THE RETIREES' NEWSLETTER

Fifth Issue Nov\Dec. 1993 page 5

PENSION NEWS

RETIREES' ASSOCIATION GIVES SUPPORT TO 4-YEAR AVERAGING OF MONEY-PURCHASE PENSIONS

Levels of money-purchase pensions in recent years have behaved like a yo-yo in their ups-and-downs. In response to much concern, Mercer actuaries recently put forth a plan for four-year averaging of such pensions.

The question was taken up at a recent meeting of the Pension and Benefits Committee of the Faculty Association, of which our President and Secretary-Treasurer are members.

At that meeting Shklov and Phillips expressed to the University and the Faculty Association their support for such a plan, which would greatly lessen the annual swings without reducing the long-term level of any individual pension.

With the latter point in mind, Norm Shklov, President, enquired whether the actuarial report contemplated using an arithmetical or geometric average, pointing out that the geometric average would be more appropriate.

Members will recall that, a few years ago, retirees on the money-purchase pension actually suffered a reduction as the return on investments in the fund fell precipitately.

As an emergency stopgap at that time, it was agreed that any negative changes in the annual level would be absorbed by the Fund, a measure which could clearly be only temporary.

The proposal for a four-year averaging plan, now under consideration, holds promise that the unpredictable volatility from year to year can be greatly reduced without adversely affecting the total pension received over time.

MINIMUM GUARANTEED PENSIONS

Shklov and Phillips also drove home the point strongly that, since some 50 per cent of retirees are on minimum guarantee pensions, the question of cost-of-living increases is also of urgent importance.

Shklov's recent study, which was carried in Newsletter No.4, showed real incomes of retirees on the minimum guarantee pension have been seriously eroded in recent years, and there seems every likelihood of a continued deterioration in future, unless this is fairly dealt with.

We note with profound sorrow the deaths of two of our colleagues. Dr. Temple Kingston, of Canterbury College, and Dr. John Sullivan, of the Department of English, had been well known and highly respected at the University for many years. They will be sadly missed in our Association.

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