YUFA
Grievances
Grievance Settled – Changes to Mortality Tables and its Impact on Pensions
26 Sept 06 – On May 5, 2005 YUFA and the Administration signed the Minutes of Settlement for the Mortality Table policy grievance. The details of the grievance are laid out chronologically below and will be of interest to those who are nearing retirement or are interested in the University processes for changes in how pensions are determined.
1. On June 25, 2004 the Employer announced that the pension plan actuary had recommended that the University adopt an updated mortality table commencing January 1, 2005. In April 2004, the updated mortality table was recommended to and approved by the Board of Governors.
The phase-in period for the new mortality table was to take effect over two years, beginning with those members retiring on or after January 1, 2005. The effect of the new table was that pensions would be reduced by about 3% for those members retiring on or after January 1, 2005, and a further 2% for those retiring on or after January 1, 2006.
YUFA members must retire on either January 1st or July 1st and, in order to avoid financial penalties, must give 6 months’ notice if they elect to retire before their ‘normal retirement date’. Thus the fact that the change in mortality tables was announced on June 25, 2004 with an effective date of January 1st, 2005 meant that YUFA members could not elect to retire early and avoid the impact of a 3% reduction in their pensions. (Members of other employee groups have greater flexibility with respect to the dates on which they may retire.)
2. On July 15, 2004 YUFA filed a policy grievance alleging that the Employer had violated the Collective Agreement by unilaterally changing the mortality tables used to calculate pensions, without notice or consultation, and without an appropriate phase-in period. Furthermore, pension statements distributed to members in June 2004 provided pension projections based on the previous table, impacting negatively on members’ ability to properly plan their retirement date.
3. On July 19, 2004 the Employer responded to YUFA, stating that notwithstanding their position with respect to the merits of the grievance, they had decided to delay the implementation of the new mortality table by one year.
4. On July 29, 2004 an announcement went out to all pension plan members informing them that in response to concerns raised, particularly by those members nearing retirement, the University had decided to delay the implementation of the new mortality table for one year.
5. On May 5, 2005 YUFA and the Employer signed the Minutes of Settlement, which provide the following provisions for future implementation of mortality table changes:
The Employer will consult with the All University Committee on Pensions (AUCP) regarding future changes to the mortality table prior to announcing any such changes to the University community.
The Employer will provide AUCP with the mortality experience data on which future mortality table changes are based.
Paragraph 2 [of the Minutes of Settlement] will be deemed to constitute existing practices, subject to review from time to time based on their reasonableness and efficacy.
The Employer will normally provide members of the University community with at least one year’s advance notice of any future change to the mortality table (i.e., any change beyond the changes announced for January 1, 2006 and January 1, 2007).
The Employer is investigating ways of developing a protocol for mortality table adjustments by which such adjustments will occur on a regular basis in order to keep pace with changes in mortality experience. By providing for regular adjustments in response to changes in mortality experience, this protocol will aim to minimize the impact of individual adjustments. The Employer will present the results of its investigation, including any new protocol it develops, to AUCP.