Stage 1 Solvency Relief
Sponsors of Defined Benefit and Hybrid Pension Plans have experienced significant funding challenges since the market collapse in 2008. The market decline combined with declining interest rates has resulted in large funding deficits requiring employers to substantially increase the amount of money they contribute to their pension plans. The University sector has been heavily impacted since most Universities (including Laurier) sponsor defined benefit or hybrid plans and the increased contributions directly impact our operating budgets. Laurier’s December 31, 2009 actuarial valuation resulted in a $59.1 million going concern deficit (82.2% funded) and a $31.3 million solvency deficit (89.7% funded).
In response, the Ontario government is allowing the sponsors of public-sector plans to apply for temporary relief from pension Solvency special payments. The application process requires the submission of a Sustainability Plan(by March 23, 2011 for Laurier) detailing proposed plan design changes that, if implemented, will make the Pension Plan more sustainable and affordable in the future. The Sustainability Plan must be shared with plan members and retirees but does not require their consent. It is acknowledged that any changes must be collectively bargained with the various union groups prior to implementation.
Laurier’s proposed sustainability plan is based upon the following key principles:
- Maintaining a competitive and comprehensive retirement savings program for current and future employees
- Greater equality of cost sharing between the University and plan members in funding the pension plan
- Maintaining equality between employee groups and between different generations of plan members
We are committed to providing ongoing information to faculty and staff to help them better understand the Laurier pension plan design and the importance of the temporary solvency relief application. The documents below contain backgound about the pension funding situation and potential options to make the Laurier pension plan more sustainable subject to negotiations.
UPDATE June2, 2011: Laurier Receives Approval for Stage-One Pension Funding Relief