How might this affect McMasterʼs pension funds? As Administrator of the McMaster pension plans, the University is responsible for the investment of pension plan assets. A report being considered by the Ontario government may change how university pension plan assets are handled in the future. Itʼs too early in the process to know how or when, or indeed if, these changes will be made, but we want to make MURA members aware of the issues.

In May 2012, the provincial budget proposed the pooling of pension plan assets of the broader public service, which includes universities, and appointed William Morneau as Pension Investment Advisor. The Morneau Report was issued in October 2012. The report recommends the establishment of a new independent asset management corporation, and legislation requiring pension funds with less than $40 billion of assets to place these funds with the new corporation for investment. Universities may also voluntarily place endowment, trust and reserve funds with the new investment corporation.

The creation of this new investment management vehicle is intended to reduce asset management costs and increase investment returns. These benefits would result from economies of scale, reduced administrative costs, access to a broader range of asset classes and greater risk control. Pooling of pension assets across universities could provide opportunities to make advantageous investments that would not be feasible for an individual university pension plan.

What does this mean for active and retired members of the McMaster pension funds?

For active members, better investment returns would enhance the sustainability of pension plans and potentially reduce, or limit increases to, employer and employee contributions to the plans in the future.

For retired members, better investment returns would increase the likelihood that annual pension indexing would keep pace with inflation.

Shortly after the Morneau Report was issued, the Premier resigned and provincial parliament was prorogued until a new Liberal leader is chosen. Whether and when the proposals will be implemented is yet to be determined.

Stay tuned!

Cliff Andrews,  
Observer, Hourly Pension Plan Committee 

Bob West,
MURA representative, Salaried Pension Trust Committee