U of G gets pension funding relief
Sunday, August 8, 20100 Comments
Responding to requests from Ontario’s universities, the province announced Thursday it would grant eligible institutions temporary relief from pension fund obligations.
In a statement posted online, the Ontario government said a two-stage plan would allow universities to top up their pension funds over 10 years, rather than the five normally required under the Pension Benefits Act.
In order to be eligible for the first phase of the plan – a three-year solvency relief period – universities “must submit a plan to the Ministry of Finance outlining how they will make their pension plans more sustainable.”
The relief period would give institutions a chance to re-negotiate with pension plan contributors to ensure “long term pension sustainability,” the release said.
Once such a plan is in place, institutions would be permitted to pay off their solvency deficits over a period of ten years.
“These measures will ensure that universities address their pension issues so that government funding will continue to support a quality education for our students," Minister of Colleges, Training and Universities John Milloy said at the press conference announcing the changes.
The news was welcome relief for the University of Guelph, which faced additional payments of between $70 and $100 million annually to shore up its own pension fund.
"I am pleased with the announcement, but there are many details and conditions yet to be worked out and confirmed," said University of Guelph President Alastair Summerlee in a university press release. "We will continue to keep members of the community informed as these details emerge."
Summerlee added that the relief was only temporary and would need to be combined with a multi-year plan to tackle U of G’s structural deficit and “ensure the continued fiscal stability of the University.”
But the question of renegotiating pension funds will likely be a contentious one. CUPE Local 3918, which is currently in conciliation talks with the university over its collective agreement, has vowed to fight any cuts to its pension plan.
Many of Ontario’s oldest universities are under financial stress owing to the decline in the value of pension fund investments during the 2008 market meltdown.
A report released in May by Toronto-based Dominion Bond Rating Service estimated U of G’s pension fund deficit at $165 million, the third-highest of the Ontario universities surveyed.
That figure doesn’t include post-employment benefits liabilities, which are expected to cost Guelph an additional $207 million as staff and faculty members retire.
DRBS estimated the University of Toronto’s pension deficit at $748 million, while McMaster University had an estimated shortfall of $373 million.
Universities are also struggling to contain rising staff costs and the fact that funding from the provincial government is failing to keep pace with increased operating expenses, the report said.