Pension plan is safe, memo promises

Staff and faculty members don’t need to worry that their pension plan will be changed to a potentially less secure “defined contribution” structure, says a memo from the pension and benefits committee that’s being distributed today.

The memo is a response to a letter circulated Friday signed by leaders of three organized employee groups, warning that “Critical changes to your pensions are being considered . . . is your pension going to be as good as you think? . . . The younger you are the greater the effect of the changes!”

Today’s memo says that the letter from the three associations “does not at all represent the changes we are considering” and is probably based on a misunderstanding. It says some proposed changes to details in the pension plan are not a threat and don’t involve an end to the highly prized “defined benefit” structure.

A defined benefit, or DB, pension plan pays a retired employee an amount that’s promised long in advance, based on the number of years of service and the individual’s final salary. On the other hand, a defined contribution (DC) or "money purchase" plan pays a pension that’s based on what the accumulated premiums will buy when retirement time comes.

“The University and the P&B Committee is committed to our Defined Benefit Pension Plan,” says today’s memo. "Your pension does not depend on investment results or the health of the Pension Plan.”

Friday’s letter came from Roydon Fraser, president of the faculty association; Joe Szalai, president of the staff association; and Greg Macedo, president of Canadian Union of Public Employees local 793. It warned that proposed changes to the pension plan, being worked over by the P&B committee, are “fundamental in nature and far-reaching in effect”. And it announced an open meeting next Tuesday at which a consultant will speak on “Pros and Cons of Defined Benefit, Defined Contribution, and Hybrid Pension Plans”.

“By all means attend the meeting,” today’s memo responds, saying the speaker “has a fine reputation for being able to explain complex pension issues in simple terms”. The February 27 meeting will start at 12 noon in the Humanities Theatre.

The memo says the P&B Committee “is considering changes to ensure the long-term sustainability of the Defined Benefit Plan. We have been looking at five related issues: Moderating our assumptions of future investment returns based on our actuary’s advice. Changing how we treat members who leave the University before retirement. Stabilizing employer contributions to the Plan; these have increased from 138% of employee contributions in 2002 to 172% in 2007. Increasing employee contributions to the Plan in order to ensure its future viability; the formula under consideration would graduate the increase in member contributions by salary level (i.e., the increases will be lower at lower salary levels and higher at higher salary levels). Increasing the pension cap of $2650 per year of service.”

It suggests that any concern about future changes comes from a misunderstanding of that last issue, the “cap” on how large a regular pension can be. It goes into some detail about that aspect of things, observing that as the formula stands, "individuals with salaries greater than $145,000 now or 20 years in the future will not receive pension based on their entire income, even though they will continue to make full contributions. The Committee believes that this is unfair and is seeking cost effective ways to raise the cap. While this may not be a pressing problem at present, it will certainly become so in the near future and it is important that the Plan be funded appropriately.

“This is a complicated issue since much of the cost of funding pension plans has to do with looking forward and predicting ultimate costs and liabilities. We are considering a proposal that could solve the problem, maintain the Defined Benefit Plan and provide the funds to ensure the UW Pension Plan continues to be solvent, viable and able to deliver the retirement income intended.

“This proposed solution will provide for the Registered Plan to increase its limits to the maximum permitted under the Income Tax Act, while transferring the remaining pension costs to the Payroll Pension Plan," a separate, existing fund that doesn't have the same constraints as the main registered pension plan. For a smaller number of the highest-paid employees, a third fund will be created, a so-called "notional account" that "will not replace what they would receive if their entire salary was covered under a defined benefit plan, but will provide some additional retirement income".

Says the memo: “These changes are meant to ensure that the Defined Benefit Plan at Waterloo remains healthy, solvent and intact. . . . In March, we expect our actuary to have a comprehensive draft of the proposed changes for the Committee’s review. Subsequent to that, we will present them to Plan members for input and suggestions.”

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George continues at helm of IST

Alan George (left), who has headed UW's information systems and technology unit since 2003 — and held multiple other senior positions in the university since the 1980s — will continue in the IST job until 2009, the provost has announced.

Says a memo circulated by provost Amit Chakma: "I am pleased to announce the re-appointment of Professor Alan George as Associate Provost, IST for a two year term effective July 1, 2007.

"Professor George has served UW in many administrative leadership positions, including a combined 18 years as Provost and Dean of Mathematics. He has been serving as the Associate Provost, IST since 2003, and has been concurrently serving as Interim Vice-President, University Research since January 1, 2006."

He's now retired as a faculty member in the school of computer science and serves there as an adjunct professor. When he took on the IST role in 2003, he was still dean of math; in 2005 he finished in that office but was renewed for two years as head of IST. Then last year he was called in to serve as interim VP (research) as well, a position he'll be able to leave on July 1 when George Dixon, currently dean of science, takes on the VP post.

Said Chakma's memo: "Over the past years as Associate Provost, IST, Alan has provided very strong leadership in the area of information technology. With the conclusion of his role as Vice-President, University Research in June 2007, he will be able to devote his full attention to the IST portfolio. I am personally grateful to Alan for his long standing commitment and dedication to UW and his willingness to continue as Associate Provost, IST for an additional two year term. President Johnston and I look forward to continuing to work with him, and are confident that he will have your full cooperation and support."

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Music scholarship donated to Grebel

“To recognize his family’s passion for music,” the university’s 2005-06 donor report tells readers, “Rudy Rempel has established the Rudolph and Hedwig Rempel Music Award.

"By working with Darren Pries-Klassen at Mennonite Foundation, Rudy realized that he had enough resources to care for himself and his son and make a gift to support his love of music. This endowment will provide $2,500 over four years to support and promote musical gifts to four students per year studying at Conrad Grebel University College and pursuing Music studies at the University of Waterloo.

"Born in Halbstadt, Ukraine, and blind since the age of two, Rudy developed a keen ear and love for music. He attended a Music Technical School in Simferapol in the Crimea where he soon became a teacher. Rudy enjoyed the interaction with students and particularly appreciated working with gifted students. Although destined for fame in Leningrad, World War II unfortunately interrupted Rudy’s musical studies and led him on a different path. Rudy immigrated to Waterloo in 1948.

"His future wife Hedy had immigrated earlier to Canada in 1924 from Gnadenfeld, Ukraine. The Rempels settled in Kitchener and had one son, Walter. In spite of Walter’s developmental handicaps, he is a very social person with a great memory and he enjoys interacting with family and friends. Rudy worked at tools and projects to improve the quality of life of blind persons and helped the Canadian Mint to design coins that could be easily identified by touch for the blind. He also served for four years as National President of the Council of the Blind.

"Hedwig, who died in 2003, was a tireless caregiver for Rudy and Walter. Not only did Hedy manage the household, but she managed the family’s finances. The fruits of their modest life and their love of music are manifest in the generous gift that makes this award possible.”

CAR

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