Pension Surplus - Buyback Option Information
(e-mail sent to McMaster Community on June 25, 2002)

To: All Active members (current employees) of the Surplus Sharing Group

This message concerns the Buy-Back option and its cost.  If you are not eligible for this option, read no further.

It has come to our attention that, due to a misunderstanding between the University actuaries and the employee representatives and their advisors, the calculations for the buy-back were not done in the manner anticipated by the employee representatives and explained at the information sessions based on the Surplus Sharing Agreement and its appendices.

In particular, the cost of the buyback was taken directly from the buy back table provided in the packet sent to you in January 2001 whereas the explanation given in the information sessions was that the table would serve as a guide but that calculations based on the individual age and salary of individuals at July 2000 would be made.  Some individuals have therefore been given cost estimates in excess of what would have been charged if the calculation were done for the exact age and salary while others have been provided estimates less than the exact amount.

The University and employee representatives have discussed the matter and have concluded that new calculations must be done for everyone who wishes to avail themselves of the buyback option.  A new cost will be provided automatically to everyone who has requested to buy back some
previous service.  This is in process and you will receive a new estimate in the near future.  If you wish to continue with your current buy back plans, you will not need to respond.  If, however, you wish to change your buyback option, you will be told how to indicate this intention.

It is possible that there will be some individuals who previously decided against a buy back option because it seemed to them too expensive.  If this is your situation, than you can request that a new cost be provided for you as well.  You can do this by emailing your request to surplus@mcmaster.ca or leaving a phone message at extension #24272.

Before going to this stage, however, you might wish to look again at the buy back table at http://www.mcmaster.ca/mufa/buyback.html.  (Or for those who are capped at the CCRA maximum look at the table in the message http://www.mcmaster.ca/mufa/penapr15.html).  The present calculation moves your age and salary to the nearest cell above or below your actual age as at July 2000.  So, if you were 38 with a salary of $63,000 it would move you to the column for age 40 and the row for $65,000, for a cost of $4104.  Obviously you cannot get a revised estimate lower than the one for a person aged 35 and a salary of $60,000, which is at $2987.  The new estimate is going to be somewhere between these two values, $2987 and $4104. Moreover, because your age is more than half way through the age gap (between cells) and your income more than half way through the income gap, the new estimate is probably going to be above the midpoint between $2987 and $4104.  If you think this would make the buy back option sufficiently interesting that you want a new estimate, then request one now.

Les Robb for the Employee Groups
Simon Ouellet for the University