U of G Receives ‘Stage-One’ Approval for Pension Relief
May 26, 2011 - Campus Bulletin
The University of Guelph’s application for stage-one temporary pension relief has been approved by the provincial government. Under recent provincial legislation, universities facing significant solvency funding requirements for their pension plans were given the opportunity to seek temporary relief under certain conditions.
This means U of G now has three years of stable and manageable pension contribution payments, and the possibility of a longer period to pay off its pension plan solvency deficit.
It also provides a window in which the University can negotiate with its employee groups to make changes to the pension plans that will improve fiscal sustainability.
“This is good news, but it’s important to remember that we’re not being absolved of the current pension solvency deficit,” says president Alastair Summerlee. “It simply, but importantly, gives us time to restructure our pension plans.”
Instead of making $97-million annual pension payments now, the University will pay about $36 million a year until 2014.
“The difference is significant and is money that we won’t have to find in the operating budget,” Summerlee says. “Without this relief, it would be impossible to function as a university without massive cuts to our programs.”
Under this same legislation, after 2014 the University may have the option to fund any solvency deficits over 10 years instead of five, as is the current requirement under normal provincial rules.
To qualify for this opportunity, U of G must show that sufficient changes have been made to improve the financial conditions of the plans. Summerlee says the University will continue to review options for restructuring its pension plans to meet this objective. Any changes will require the support of employee groups, achieved through formal bargaining.
The options U of G is considering include a combination of measures that would change the current proportion of cost sharing and reduce benefits.
Summerlee adds that the situation is not unique to U of G; several universities and public agencies applied for and received this temporary relief approval.
He encourages faculty and staff to educate themselves on this issue. A podcast of the recent pension town hall meeting is available online via the U of G home page. In addition, information is available on the Human Resources web page.
