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