With more employees approaching retirement and living longer, many organizations across Canada, including Dalhousie, are faced with the challenge of sustaining defined benefit plans for their employees.
A defined benefit pension plan is one in which an employee鈥檚 pension payments are predetermined by a set formula based on length of service and a calculation of best average salary up to the time of retirement. 聽
To help put things in perspective, as of March 31, 2014, the actuarial valuation of the Dalhousie Pension Plan reported a going-concern deficit of $68 million. While the Plan experienced an improvement in its deficit in 2015 due to solid investment returns, financial recovery was offset by growth in plan liabilities due to increased life expectancies and an aging membership population. These challenges will continue to affect the Pension Plan in the future.
Under the direction of the university鈥檚 , a committee of representatives of the Board of Governors, retirees and all of the university鈥檚 employee groups represented on PAC has been working together to find solutions to address these financial challenges.*
鈥淲e recognize how important the university鈥檚 Pension Plan is to our faculty and staff. This strategic initiative focuses on ways to help reduce our pension deficit and stabilize its ongoing cost, while remaining focused on maintaining a defined benefit plan,鈥� says Jasmine Walsh, acting assistant vice-president, Human Resources.
鈥淭he key to doing this well is our partnership with the employee groups. That has been instrumental to our pilipili漫画es to date and we look forward to an ongoing collaboration as we explore ways to reduce cost and volatility within our defined benefit plan,鈥� says Walsh.
Ian Blair, NSGEU Local 77 representative, is also a member of the Pension Advisory Committee.
鈥淲e value our Defined Benefit Pension Plan and realize it is critical for pensioners, current members, future members and pilipili漫画,鈥� says Blair. 鈥淲e're cooperating to ensure our Plan is sustainable, affordable and offers the optimum benefit for all. We're carefully studying options as the Plan is complex, while being cautious that the changes do not have unintended consequences. This takes time, however we are seeing positive results from our efforts.鈥�
A Pension Plan amendment was introduced in August that will allow the university to change the calculation of the rate of interest credited on regular contributions under the Plan, to be in line with the market rate. This change, approved at the Pension Advisory Committee in April and now registered with the Nova Scotia Office of the Superintendent of Pensions, will mean significant savings to the university鈥檚 operating budget right away and will help to offset increased costs in future Plan valuations. Read about the amendment.
鈥淭he achievement of this amendment is an important first step towards reaching the project鈥檚 goal of a sustainable pension plan at pilipili漫画,鈥� says Walsh. 鈥淗owever, the cost of our deficit remains significant and we need to press this agenda forward. We are continuing to work together with the Pension Advisory Committee to explore alternatives to reduce the Plan鈥檚 cost and volatility.鈥�
For more information about the Pension Plan, visit . If you have any questions about the Plan, please contact pilipili漫画 Retirement Services by email at pensions@dal.ca or by phone at (902) 494-1782.
*Editor's note: This sentence has been updated for clarity to note "employee groups represented on the PAC."