The Nova Scotia Department of Labour and Advanced Education has notified ±«Óătv that an Order in Council has been issued that will provide short-term solvency relief for the university pension plan. This relief will be in effect for two years, giving ±«Óătv a most welcome window in which to work toward permanent solvency relief.
“This is a very positive development for ±«Óătv,” says Ken Burt, Vice President, Finance and Administration. “This is the beginning of a process that we're hopeful will put us on track to build a pension system that works for everyone at Dal. We've been working closely with employee groups to get to this point and we will continue to do so in order to find ways to make our pension plan more cost effective for all concerned.”
Pension relief and a process of working toward a more sustainable system is not new for the university. It was referenced as far back as the long-term financial plan in 2006/07, and came to a head during the market crash of 2008 which severely affected the financial health of the ±«Óătv pension plan. Discussions around the future of the plan have been ongoing since that time including a series of well-attended town hall meetings across the campus over the past year.
Sharing the responsibility
These pension challenges have had an impact on the university's budget planning, especially in a climate of government cuts. While many understand the value of the current defined benefit plan, which promises a guaranteed income upon retirement, the increasing cost of these plans for employees and employers is forcing many organizations to look at other options. For those who are committed to keeping the defined benefit plan, the jointly sponsored defined benefits plans are becoming more prominent. These pension plans allow employees, as co-sponsors, to share responsibility with the university for plan governance, trusteeship, and administration, including the level and kind of benefits provided.
So what happens now? “This is not the end of the story,” says Katherine Sheehan, Assistant Vice-President, Human Resources. “In general, defined benefit plans are becoming increasingly expensive partly because we are all living longer and enjoying our pensions for a longer period of time. Jointly sponsored plans are more responsive to change and to the needs of the members. Without a governance change, the longterm viability of the plan will remain in question.”
Accordingly, the university is proposing to move to a jointly sponsored plan which will allow it to achieve permanent solvency relief. “The Nova Scotia government has said very clearly they are going to follow the Ontario legislation which involves giving permanent solvency exemption to jointly sponsored plans,” adds Ms. Sheehan. “ The university will continue to work with our employee groups to develop a new governance structure and continue to educate our employees on the value of the defined benefit pension plan we have at ±«Óătv.”
For questions on pensions, please e-mail: pensions@dal.ca or visit the Pension & Employee Benefits website to view the town hall presentation and a series of FAQs.More town halls are being planned in May so stay tuned for details about those dates.