The Retirees' Newsletter
The Faculty and Librarian Retirees' Association, University of Windsor, Windsor, Canada
Issue # 15 -- December, 1995
(With reference to the letter printed below, readers' attention is directed to the reply, by Norm Shklov, on the following page)
Your Newsletter (#14) was as usual interesting and informative. I read it with pleasure and some nostalgia, although I like Toronto and have plenty to do here [and elsewhere]. This particular Newsletter touched, I think, on an important topic for all faculty - retirement income.
As we all know, our retirement fund was by far not the best of funds. At first it was kept secret from the faculty. When its innards were finally disclosed to the faculty, it turned out that it had been losing money hand over fist. Moreover, in the early seventies, then under Canada Trust management, the fund lost, I was told, many millions of our money in one year. My own MP [Money Purchase - editor] balance was depleted in the first couple of years of my retirement to such a degree that I lost all hope to ever change from the minimum pension to the MP pension. Our actuary predicted for me that I should be switched to MP pension in about ten years after retirement. But due to the above calamities I was not switched until fourteen years after retirement. We had perhaps bad luck with the choice of our fund managers [?]/ And it cost us all.
The moral of the story is that, short of improving our fund management, faculty should be arranging its own retirement packages individually and in parallel with the university pension. I did just that and am glad that I did it. I tried various strategies, but eventually settled on Mutual Funds. I think that as far as funds are concerned, two considerations are important: the reliability of the people behind the fund...and the quality of the investment policy. Timing of purchase is also important, but in the long run it may become less important. Currency movements should be taken into consideration if necessary.
With these assumptions I have achieved in one fund, over a long period of time, three hundred percent appreciation without much risk; in another fund forty percent appreciation over a short period of time [about 13% annually] but with some risk involved; in another fund with no risk except currency depreciation about 6-7% p.a.; and in still another fund [abroad] 8-9% annual return. There were small temporary losses, but nothing to compare with the gains. There is of course also real estate, but one must watch the highs and lows like a hawk.
If I had relied on my university pension for my retirement, I would have been now dragging my butt along Toronto streets instead of travelling in fair comfort in the world even after my Government grants had expired in the late eighties [well after retirement]. I hope that these remarks may be useful to future retirees.
In case some people will think that I was just damned lucky, I should add that I and my parents had our portion of bad luck when we were twice forced to emigrate losing everything. Best regards,
VAL CERVIN, Toronto.
Editor's Note: I felt that, in fairness, some of Dr. Cervin's sweeping and disturbing statements about the University's pension plan, demanded competent scrutiny. I therefore asked Norm Shklov, statistical mathematician and longtime expert on our University pension, to write his reactions. Shklov's reactions are on the following page.
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