
$20.8
$31.1
$10.3
- min guarantee normal cost
$20.3
$13.5
($6.8)
- going concern deficiency (for 15 years)
$29.6
$23.8
($5.8)
- solvency deficiency (for 10 years)
$15.6
$21.4
$5.8
University Contributions - Total
$86.3
$89.8
$3.5
$622.6
$622.6
$0.0
- member contributions
$211.9
$315.3
$103.4
- University contributions*
$218.3
$315.3
$97.0
- past service*
$252.3
$194.6
($57.7)
- future service*
$228.0
$110.4
($117.6)
$1,533.1
$1,558.2
$25.1
$698.6
$620.3
($78.3)
University Contributions
Present Value of Benefits (active members)
Money Purchase Accounts
Present value of future money purchase
Present value of minimum guarantee supplement
Total Present Value of Benefits (active)
*Portion of future benefits funded by University
Estimated University Savings
- amount
$78.3
- % of total value of benefits ($1,533.1 million)
5.1%
Savings Target (from March 2011 application)
- amount
$78.2
- % of total value of benefits ($1,533.1 million)
5.1%
4/30/2013
11
YUPG Representatives
CUPE 1356:
CUPE 3903:
IOUE 772:
OHFA:
YUSA:
YUFA:
Walter Silva
William Gleberzon, Mohan Mishra,
Iouldouz Raguimov, Raj Virk
Andrew Johnston
Jinyan Li, Eric Tucker
Joanie Cameron Pritchett, Giulio Malfatti
Brenda Hart, Arthur Hilliker, Sue Levesque,
Brenda Spotton Visano, Al Stauffer, Walter Whiteley
With advice and assistance from
Anthony Benjamin, Domenic Barbiero (Eckler Ltd)
Darrell Brown (Sack Goldblatt Mitchell LLP)
Russ Armstrong (CUPE – Regional)
Kevin Skerrett (CUPE - National)
4/30/2013
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