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University of Waterloo -- Waterloo, Ontario, Canada
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Friday, April 18, 1997

Pension fund is swelling

There is so much money in the UW faculty and staff pension fund that something has to be done to shrink it, the senate finance committee was told yesterday.

[Kalbfleisch photo]
Jim Kalbfleisch
"Chances are, if no action were taken, the university would be forced to stop contributing to the fund," said provost Jim Kalbfleisch. He said the fund, which recently passed half a billion dollars in assets, had a surplus of $37.7 million as of January 1, after two years in which its investments brought returns of 17 per cent and 20 per cent. If that kind of thing continues, the fund will soon bump into a limit set by the federal government, which doesn't allow a registered pension fund to have a surplus greater than 10 per cent of its liabilities. In UW's case that would be about $46 million.

Kalbfleisch said the pension and benefits committee -- which he chairs -- is dealing with the problem (problem?) in two ways.

First, it has recommended cutting pension premiums in half for the next three years, reducing what goes into the pension fund both from individual staff and faculty and from the university's budget. The recommendation was unanimous, at a P&B meeting held late last week, Kalbfleisch said.

Staff and faculty currently pay between 4.8 and 6.5 per cent of salary into the pension fund; the temporary reduction will mean another 2 to 3 per cent in people's take-home pay for the three years. The university will continue to put $1.33 into the fund for every $1 paid in premiums by individuals, but cutting the rate in half will save the budget some $3.3 million this year. The change is to go to the board of governors executive committee for approval on Tuesday.

Second, "possible pension plan improvements are under discussion" by the committee, Kalbfleisch said. Discussions will continue at its next meeting, scheduled for Monday morning. Anything it comes up with will likely go to the board of governors for approval next October.

"It's very tricky to find pension improvements that will benefit everyone," Kalbfleisch said. But it may be possible to tinker with the formula by which the "standard form" of a new retiree's pension is calculated, and the committee is also looking at "what sorts of early retirement enhancements might be possible".

A budget with a surplus

At its meeting yesterday, the finance committee voted to recommend a 1997-98 budget to UW's senate, which will send it on to the board of governors in the first week of June. After an hour of discussion about the budget, as proposed by provost Jim Kalbfleisch, the vote in the committee wasn't unanimous; Fred McCourt, president of the faculty association, said approval should be delayed until more information was available.

The big gap in the budget is information about the cost of any salary increases for staff, faculty and teaching assistants in 1997. "Negotiations have not been completed for any of the groups," Kalbfleisch said. He predicted a budget update in October, by which time salary information will be known and there will also be a clearer sense of whether enrolment is really going to shrink this year, as he's predicting.

The budget involves total spending of $176.1 million in the coming year, and a surplus of $1,950,000 (minus the cost of any salary increases). That compares to a $685,000 deficit in the operating budget in 1996-97, the fiscal year that comes to an end next week.

"I'm really pleased that at this point I'm not asking people to cut their budgets again," the provost said.

A potential deficit has been turned into a surplus through two main savings measures. First, the pension premium reduction is saving the university $3.3 million. Second, winding up a "life insurance reserve fund" means a saving of more than $1 million a year in payments towards last year's special early retirement program.

Kalbfleisch pointed out that -- largely because of government rules about tuition fee increases -- UW will increase the amount it spends on scholarships and student aid by about $1.5 million, to more than $4 million altogether. That increase is almost equal to the total increase expected in UW's income, $1.7 million from this year to next year. "Apart from new student aid, it's pretty well flat," Kalbfleisch said about the budget.

Some spending patterns have changed, though. Departments are shifting about $3.5 million out of salary budgets into other kinds of expenses, in the wake of the early retirements. But UW will still spend nearly 82 per cent of its money on salaries and benefits in the coming year.

Now, the rest of the story

Co-op students still taking part in employer interviews are advised that there will be no Student Access update tonight. The system will be receiving a Year 2000 upgrade. The next system update will occur Monday night (April 21), says Olaf Naese in the co-op department. "Any interview information you require during the upgrade will be posted on the co-op bulletin boards in Needles Hall, Engineering Lecture Hall and the Math & Computer Building."

The Twin Cities Kiwanis Club presents the next in its travelogue series tonight at 8 in the Humanities Theatre. Topic: "Europe's Wild Gem, Iceland". Tickets are $5.50, students $4.50, kids $3.50.

Electrical power and ventilation will be shut off at several north campus buildings tomorrow for work on hydro transformers. Power will go off at 8 a.m. at the Columbia Icefield, Hildegard Marsden Nursery, Brubacher House and Clemmer day care centre, and will be off until about 4 p.m. "If there is a heavy rainfall," a memo from the plant operations department notes, "this shutdown will change to Sunday."

The local Gilbert and Sullivan Society presents "Love Makes the World Go Round: Songs of Love from Gilbert and Sullivan to Broadway", Saturday night at 8 in the Humanities Theatre. Tickets are $12.

Wilfrid Laurier University student leaders say they're expecting 2,000 students at an on-campus end-of-term party tomorrow night. It's the second year for the official, controllable alternative to the "street parties" that got out of hand on Ezra Avenue as WLU exams ended in 1994 and 1995.

"The Super Cities Walk" to combat multiple sclerosis starts Sunday at 10 a.m. (check-in 8:30) from UW's Federation Hall. Walkers have been collecting pledges for the Multiple Sclerosis Society of Canada. There are three routes: 5 kilometres through Waterloo Park, and 10 and 15 kilometres through north Waterloo and the Laurel Creek Conservation Area.

Finally: "It's the worst time of the term," a faculty member said to me yesterday. And he only has to mark the exams, not take them. . . .


April 18, 1985: A fire hits the basement of Chemistry II about 5:30 a.m., doing extensive damage to laser chemistry laboratories.

Editor of the Daily Bulletin: Chris Redmond
Information and Public Affairs, University of Waterloo
credmond@watserv1.uwaterloo.ca -- (519) 888-4567 ext. 3004
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