A Newsletter for Members of YURA –
Published by the
Report by John A. Heddle, YURA Nominated Trustee
The York Pension Fund has passed a milestone this year, now being worth more than $1,000,000,000, one Giga-buck, or, in current parlance, a billion. Another milestone, passed a few years ago, is that the fund is now paying out more in benefits to members than it gets from contributions. The difference comes, of course, from investment earnings.
You probably know that the Pension Fund bounced back last
year from a 4% loss in 2002 to a 14% increase in 2003. The current year is unfinished, but the fund
has returned about 4% so far.
Unfortunately, it is most unlikely that it will do well enough for there
to be an increase in the pensions of retirees.
The ability of the Pension Fund to provide retirees with increases is a
matter of great concern both to us, the retirees, and to the Trustees of the
York Pension Fund, like me. This is in addition to the question of the ongoing
dispute between YUFA and
The pensions we are receiving are based on the assumption
that the Fund will return 6% annually.
Rather than buy an annuity from a Life Insurance Company, or elsewhere,
the York Pension Plan is self-annuitized and for this assumes 6%. In some years past, members were able to
withdraw their funds and buy an annuity with the same terms offered by the Plan
but at a higher rate, say 8%, so their pensions were higher, though they would
not be indexed in any way. In other
years, such as the present, a retiring member probably could not buy a 6%
annuity anywhere in
Surprisingly, we have not yet had a decision on the indexing
formula in the dispute between YUFA (on behalf of all retirees, present and
For example, if the most recent four year average had been
4%, then your nominal pension would be 2% less than what you are getting
now. The damage comes when an increase
follows a decrease. YUFA maintains that
the text of the Pension Plan requires the increase (the rolling average less
6%) to be applied to the existing pension.
The Trustees have also been very active in reviewing the governance of the Pension Fund. I think they are doing a great job and that we have one of the best run funds anywhere. (This is NOT the same as having one of the best retirement plans, it is about how the investments are managed, not the entitlements retirees have). We can thank our own representatives and the members of the Board of Governors who sit as Trustees and give a lot of their time, energy, and expertise to the Board of Trustees.
As in ISO14001 certifications, one of the important conditions is that self-examination be a permanent part of the process. One of the current issues is the voting the shares owned by the York Pension Fund. This is a complex issue, not merely a financial one, as I am sure you appreciate after the stories of a Canadian mining company funding, albeit indirectly, a war in Africa. For Trustees, being fiduciaries, it is not proper to do “the right thing” if it bears a financial cost. Many years ago, when the issue of investing in South Africa when Apartheid existed, the solution was to ask the members of the plan to approve withholding funds from South Africa even if it risked a reduction in the returns generated by the fund. Members agreed in a vote, thereby freeing the Trustees from their fiduciary shackles on this one issue. Clearly this is impractical as a general procedure for all the many issues that exist for a one billion dollar fund, which is what we have. There are hundreds of investments, most of them held very indirectly through fund managers who invested in index funds, et cetera. A policy is required because there are many decisions to be made by shareholders that do have financial impacts, such as the granting of stock options.
Previously, the fund managers voted the shares in accordance
with their own policies, though they could have been instructed by us. Effective
Finally, you will be delighted to know that Mort Abramson has agreed to become a trustee. Few of you will have forgotten his outstanding letters when he was a YUFA representative for several years. I expect most of you still have them. Anyway, I have asked to be replaced as I am moving west and Mort has agreed to take my place as soon as the Board of Governors formally approves his appointment. Goodbye and thanks for all the ¼coffee. John A. Heddle
The YURA OGS recipients this year were:
Bipasha Baruah ‑ Environmental Studies
Travis Fast ‑ Political Science
Laura Fenton ‑ Sociology
Angela Joya ‑ Political Science
Gregory Kennedy ‑ History
Ian Mosby ‑ History
Pandora Syperek ‑ Art History
Approximately $17,500 of YURA gifts in 2003/4 were designated to the Ontario Graduate Scholarship Program. These gifts were matched 1:1 by the York University Foundation and then 2:1 by the Provincial Government, providing $15,000 scholarships to seven graduate students at York.
