Presentation on theme: " AUFA Pension Issues: timeline Eric Alcorn, AUFA President and AUFA representative on the Pension Committee. JN 19 Pre 2012: Sept - Dec 2012: Pension."— Presentation transcript:
AUFA Pension Issues: timeline Eric Alcorn, AUFA President and AUFA representative on the Pension Committee. JN 19 Pre 2012: Sept - Dec 2012: Pension committee (PC) warned of increased unfunded liability from Current $13m being covered by administration special payments, to $30m +. Chair initiates a process to review the pension plan to identify means to reduce the the unfunded liability in the upcoming 2013 valuation.
AUFA Pension Issues Dec 2012: N.S. government announces changes in regulations such that universities will have a year to start special payments for new unfunded liabilities, relieving the pressure to start employee special payments in May of 2013.
AUFA Pension timeline: 2013 Jan – June: Pension committee develops proposed changes to plan. June: Committee votes to endorse plan ‘8D’ and begins discussions on the communication strategy for information sessions and a vote, to be held in November 2013. Summary 8D Benefit8DCurrent plan IndexingNo indexingProspective indexing Final average earnings103 Early unreduced retirementRule of 85 / 58Rule of 80 / 55 2x contributions w/ interestremovedincluded Contribution increase2.3 – 2.5%0 Funding formulaMove to 50 / 50Keep current in plan
AUFA Pension timeline: 2013 Plan 8D not only drastically reduced benefits to active members, It over charges the active members by $20m over 25 years and shifts the burden of the CSC (Current Service Cost) to the members from the Administration. Nov.: AUFA executive becomes aware of the impending 8D and acts to stop it. Chair of the PC allows AUFA 3 weeks to come up with alternative plan changes that conform to certain parameters: 1) Address the unfunded liability, 2) Save the university $ from operating budget.
AUFA Pension timeline: 2013 Dec.: AUFA, on the advice of legal counsel, hires Paul Chang, an actuary from Morneau Shepell. Over the holidays AUFA executive members work closely with Paul Chang, Ron Pink, and the AUPA and SEIU reps from the PC to develop alternative proposals. Goals: 1)Stabilize the plan 2)Reduce the unfunded liability 3)Preserve benefits for members as much as possible 4)Address member portion of the unfunded liability through reduced liability and not special payments 5) Decrease administrative spending on pension from the status quo.
AUFA Pension timeline: 2014 Jan: AUFA presidents the proposal to the PC Summary AUFA Sponsored Employee Group Proposal (ASP) Benefit8DASPCurrent IndexingNo indexingProspective indexing Final average earnings1033 Early unreduced retirement Rule of 85 / 58Rule of 80 / 55 2x contributions w/ interest (CANSIM) freeze included Contribution increase2.3 – 2.5%00 Funding formulaMove to 50 / 50Keep currentKeep current in plan Portability after 55remainsremovedremains Cost share50 / 50removed0
AUFA Pension timeline: 2014 Jan: The AUFA sponsored plan provided the pension plan and the administration the following: -A reduction of $11m of the unfunded liability, the member portion, over 10 years, which becomes $15m over 25 yrs (a $4m bonus for the university) -Plan stabilization such that money removed from the plan does not out strip money accumulated and the admin will not have to cover unfunded portions of money removed (cash flow stability) -A $2m+ / yr reduction in payments for the administration over the status quo they are paying now.
AUFA Pension timeline: 2014 Jan – Feb: Five meetings of the Pension Committee to discuss the ASP. It takes over 3 weeks for the plan actuary, Doug Brake from Mercer, to analyze our proposal. The analysis is flawed resulting in several retractions by Mercer, one mistake over estimating the Plan liability by ~ $5m. The strategy of the BoG is to hyper-inflate the liability so as to minimize the impacts of the ASP proposal.
AUFA Pension timeline: 2014 Example: Mercer is now using as one of its assumptions salaries increases of 4% / yr. (Good news for negotiations?). This value increases liability by $4.7m. Independent analysis of the finances of Acadia University (Jn 2014) states that: “Total wages have increased by 7% since 2006.“ A mean of 1% / yr across the university community. “From 2006 to 2013, academic wages increased by 11% …“ A mean of 1.6% across faculty. This includes grid steps.
AUFA Pension timeline: 2014 Feb: The vast majority of debate concerned assumptions, particular salary assumptions going forward. The 50 / 50 cost share, to my knowledge, was brought up only once by the Chair in context of the 2006 agreement – as a sacred cow for the BoG and Administration. The Chair was reminded that all aspects of the plan were on the table. Not a single amendment or counter proposal was brought forward concerning the ASP.
AUFA Pension timeline: 2014 Feb 28: The ASP was defeated in a committee vote 5/4. All bargaining group representatives voted in favour of the proposal The BoG, admin, and all-employee-group rep voted against the proposal. March: AUFA develops a second proposal Same as first plus a 1% increase in contributions for for 15 years in lieu of 50 / 50 cost share. Provides $4m to the university over the 15 yr period.
