1. Original article: DID YOU KNOW… that budgets are a tool used by the Administration to get you to do more with less?

• Correction/Clarification: This opening statement is, of course, false. As a publicly funded organization, budgets are a prudent and legally required instrument for planning and tracking the expenditure and receipt of money.
  

2. Original article: THE PENSION “CRISIS”

• Correction/Clarification: Nearly every pension plan in Canada is currently experiencing significant funding issues as the result of broad economic and demographic forces. The term "pension crisis" has been used for several years by many financial experts, government officials and the news media. The Globe and Mail ran a seven-part series on the “pension crisis in Canada” in the fall of 2009. Given widely accepted expectations for low interest rates, lower investment returns and pensioner longevity, the Laurier Pension Plan design — like many other plans — is not sustainable in its current form.

3. Original article: The Administration has put on quite a show in the past two years about the serious deficit in our pension plan. A deficit is when assets in the pension plan are less than the pension liabilities. Another way of saying this is that the pension plan is underfunded. Yet, with all the talk of pension “crisis,” the Administration has deemphasized how this deficit originated.

• Correction/Clarification: In point of fact, the University has made prudent and responsible efforts to inform members of the Laurier Pension Plan of the very real concerns affecting our Plan and most other pension plans.
• The University has explained in detail and good faith the serious issues affecting all pension plans. The current pension deficit is the result of numerous factors, the primary cause being a sustained downturn in global markets.
  

4. Original article: Technical issues will be addressed below. But first let us look at the origins of the deficit in the Laurier pension fund by providing an analogy. Suppose that you buy a home (an asset) with a mortgage loan (a liability). One day the bank says that you cannot make payments on the mortgage loan for the next five years. During this five year time period the mortgage loan balance grows at an increasing rate because interest is charged on the unpaid interest. At the end of the five years the bank allows the homeowner to again make payments on the mortgage loan including all past payments not yet made.

• Correction/Clarification: This analogy is inaccurate and seriously misleading. The current funding difficulties affecting most pensions are the result of a combination of broad economic and demographic forces, not simply the result of contribution holidays taken nearly a decade ago. In the 1990s investment returns had been so favourable that many pension plans found themselves in a surplus situation – meaning the funds that had accumulated in the plan were much greater than the funds required to pay for current and future retirees’ benefits. The Income Tax Act, however, limits the amount of surplus a plan sponsor can hold in a registered pension plan.  Since it was not legally possible to continue to accumulate surpluses in the pension plan, most plan sponsors used their surpluses to pay their annual contributions. Utilizing surpluses in this way is what is known as a “pension contribution holiday”.
• This approach to dealing with plan surpluses was not only widely accepted as an appropriate practice, it was also encouraged by government.  In the 1990s there were expectations from the Ontario government that universities should be using the surplus in their pension funds to address shortfalls in university operating funding from the province and as a publicly funded institution committed to delivering high quality post-secondary education, it is incumbent upon us to direct available operating funds to support the mission of the institution. 
• Based on the recommendation of the WLU Plan’s actuary, the University took a contribution holiday from 1993 to 2003 to reduce the level of surplus in the Plan. WLUFA members also agreed to take a partial contribution holiday from July 1, 1999 to June 30, 2001. During this time, the surplus funds in the plan were redirected to make the full required money purchase account contributions as defined by the Plan text, thus maintaining the intended actuarial design of the plan.
  

5. Original article: The Laurier Administration has acted much like the homeowner who did not set money aside for mortgage payments and decided to spend the money. Just like that homeowner, the Administration borrowed from the pension plan and has not paid the pension plan for the loan. This is the origin of the deficit in the pension plan where liabilities are greater than assets. If this loan were paid, there would be no pension “crisis.”

• Correction/Clarification: This statement is simply not true, for reasons explained above. Laurier’s pension issues — like those of nearly every pension plan in Canada — are primarily the result of broad economic and demographic forces.
• The notion that the University should have set aside or invested the funds normally contributed to the pension plan in anticipation that, at some time in the future, the plan may become underfunded is not reasonable for three key reasons. First, the funds that had accumulated during the 1990s were greater than what was then expected to be required to fund the benefit promise (current and future), and greater than the Income Tax Act limits on the amount of funds a plan sponsor could shelter in a registered pension plan. Also, at that time in the 1990s, there were expectations from the Ontario government that universities should be using the surplus in their pension funds to address shortfalls in university operating funding from the province. Finally, as a publicly funded institution committed to delivering high quality post-secondary education, it is incumbent upon us to direct operating funds to support the mission of the institution.
  

6. Original article: At the end of 2010, our actuary calculated the Administration’s loan to be $59.27 million and the employee’s loan to be $4.94 million, both resulting from the pension contribution holidays.

• Correction/Clarification: The analysis performed by WLUFA’s actuary used forecasted service cost and money purchase contributions for each period instead of actual, resulting in an increased amount of projected accumulated funds. The analysis also neglected to include the special payments made by the University since 2002 that would presumably not have been needed. Taking this into account, the University’s actuary has determined the total contribution holiday to be $50.3 million.  

7. Original article: If these loans were paid as of 2010, our actuary has determined that the Laurier pension plan would be properly funded. There would be no pension “crisis.”

• Correction/Clarification: This statement is inaccurate and misleading, for the reasons explained at length above.

8. Original article: “Creating a useful crisis is part of what this will be about. So the first communications that the public might hear might be more negative than would be inclined to talk about (otherwise). . . Yeah, we need to invent a crisis and that’s not an act of courage, there’s some skill involved.” (John Snobelen, Minister for Education, Toronto Star, 13 September, 1997. P. A3)

• Correction/Clarification: The University has not “created a crisis”. It is clear from numerous public statements by a wide range of experts over the past several years that many pension plans in Canada have been seriously impacted by broad economic and demographic forces. Given widely accepted expectations for low interest rates, lower investment returns and pensioner longevity, the Laurier Pension Plan — like many other plans — is not sustainable in its current form.