Provided by Michele Leroux, Manager,
Benefits and Pensions, Human Resource Services
The current economic market decline has provoked many questions and media coverage concerning the status of Registered Pension Plans in Canada. MURA has asked the Benefits and Pension Unit of Human Resources Services for a brief explanation of how these events impact pension payments from the registered plans.
The impact of the markets on the McMaster Pension Plan funds was recently addressed in the McMaster Update, December 2008 (Volume 1, Issue 1). The following are excerpts from the article:
“The pension plans are designed to provide benefits over the long term, and fluctuations in the markets are anticipated and taken into account in the portfolio’s investment strategy.”
“The amount of the pension a McMaster plan member receives does not fluctuate with the status of the plan and payments come out of a pool of funds separate from the University’s operating budget.”
Defined Benefit Plans
Both the Salaried and Hourly McMaster Pension Plans are defined benefits plans. In general, a defined benefit plan structure has the following key elements:
- Employee Contribution formula is defined (as outlined in the plan text).
- Your base Pension Benefit at the time of retirement can be estimated in advance according to the formula defined in the plan text. Investment returns do not impact your base monthly pension payment. The only impact is on potential annual pension increases in the future.
- Employer (University) Contributions are not predictable and are dependent on the plan’s investment returns, assumptions and experience (assumptions are governed by Actuarial Standards).
Additional Information
To learn more about the governance structure, investment policies and procedures, or quarterly investment returns for the pension funds please visit the HR Pension page.
Pensioners are encouraged to visit the website provided above and review documentation provided by Human Resources Services.
Wishing you all the best in 2009.
- Michele