AUFA Pension timeline: 2014 March - April: No meetings called for 6 weeks, with a looming valuation deadline approaching and the prospect of the ‘status quo’ massive increases to contributions. In consultation with our legal counsel the bargaining units (AUPAT, SEIU, and AUFA) reps unanimously decided to replace the all-employee-group-rep, according to the Terms of reference of the Pension Committee and the By-laws of the BoG. April 16: The new rep, Darcy Benoit, is barred from the meeting by the Chair. AUFA declares the committee illegitimately constituted and Leaves the meeting. As does SEIU. The meeting continues, but does not address the second ASP.
AUFA Pension timeline: 2014 April – May: The BoG makes clear that they feel they have followed the rules, and that they have absolute authority over membership of Standing Committees of the board, including representatives picked by the employees.
AUFA Pension timeline: 2014 May 1: AUFA’s legal counsel sends a letter to the Superintendent ofletter to the Superintendent Pensions outlining our concerns: 1)The ToR of the PC, the By-laws of the BoG have been violated by the BoG re: membership of the committee. 2) The Acadia pension plan, and provincial and CRA regulations have been violated by the BoG and the administration re: contribution increases for special payments. 3) Provincial regulations have been violated re: Part time employee access to the plan, and annual interest rates applied to pensions
AUFA Pension timeline: 2014 The Superintendent response:Superintendent response: 1)Any issue relating to the delegation of administrative duties to the Pension Committee is a matter to be addressed by the Board and the Pension Committee. -Work it out yourselves. 2) Ask the CRA, not me. As for funding policy – so what? 3) Give me more information AUFA was not surprised, but also not particularly pleased.
AUFA Pension timeline: 2014 May 21: Ron Pink, our counsel sent a second letter of clarification.second letter The superintendent has replied for a second time looking forsuperintendent has replied for a second time more clarification. The superintendent has yet to actually rule on anything! This issue is on-going and our counsel is actively pursuing a successful resolution. Our options are to wait for a ruling and possibly appeal it, take the issues to court and have a judge interpret the ToR and regulations, or continue to try to work with the BoG to resolve the matter. We are keeping the first two options in our pocket for now as we try to engage an unwilling BoG.
AUFA Pension timeline: 2014 June 4: AUFA president meet with Paul Jewer, Chair of the BoG to discuss the pension Committee membership issues. No real movement forward. Agreed to disagree on many issues. He reiterated the position that the BoG has absolute authority over membership of all BoG committees. Agreed to consider ways to get beyond the impasse.
AUFA Pension timeline: 2014 June: The Chair of the PC has called a meeting for Jn 27 th, which the two AUFA members can not attend (I am on vacation, and Cindy Trudel has negotiation duties). To date neither the BoG or administration representatives on the Pension Committee have brought anything forward for discussion, other than 8D, not a single motion, amendment, or new proposal. Their strategy has been to wait until the employees come to them. Though the Chair of the PC has stated that 8D is dead, as it stands, 8D is still the only proposal on the tabled. It was approved in in Jn 2013.
AUFA Pension timeline: 2014 June 12 th, the AUFA president wrote the following to the BoG chair, Paul Jewer: “To mitigate the difference in interpretation of the terms of reference of the Pension Committee all parties agree, that without precedence or prejudice, to temporally reform the committee by eliminating the all-employee representative while maintaining the representational balance. Specifically, the committee membership will be 7 (instead of 9) members consisting of the current number of SEIU, AUPAT and AUFA representatives, the PAC representative from the administration, and 2 of the current 3 Board of Governors representatives. Thus reducing the committee size by one employee and BoG representative.”
Update: Jn 26 2014 June 19 th : Received a reply from Paul Jewer, Chair of the BoG informing AUFA that they have no plans to mitigate the impasse concerning the membership on the Pension Committee. However, the Pension Committee will continue to meet. Jn 26: AUFA president expresses disappointment to the BoG response. Jn 26: Pension Committee meeting still planned for Jn 27 even though over half the plan membership will not be represented at the meeting.
Update Ag 15, 2014 July 4: CRA approves increases to Employer contributions to the plan. Approval of Employee contribution increase is still outstanding. July 24: CRA gives time limited approval for increased member Contributions. July 29: AUFA council sends a letter to the Superintendent of Pensions urging timely action.
Aug 14: Meeting between the bargaining units (SEIU, AUPAT, AUFA) representatives and Justice James MacPherson, Chair of the Board’s Governance Committee. Discussions centred around membership Issues, governance and the terms of reference of the Pension Committee. We expect a decision concerning our nominee for the committee shortly. Aug 24: Justice MacPherson confirms Darcy Benoit as the all- employee-group rep. Sept 18: Pension Committee called for Oct. 16th