Stock market losses affect faculty pensions at Western

Tuesday, April 7th, 2009

With pension problems being felt all over Ontario, Western is feeling the strain.

“It’s more acute for people who are approaching retirement,” Mike Carroll, president of the University of Western Ontario Faculty Association, said.

He estimated the current market has cost some faculty members up to 35 per cent of their retirement funds.

Faculty at Western have a defined contribution plan, which means both the employee and employer make contributions to a fund. These contributions are generally the same amount every year and employees are able to choose where their money is invested.

This means when a faculty member retires, the university does not owe them anything more, Carroll explained.

The current recession has also caused many faculty members’ investments to lose value and has forced some members to delay retirement.

“If you invested in equities the money is dramatically reduced,” Carroll said.

The province is also running into some pension trouble. A provincial government report, opened for comment this week, foresees Ontario’s Pension Benefits Guarantee Fund is likely to run into some difficulties.

This will cause the program to run into problems both with revenue and the numbers of people applying.

PBGF is a program to provide financing for pensioners when their former employers are unable to provide a pension.

According to Rick Robertson, professor at the Richard Ivey School of Business, PBGF receives revenue from a variety of different sources. As such, a large company could bring down PBGF both by cutting revenues and increasing demands on the system.

The inability of the PBGF to provide for pensioners will not hinder faculty here, however. The fund only provides for employees who have a defined benefit plan, meaning the employer sets what their retirement benefits will be.

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