Dal building sustainable pension plan for the future

With more employees approaching retirement and living longer, many organizations across Canada, including Dalhousie, are faced with the challenge of sustaining defined benefit plans for their employees.

A defined benefit pension plan is one in which an employee’s pension payments are predetermined by a set formula based on length of service and a calculation of best average salary up to the time of retirement.  

To help put things in perspective, as of March 31, 2014, the actuarial valuation of the Dalhousie Pension Plan reported a going-concern deficit of $68 million. While the Plan experienced an improvement in its deficit in 2015 due to solid investment returns, financial recovery was offset by growth in plan liabilities due to increased life expectancies and an aging membership population. These challenges will continue to affect the Pension Plan in the future.

Under the direction of the university’s Strategic Initiative to reduce the deficit and stabilize the ongoing cost of the Pension Plan (5.4), a committee of representatives of the Board of Governors, retirees and all of the university’s employee groups represented on PAC has been working together to find solutions to address these financial challenges.*

“We recognize how important the university’s Pension Plan is to our faculty and staff. This strategic initiative focuses on ways to help reduce our pension deficit and stabilize its ongoing cost, while remaining focused on maintaining a defined benefit plan,” says Jasmine Walsh, acting assistant vice-president, Human Resources.

“The key to doing this well is our partnership with the employee groups. That has been instrumental to our successes to date and we look forward to an ongoing collaboration as we explore ways to reduce cost and volatility within our defined benefit plan,” says Walsh.

Ian Blair, NSGEU Local 77 representative, is also a member of the Pension Advisory Committee.

“We value our Defined Benefit Pension Plan and realize it is critical for pensioners, current members, future members and Dalhousie University,” says Blair. “We're cooperating to ensure our Plan is sustainable, affordable and offers the optimum benefit for all. We're carefully studying options as the Plan is complex, while being cautious that the changes do not have unintended consequences. This takes time, however we are seeing positive results from our efforts.”

A Pension Plan amendment was introduced in August that will allow the university to change the calculation of the rate of interest credited on regular contributions under the Plan, to be in line with the market rate. This change, approved at the Pension Advisory Committee in April and now registered with the Nova Scotia Office of the Superintendent of Pensions, will mean significant savings to the university’s operating budget right away and will help to offset increased costs in future Plan valuations. Read about the amendment.

“The achievement of this amendment is an important first step towards reaching the project’s goal of a sustainable pension plan at Dalhousie,” says Walsh. “However, the cost of our deficit remains significant and we need to press this agenda forward. We are continuing to work together with the Pension Advisory Committee to explore alternatives to reduce the Plan’s cost and volatility.”

For more information about the Pension Plan, visit dal.ca/pension. If you have any questions about the Plan, please contact Dalhousie Retirement Services by email at pensions@dal.ca or by phone at (902) 494-1782.

*Editor's note: This sentence has been updated for clarity to note "employee groups represented on the PAC."