Page Ten

The Retirees' Newsletter

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

Vol X , No. 5, December 2000

Editorial Page

Minimum Guarantee(MG) / Money Purchase (MP) Pension

I would like to close this year's message on a positive note. Over the last two years, some controversy and confusion was voiced among WURA members arising from the dissemination of misleading and selective information about differences between the minimum guarantee (MG) and the money purchase (MP) parts of the Plan. We are grateful for Jim Skinner's clarifications at the Fall General Meeting when he provided a clear definition of the two terms and how a retiree ends up on either an MG or an MP pension. A timely article by Bill Phillips and Peter Burrell in this newsletter also deals with this issue quite succinctly, in a somewhat humourous way.

Over the years, this Newsletter has carried columns, replete with calculations and graphs, explaining the MG/MP arrangement in our Plan. More recently, the Toronto Pension Consultant, Ashley Crozier's report ( now a public document, available at a cost of $5) identified some of the factors that contribute to a member's MG pension status.

Some individuals--including members on your Executive--have been puzzled and disturbed by the different rates of increase between MG and MP pension. Ever since we became aware of the so-called 'parity principle' at Queen's within the last 18 months, it was simplistically advocated by some that we seek the same sort of parity arrangement, at Windsor, that Queen's seems to enjoy--that, is the same rate of market-investment increase for both MG and MP pensioners.

However, none of the ramifications were considered in these sorts of proposals, nor any far-sighted and realistic suggestions made how we might subsidize such implementation--let alone how such proposals might be viewed by the Contract Committee, the negotiating team ,and the University itself.

It is important. however, to keep in mind several things. First, the money-purchase base within every MG pension unit always rises at the same rate of increase as does a MP's pension base. But because the MG increase does not attain the projected minimum-guaranteed level of pension for that year, the University tops it up with extra funding. In effect, then, every MG pension fund increases by the rate of return common to all pensioners in the Plan---PLUS the University's top-up component in order to reach the projected minimum-guarantee level .

At the same time, however, the MG level is controlled by a Consumer Price Index-based formula which, legally, may not be exceeded.. And this is the structural reason why individual MP and MG funds end up with different final or total rates-of-increase results. Last year, for instance, MP pensions dipped 4 % below the preceding year's because of poor market returns, whereas MG pensions received an increase of 1.09 %.

Second, neither MP nor MG pensioners have any direct control over the Pension Plan. Whatever we are able to change or modify has to be negotiated on our behalf by Faculty Association. Until this year, retirees were not represented on the WUFA Contract Committee.

Furthermore, any changes in structure have to be agreed upon by the University, the Board of Governors, and the Faculty Association.

Now, for the first time ever, we have a representative (Alan Metcalfe) on the WUFA Contract Committee to speak for the interests of retirees. It is possible, too, that he or others may serve as a backroom resource person during negotiations.

How much of our total input ends up in the final contract, of course, is anybody's guess because of the stages involved. The good news, at this point, is that we have done whatever could be done to protect and to enhance our common interests.

One more point. The so-called parity principle was brought to the D7 Committee for serious consideration. Jim Skinner, a member of the D7, visited Carleton and Queen's universities to learn more about their plans and to prepare a report. Two additional actuarial reports were also commissioned which deal with pension-plan design possibilities, and also with estimated funding positions for the Plan as of July 1, 2000, and July 1, 2001.

The D7 Committee (whose contract-mandated role is to review the adequacy of our pension Plan) has studied these reports, and currently is in the process of compiling its own report and recommendations. This will be the first time ever that this D7 Committee--originating in 1982--will have issued such a formal report. This, too, we see as an important part of the our response to the parity-principle proposal and its feasibility

I conclude with Season's Greetings and Best Wishes for a Happy New Year.

Datta

The Association

The Retirees' Association (Faculty, Librarian, Administrator) at Windsor was formed in 1990, to give a unified voice to retirees; to provide a bridge for communication with the University; to encourage social contact among the retirees; and to open a few doors through which retirees could continue to contribute to the University of Windsor.

Thus the Association is meant to fill what could otherwise be a void in the lives of retirees - possible isolation from the University and from their former colleagues; and possible lack of understanding of vital pension and health issues that affect them directly.

There are only two meetings of the full membership per year: in the spring and the fall. An informal social committee arranges several other events per year - dinners, plays, picnics, and so on -all of which are paid for by those who take part. The Association encourages smaller special interest groups to form as occasion and their interests warrant. Because of extreme economy of operation, dues have been kept at the level of $ 20 per year. This includes five issues of The Retirees' Newsletter .

Officers of the Association are:

President: Stan Cunningham

Secretary: Datta Pillay

Treasurer & Membership: Phyllis Nolan

Elected Members of the Executive

Committee: Don Briggs, Gino Fracas, Jerry Malone and Alan Metcalfe

Ex Officio Member:

Immediate Past President: Kumar Chatterjee

Founding President: Norm Shklov

Committee Chairs:

Bursary Fund - Wilfred Innerd

Pension & Benefits: John Meyer