by Les Robb, MURA representative on the Pension Trust Committee

For the last few years I have reported at this time of year with good news of pension increases. However given the stock market collapse I warned in the Summer 2009 newsletter not to expect an increase in January 2010, and I can now report that the annual rate of pension increase this year (January 1, 2010) is ZERO. The rate of return in the pension fund for 2009 was -11.69%. Combining this return with the previous 4 years of return gave rise to a five-year annual average rate of return of 2.94%. This rate falls short of the 4.5% required for indexing so there will be no indexing this year.

I did a quick calculation to see what would be required to achieve indexing in 2011. The fund would need to earn 18 per cent or more in the year ending on June 30, 2010 to bring the calculation back into the range that would lead to positive indexing. Such a rate of return is a very rare event in a plan such as ours, so my best guess is that we will have zero indexing for at least 2 years.