About Our Pension Plan
One of the key negotiating issues in this round of bargaining with CUPE 233 has been contributions to the university's pension plan. The university believes in transparent disclosure about the pension plan and its management, and that all pension plan members should have accurate and up-to-date information. We encourage you to review corrections to inaccurate information about the university’s pension plan and its management.
8 key things to know about TMU’s pension plan
- Since its inception in 1964, TMU’s pension plan has been funded through equal contributions from plan members and the university.
- Five employee groups contribute to TMU’s pension plan: CUPE 233, OPSEU 596, the Toronto Metropolitan Faculty Association (TFA), Management and Confidential Employees (MAC), and senior administration.
- Four of the five participating employee groups have the same equal contribution rates, which are matched equally by the university. Equal contribution rates are not enshrined in the TFA Collective Agreement.
- In the broader public sector, using the equal contribution principle is a common approach to pension funding.
- TMU’s pension plan is well-managed. Since the plan’s inception in 1964, there have only been three contribution increases.
- Within the university sector’s defined benefit plans, the TMU pension plan has one of the lowest contribution rates for employees.
- From a total compensation perspective (which includes paid time off, benefits, pension and wages) TMU offers among the best total compensation packages in the post-secondary sector within Ontario.
- The university’s goal is to ensure that the plan remains sustainable over the long-term and that employee pensions are protected now and into the future.
Important information about TMU’s pension plan
General pension plan information
One of the key negotiating issues in this round of bargaining with CUPE 233 has been contributions to the university's pension plan. With this in mind, we are sharing some important information about the university’s pension plan, its history and its current funding model.
TMU’s pension plan is designed to provide retirement income to plan members and has been well-managed for many years. Since its inception in 1964, it has been funded through equal contributions from plan members and the university. Equal contributions are written into both the pension plan document and the CUPE 233 and OPSEU 596 collective agreements.
The university is fully committed to being a responsible steward of the pension plan to ensure that the plan remains sustainable over the long-term and that employee pensions are protected now and into the future.
The university believes there should be equity and fairness in how the pension plan is funded. This means shared and equal contributions for the university and participating employee groups. This is a common approach to funding in the broader public sector and has ensured pension plan stability.
When other universities were experiencing deficits in their plans starting in 2009, the TMU pension plan was one of the few that wasn’t in this position. In contrast to many other university plans, in nearly 60 years of operation, TMU’s pension plan has only experienced three contribution increases since its inception.
The university is required to file valuation reports with the regulatory authorities that document contribution requirements. The December 31, 2019 valuation report showed that increased contributions would be legally required as of January 1, 2021.
The university has always shared contributions equally with contributing members and therefore the university's and the employees’ contributions were both increased by 0.4% in accordance with the 2019 valuation.
In response to the contribution rate increase, the TFA filed a grievance claiming that contributions for TFA members could only be increased through the collective bargaining process, on the basis that their collective agreement explicitly includes a current pension contribution rate. Unlike the CUPE 233 and OPSEU 596 collective agreements, the TFA collective agreement does not contain the equal contribution language.
The arbitrator decided in the TFA’s favour and as a result, for the first time in the pension plan’s history, one employee group is contributing less than the university and less than the other employee groups. The university was very disappointed with the arbitration decision and recognizes the inequitable situation that has been created.
Our goal is to continue to ensure that the plan remains sustainable over the long-term and that employee pensions are protected now and into the future.
The university believes that equal pension contributions by all employee groups benefit employees in the long-term by ensuring the pension plan remains strong.
Contributions are determined by the plan’s independent actuaries.
Since at least 1990, both the CUPE 233 and OPSEU 596 collective agreements with the university explicitly outline that pension contributions will be shared equally between participating members and the unions.
On January 1, 2021, pension contribution rates increased by about 0.4% each for members and the university.
There are nine universities in Ontario of comparative size to TMU that have defined benefit pension plans.
Six of the nine universities share equal contributions between employees and the university. This includes TMU with the exception of members of the Toronto Metropolitan Faculty Association. TMU’s pension plan contribution rates for employees are lower than five out of six of these universities.
Of the three universities that do not share equal contributions with the university, they all have higher contribution rates for employees than TMU.
In summary, of the 9 universities with defined benefit pension plans, eight have higher contribution rates than TMU.
TMU’s pension plan is well-managed and is currently fully funded and in a healthy position.
The university filed its most recent valuation report on March 31, 2022 which showed that the contributions based on the plan formula were $4 million higher than what the minimum contribution formula required as of that date. This $4 million reflects 0.22% of the total fund value.
A number of factors contributed to this positive valuation, including an increase in bond yields and long-term investment returns which lowered the liabilities of the plan. Additionally, the submission date was selected to ensure the stability of employee and university contributions required given the high volatility of the marker, which impacts valuations.
It’s important to note that the valuation report only reflects a snapshot in time. At this time, the $4M remains within the plan and can be used to offset additional contributions that may be required in the future.The university’s goal continues to be balancing stability of the plan in a volatile market and managing costs for our employees.
Should future reports show higher contributions than what the minimum contribution formula requires, the possibility of decreased contributions would be assessed in the context of the pension plan’s sustainability.