Pension Surplus Update
(appeared in MUFA Newsletter, September 2001)

You have received various announcements from me over the summer updating our progress on pension surplus matters.  This is a further update and an attempt to consolidate the earlier information  in one place.

After finishing the campaign to get support for the proposal in early May,  we turned to finalizing a number of important documents.   These included the final agreement (now known as the Surplus Sharing Settlement Agreement), the new Pension Plan text, a revised old pension plan text, and a letter of understanding between the university and the employee organizations about future plan expenses.  I will say a few words about each of these in turn:

The Surplus Sharing Settlement Agreement is the final version of the agreement made last September.  It fills in a lot of the details and clarifies some of the issues particularly around taxation matters.  It is on the MUFA web site.

The new pension plan (known as, the Contributory Pension Plan For Salaried Employees of McMaster University Including McMaster Divinity College 2000, or Plan 2000 for short) is also on the MUFA web site.  It incorporates the changes necessary to allow the surplus distribution and the service buy back.

The revised former Pension Plan with revisions to allow the transfer of assets and liabilities out of the existing plan to the new Plan 2000 for those participating in the surplus distribution is not on the web site.   The changes are very minor and the Plan text is available in the Faculty Association offices if anyone wishes to view it

The letter of understanding is an agreement between the Administration and the employee associations.  It extends an agreement we had reached some years ago about our earlier Plan to the new Plan (Plan 2000).  It deals with administrative expenses that can be charged to the pension plan.

At the same time as these documents were in preparation, our lawyers were working with the University’s lawyers to prepare the various legal (court) documents that were going to be needed.  These have now been submitted to the court and are available for viewing on the web site.  The court procedure is in two stages.  The first one, which was completed in the first week of September involved submitting an Application outlining how we planned to proceed in the distribution including advertising our activities to those who may have an interest in the proceedings.  The second stage is scheduled for the end of October and is the formal hearing when individuals who wish to be heard by the courts may appear.  We do not anticipate any interventions at this second stage though this would be the opportunity for anyone who objects to the distribution to make her or his case.  Assuming we receive approval at this October meeting, the proposal will then go to the Financial Services Commission (FSCO) for final approval.  This will take 90 days, I am told, so we do not anticipate distributing surplus until February at the earliest.

While the Courts and FSCO are considering our proposal we (or rather, the Plan actuaries) are also pressing ahead with getting new options statements ready for distribution.  New calculations have to be made to reflect the retroactive increases awarded MUSA members as a result of their recent collective agreement.  This will increase the surplus shares of MUSA members, but should not affect the shares of others as there was sufficient money not allocated in the last round to accommodate the increase.  However, because there was money held back for this purpose, there will be adjustments (likely minor) to everyone’s surplus share as well.  We do not have an exact time frame for sending out the revised statements but it seems wise to wait until after the courts approve the plan at the end of October.  Even then, there are many other things the actuaries will be busy with and it will take time to print and get these forms in the mail so don’t be surprised if the forms are even later than that arriving.

Surplus sharing plan members will be required to return the  form  indicating  how  they wish their share to be distributed — how much to cash, how much to their RRSP (if they have room),  and how much if any to the buy back option.  The rules governing these options will be spelled out in more detail at that time and we are considering other ways  to  clarify  the options.  In any case, you should keep in mind that the University will need to get in touch with you at least twice more so if you are changing addresses, it is imperative that you keep the University informed.

Les Robb