Daily Bulletin, Thursday, February 9, 1995

THE PENSION PLAN:  Here's the text of the campus-wide memo issued
yesterday by the provost, Jim Kalbfleisch, to explain how the pensions
available to some retiring faculty and staff have been increased:

     The purpose of the UW Pension Plan is to provide retirement income 
     that is related to base earnings near retirement, and to protect 
     that income from the effects of inflation through cost-of-living 
     adjustments.  Over 20 years ago, Revenue Canada established a ceiling, 
     or cap, on pensions payable from our type of pension plan.  For many 
     years no-one at UW was affected by the cap, but that has changed as 
     salaries have increased while the cap has not.  Recently some retiring 
     Plan members have been unable to receive the pension indicated by the 
     pension formula.  The Pension and Benefits Committee has been concerned 
     that, if no changes were made, significant numbers of future faculty 
     and staff retirees could not receive their formula pensions.  A 
     special sub-committee, chaired by Professor Frank Reynolds, was 
     established to study the issues and suggest solutions.  The purpose of 
     this memorandum is to describe actions taken by the Pension and Benefits 
     Committee to deal with the cap problem.
     
     (1)  Indexation of the cap.
          Revenue Canada has announced that the cap will be indexed to the 
     average industrial wage beginning January 1, 1996.  On the 
     recommendation of the Pension and Benefits Committee, the Board of 
     Governors has approved steps, most recently at its October 1994 meeting, 
     to fund the additional costs to the Pension Plan as the Revenue Canada 
     cap increases.
          Indexation of the cap should stop the problem from getting worse, 
     but without further action there would still be a number of new 
     retirees each year whom the cap prevented from receiving their full 
     formula pensions.

     (2)  Change in pension form to which the cap is applied.
          The Board of Governors has approved a further change at its 
     February 1995 meeting.  Currently the Revenue Canada cap is applied to 
     our Plan's normal pension form (single life, 5- year guarantee).  In 
     future, the cap will be applied instead to the maximum pension form 
     allowed by Revenue Canada.  For members with a spouse, the maximum form 
     is a joint and survivor pension with a two-thirds pension to the survivor
     and a 5-year guarantee.  For single members, the maximum form is a 
     single life pension with a 15-year guarantee.  This change will produce 
     larger pension values for members affected by the cap.  As at present, 
     a member will then be able to select from a variety of pension forms, 
     or transfer the pension value and excess contributions out of the Plan.
          
     (3)  Actuarial adjustment of the cap beyond age 65.
          The Board has also approved a change in the Plan text so that the 
     cap can be actuarially increased for individuals who work beyond age 65.  
     This change will correct the current situation where individuals 
     affected by the cap find that their pension values steadily decrease 
     as they continue to work and contribute to the pension plan.
          
          The first change will permit larger initial pensions to be paid 
     to some individuals who retire from January 1, 1996, onward.  Changes 
     (2) and (3) will apply to new retirements as of March 1, 1995, and may 
     also affect pensioners who have retired with a capped UW pension between 
     January 1, 1990, and March 1, 1995.  If the application of changes (2) 
     and (3) results in higher pension payments to these pensioners, their
     pensions will be adjusted effective March 1, 1995.  There will be no 
     retroactive payments.
          These changes will not alter our Plan's pension formula.  Rather, 
     they will enable most individuals previously affected by the cap to 
     receive the full values of their formula pensions.  The Plan actuary 
     estimates that, even after these changes, the Plan will be more than 
     fully funded.
          The Pension and Benefits Committee will hold an open meeting to 
     discuss these changes on February 16, 1995.  Questions may also be 
     directed to Linda Bluhm (X2046) or David Dietrich (X3911) in Human 
     Resources.

The open meeting is set for Thursday of next week at 3:30 p.m. in Needles
Hall room 3001.

YESTERDAY'S GAZETTE had a few oddities in it, including the article about
a coming conference at which UW's Student Alumni Association will host
counterparts from across North America.  The article mentioned no date for
the event, which might have given the impression that it's this week.  In
fact, the student alumni conference is coming February 24-26.

And Pat Cunningham of the development office writes: "In the material I
gave you about Mardi Gras, I incorrectly stated that Val George, CHYM-FM,
would be the MC at 5 p.m.  It should have been Val Cole."

(Further to the February 17 Mardi Gras, by the way, Meredith McGinnis
writes that she still needs volunteers to help at the event, from 7 to 9:30
p.m. or 9:30 to midnight.  Anybody interested can reach her at ext. 3307
or e-mail meredith@corr1.)

TODAY:  Rienzi Crusz, retired from the staff of the Dana Porter Library,
gives a reading of his poetry at noon hour, for the Librarians' Association.
That event takes place in Dana Porter room 428.

Chris Redmond
Information and Public Affairs, University of Waterloo
888-4567 ext. 3004      credmond@watserv1.uwaterloo.ca