Ontario universities that have run into trouble keeping their pension plans afloat will see some relief from the province, but that doesn’t mean any new funding will be on the way. Pension funds that have taken a beating over the recession have accumulated massive deficits, meaning universities may have trouble paying retired workers without redirecting money from other areas like teaching.
To help alleviate the financial pressure, the Ontario government is proposing to amend the Pension Benefits Act to provide universities with much needed solvency relief, by temporarily exempting them from regular solvency expectations. Universities eligible to participate in the plan will be given three years to negotiate with pension plan members and representatives to develop a strategy to bring pension funds into solvency. After this stage, universities that have developed a successful plan will be given 10 years “to amortize their solvency deficits,” according to a government release sent out on Thursday. Under current rules, universities are given five years to address deficits.
But the government is firm that public funding will not be used to cover pension shortfalls. “Ontario will not provide additional funding to cover university pension deficits,” the release stated. Universities that fail to develop a successful plan during the first stage of the process will be subject to normal solvency requirements.
According to the Council of Ontario Universities (COU), no fewer than seven universities are in need of pension deficit relief, including the University of Toronto, Queen’s, York, McMaster, Guelph, Carleton and Trent. Pension deficits range from $3 million at Queen’s to $748 million at the U of T, according to a May report by credit rating firm DBRS.
The COU declined comment, and says it will be leaving it to individual institutions to speak to the policy. A U of T public relations spokesperson said the university is “looking for more details from the government” before an official response will be given.
An email sent by Maclean’s On Campus to the Ministry of Finance seeking clarification on how universities will be judged eligible to participate in the plan was responded with a restatement of Thursday’s press release. “Universities must submit a plan to the Ministry of Finance outlining how they will make their pension plans more sustainable,” the email from the finance department stated.
The Ontario Confederation of Faculty Associations was unavailable for comment, but executive director Henry Mandelbaum told the Toronto Star he is concerned the government’s plan will see universities raise faculty pension contributions or reduce payouts to retired staff.
The Ontario Undergraduate Student Alliance is pleased with the proposal, “Without solvency relief from the government, many institutions would have been forced to divert significant funds away from their academic pursuits, thus severely impacting the learning experience for Ontario’s students,” executive director Alexi White stated on the group’s website.