Pension Returns on Investments, 2003
A February 2004 newsletter showed the percentage returns on eight investment funds in the York Pension Fund. The gross returns varied from 6.5% [TD Asset Management -- Canadian bonds, passive] to 30.8% [Sceptre Investment -- Canadian equities, active]. The total fund earned 15.1% gross; 14.6% after investment expenses were paid. However the 4-year average as of 31 December 2003 was 5.3603% – less than the 6% minimum necessary to fund an increase in pension benefits. Year 2003 was only the second year in the history of the York Pension Plan when there has been no increase in pension payments to retirees.
Benefits for University Teacher Retirees from the ARF Newsletter - the Association of Retired Faculty and Librarians, York University
The January 2004 Newsletter carried an extract from a report prepared by the Canadian Association of University Teachers (CAUT) comparing health, dental, vision and life insurance coverage provided by 18 different Canadian universities. Most of the institutions [12 of the 18] require some monthly payments from retirees for this coverage ranging from $34 to $180 per month. A copy may be obtained from the YURA office.
Donald Bean, Mathematics, started in 1964
Henry B. M. Best, died April 9, 2004, filled various academic administrative roles under President Murray Ross. He left the History Department of Atkinson College in 1977 to the Presidency of Laurentian University, Sudbury.
Leonard Birchall, died Sept. 10, 2004 at 89 years of age, Executive Officer, Administrative Studies from 1967 to 1982, Air Commodore (Retired), “Saviour of Ceylon”, past Commandant of the Royal Military College, Kingston, Ontario, LL.D [York] 1982.
Michele Campanaro, Caretaking, started in 1990
William Coleman, Atkinson, started in 1966
Eileen Daniel, Frost Library
Barbara Duncan, Health services, started in 1969
Anthony Farrugia, Psychology, started in 1970
Shirley Gourzong, Academic Affairs, started in 1971
George Green, Physical Plant, started in 1970
Alison Meikle, started in 1971
Angelo Moscardelli, Caretaking, started in 1991
Laura Rice, Psychology & CDC
Gerda Schmitt, Office of the Dean, Arts, started in 1974
Margaret Sampson, Music, Fine Arts
Miriam Dworkin Waddington, died March 3, 2004, one of Canada’s leading poets, died in Vancouver at 86 years of age. Born in Winnipeg and initially a social worker in hospitals, prisons and children’s agencies, she joined York’s English Department and taught until her retirement at age 65 in 1982. An excerpt from one of her poems is on the new $100 Canadian bank note.
Phyllis White, started in 1974
Contact any of the executive for more information about the YURA.
_ Albert Tucker, President, 416-921-1887; email@example.com
_ Ken Thomson, Past President, 416-241-6331;
_ Pearl Kroll, YURA Communications Co-ordinator [Available
during the day at the YURA Office - Ext. 70664]; 416-496-0261;
_ Frances Bukovec, Information Officer, 416-633-2225, firstname.lastname@example.org
_ Cynthia Dent, 416-488-7087,
_ Alex Murray, 416-924-1588; email@example.com
_ Catherine Ng, Treasurer, 416-638-0737; firstname.lastname@example.org
_ Susan Lanoue, 705-445-8135, email@example.com
_ Michael Lanphier, 416-961‑7236,
_ Barbara Tryfos, 416-494-1709,
_ David Wood,
_ Morton Abramson, nominee to the Pension Board of Trustees [effective Dec 2004],
_ John Becker, newsletter; 416-932-1754; firstname.lastname@example.org
The Executive is always interested in find new members to help carry on the work of the Association. Please volunteer. Call the office and leave your name.
Benefits and the Annual CURAC Conference by Albert Tucker
The second annual conference of CURAC (College and
University Retirees’ Associations of Canada) was held at the University
of Winnipeg last May 27-29. YURA and ARF
were both represented by Cynthia Dent,
Once outside of Toronto, or even of Ontario, we have also learned more about the ease with which university retirees, especially in western Canada, relate to non-university retiree organizations; about the problems of Benefit programmes, and about relations with the insurance industry. This year we were confirmed in our apprehensions that university administrations across the country are seriously reducing their financial participation in Benefit plans for retirees. Some are simply ending whatever contributions they have made in the past.
