It seems to be becoming a refrain from me – no pension increase this year and don’t expect any next year. Although the July 2010 to June 2011 return on investments was quite good (just under 15%), it did not reach the over 17 percent needed to qualify for an indexing increase. Looking forward to next year, I again think it is unlikely we will receive any indexing increase. The Plan would still need to earn almost 17% to achieve the indexing target and given the poor stock markets of the last half of 2011 (the first half of our Plan year), that seems most unlikely.

The Pension Trust Committee (PTC) is continuing to work on revising our Plan’s asset mix. As a result of an extensive Asset/Liability study we decided to move to a greater degree into Canadian equities (from non-Canadian equities) and into longer-term bonds (from our current mixed term bond investments). We have not yet moved the bonds into longer terms because of the particularly low interest rates on long bonds. Moving into longer-term bonds, nevertheless, remains the long-term strategy and we will regularly revisit the question of when to make this move so that it is advantageous to the Plan. Salaried pensioners recently received a letter from the Administration (Mark Haley) about the state of McMaster’s Salaried Pension Plan and the University’s application for solvency relief because of the Plan’s deficit situation. The letter states that this application process does not impact your pension, which may be all that many of you will want to know, but I thought it might be useful for me to provide my perspective on this letter. The short version of my comments on the deficit situation is given in point form here. A longer version is available at: 

Comments from Les Robb on the December 2011 Letter from the Administration (Mark Haley) about McMaster’s application for solvency relief for the Salaried Pension Plan

...for those of you who want more detail.

1. The Plan’s deficit is mainly due to the historically low interest rates that have increased the value of the Plan liabilities.
2. With or without the solvency relief, the University’s contributions are going to be a major drain on the McMaster budget.
3. Although there are no immediate risks to our pension payments, we need to be alert to the potential impact of any changes to the legislation governing the Plan in the more distant future.
4. In my view the University’s application should have been discussed at the Pension Trust Committee and with other groups that represent active and retired Plan members before the application was submitted.
   

Les Robb
MURA representative - Pension Trust Committee