The Retirees' Newsletter

The Retirees's Association ( Faculty, Librarian, Administrator), University of Windsor, Windsor, Ont. Canada

Vol VIII, No. 2, April 1998

continued from

the Minimum Guarantee is financed by the University. The minimum was initially introduced as a safety net below which no pension would dip. It was contemplated that no one would retire on the Minimum Guarantee because they anticipated that the Money Purchase funds would be invested so well that all would retire on it. Unfortunately, this did not occur primarily due to the poor performance by the original Fund Manager over a twenty year period.

As a consequence, many retirees find themselves retiring on the Minimum Guarantee with very disturbing outcomes. Firstly, the MG increases do not come anywhere near the increases enjoyed by those on the MP, and secondly, over a lifetime of retirement, the MG has fallen significantly below the cost of living. Therefore, the safety net or MG is failing those who retire and stay on it, and will ultimately fail those who currently find themselves on the MP when there is another major correction in the market or recession. The current longest running BULL MARKET will come to an end and it is in everyone's best interests to bolster the indexing of the Minimum Guarantee.

If you, the active members again walk off with the lion's share of the Surplus, you will be screwing yourselves in the long run. Demographers will tell you that, on average, those who live to be 65 will live into their nineties. You could very well require the support of a pension for as long as your active career. The safety net or Minimum Guarantee is foundational to this thrust. The best way to protect ourselves is to have the MG, at least, keep up with the cost of living; this is not happening now.

The existing indexation formula for the MG has seen the MG fall behind the cost of living by over 30 percent in the last 15 years. The proposed change to the indexation would see the MG fall behind the CPI by over 25% over this same period. Hardly an improvement !

There are retirees who will never move from the MG to the MP in their lifetime. You owe it to them to see that they at least keep up with the cost of living. There are many on the MP who will fall back to the MG. Surely, they will want to avoid falling down to a level below that of the cost of living.

The retirees deserve their fair share of the Surplus. And there is no better way of allocating this surplus than by improving the indexing formula for the Minimum Guarantee.

There has been opposition to the retirees receiving a fair share of the Surplus by some active members. In my view, there is no fair-minded basis for this opposition - and in fact it is a disservice to everyone in that it leaves people vulnerable at a time when they have lost their means to recover financially.

Therefore, I would like the chair's permission to put two motions to the Association for your consideration.

Pat Galasso
Kingston, Ontario
April 21, 1998

Motion One

Whereas, The Retirees have made a significant contribution to our Pension Plan, therefore, the Retirees should receive their fair share of any surplus generated by the plan.

Resolved that the Fair Distribution of surplus to the Retirees should be based on the fraction as follows:

The total number of years of contribution to the plan by living retirees or their surviving beneficiaries, who are still on the pension plan, divided by the grand total of number of years of contribution to the plan both by these same retirees and active members of the plan.

Motion Two

Whereas the one improvement in the pension plan which will be beneficial to all members of the plan, both active and retired, is the improvement in the indexing of the safety net or Minimum Guarantee, therefore, a fair share of the surplus (entitled to the Retirees) should be directed to this end.

Resolved that the Minimum Guarantee or Safety Net Segment of the pension plan be indexed to parallel closely the annual growth of the Consumer Price Index or cost of living, and that the indexing be based on a 100 percent increase from 0-8 percent or the CPI, with a carry forward to the following year or years if the CPI is greater than 8 percent.

Moved by Dr. Eric West, Professor of Business Administration

Seconded by Dr. Peter Halford, Professor of French

Both motions were passed by a majority.

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commencement date is restricted to the maximum pension by virtue of Section 5 of Appendix A of the Retirement Plan for Faculty and certain others, the increase described above shall not apply until the July 1 of the calendar year following the calendar year in which the pension commenced.

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