For retirees at York, this may well affect attempts to raise the lifetime cap on those medical and hospital expenses that fall outside of standard coverage by OHIP. Currently, retired faculty and librarians have a cap of $50,000; all other retirees are limited to $25,000.
As an added, more specific focus into our Benefits at York, Cynthia Dent has completed a very detailed, comprehensive study, which compares the Benefit plans at all universities in Ontario. Cynthia made a presentation of this study at the Winnipeg conference, and it will provide a valuable basis for further investigation of our Benefits at York. Meanwhile, all members of YURA should be thinking about insurance plans of their own before they reach the age of 70, since most companies will not insure retirees who apply after that age.
Parking by Albert Tucker
The new system based on twelve free vouchers per member seems to be working reasonably well. It still does not, however, satisfy the needs of those who continue for a few years after retirement, to continue research at the university and to direct graduate students voluntarily. Last February, the YURA Executive submitted the report of a small committee which recommended that those few retired faculty who need to come to the university on a more regular basis, be permitted to buy access cards that would enable the Parking Authority to record the costs (without requiring payment), so that drivers could be informed of the amount of their taxable benefit.
Mr. Gary Brewer, Vice-President Finance and Administration, has recently responded in a formal letter, from which I quote the following excerpts:
“I ¼cannot agree to provide complimentary parking to retirees, beyond the voucher system¼. It is not just a matter of taxable benefit. Parking is an ancillary business of the University that¼must recover the costs of building and maintaining parking facilities, as well as the costs of operating the parking service¼.We are not in a position to subsidize parking for retirees when students and employees¼are expected to pay.”
The letter suggests that where an arrangement exists between a volunteer and a department or program, some reimbursement might be made for parking expenses. The YURA Executive will continue to discuss the problem and will consider any further constructive suggestions that members would like to make.
The names of the two undergraduate students who have been selected for the following two awards that have been endowed by YURA member contributions:
Ms Reale Forbes - The William Small Award
Ms Gloria Hope - The Mature Student Bursary
Reflections on the August 2004 “Pension at York Newsletter” by John Becker
Basic Concepts behind a Pension Mortality Table
Mortality tables used by the York Pension Plan are recommended by the actuary and include a mix of factors. Using longevity statistics, mortality tables are determined separately for men and women. These are then combined using factors of 70% males and 30% females in the overall York employee group to establish a “unisex mortality table” because the law specifies that mortality tables used by pension plans must be gender-neutral. The actual mortality factor applicable to any one individual will differ depending on their age, marital status, age of spouse, and benefit option chosen.
Mortality Table Changes as of 2006
An updated mortality table will be used for plan members retiring as of January 1, 2006. These changes will not impact current retirees. They only impact future retirees. By taking account of increased longevity the starting pensions paid after 1 January 2006 will be slightly reduced if compared to what the amount would have been using the out-of-date mortality table. However it does not change the value of the total pension received. This is done to achieve a better “match” between the funds set aside to pay each pen-sion and the actual pension paid throughout a member’s retirement. This will also contribute to solving the deficit problem going forward. Further periodic, or regular, changes can be expected to the mortality tables to address the continued gains in life expectancy.
Pension Fund Deficit Announced
On average most existing pensioners are enjoying increasing life spans, an event not accounted for in the mortality table currently in use. Therefore the York Pension Plan will pay out more money than was predicted when one retired. When mortality is underestimated (as it was), the money available will "run out" while the pensioner is still alive. The shortfall is further increased when investment earnings fall below the projected average of 6% pa (as it has) since the no-reduction policy freezes pensions paid regardless of fund earnings. These factors contribute to the annual deficit which is close to $11 million for 2003. This situation will continue and require further ‘special payments’ from the university in the future.
The "shadow pension"
The "shadow pension" concept is one way the university hoped to avoid a deficit in the plan should earnings drop. These decreases have now occurred. (See description in Prof. Heddle’s report.) A successful challenge by some York retirees to provincial regulators disputing the legitimacy of this concept could be interpreted to mean that the pension liabilities have been miscalculated in all years back to the start-up of the York Pension Plan. Significant (many $millions) additional contributions would be required (but not from the current retirees who are protected because they are already retired) to cover this escalating deficit. The future sustainability of the plan will be seriously threatened.