YUFA
News
Recent turmoil in the stock markets has raised some concern among members of the York Pension Plan (YPP) as to their retirement income.
The YPP has two components, the Minimum Guarantee and the Money Purchase Component. The Minimum Guarantee is unaffected by market fluctuations. If, however, the value of your share of the YPP is greater than that required to generate the Minimum Guarantee, this component is affected by market fluctuations.
Because the YPP is widely diversified, and 40% is in bonds, it changes in value much less than changes in the stock market.
The latest figures we have been given is that the value of the fund declined by about 2.6% during the first 6 months of this year (for more details, click here). This did not and will not reduce the pension of those retiring during 2002 as the value on last 31 December is the basis for the amount of their pension and the no reduction clause applies to that amount. Those retiring next year with a Money Purchase Pension will have a pension based on the value of their contributions on 31 December 2002, whether higher or lower than the current value, but will never be less than the minimum guarantee.
This decline will also cause no reduction in the pensions of people who are already retired and drawing pensions. The non-reduction clause protects those pensions. It will, however, impact the four year rolling average of fund returns, which is used to calculate when pensions are indexed.
YUFA has two nominees on the Board of Trustees of the York Pension Plan and is confident that the funds are invested prudently.
The current YUFA-nominated trustees are Walter Whiteley (whiteley@mathstat.yorku.ca) and Ellie Perkins (esperk@yorku.ca).