The Legal Action
Harry Restall, the retiree representative (the main witness for plan members) was examined extensively over the course of the last few months; April 28th to May 8th, June 2nd to June 5th and June 16th and June 17th. Harry’s testimony was solid as a rock and withstood substantial cross examination. There where no surprises in the court room and will prove to be a good sequel to the trial in the fall.
Harry is to be congratulated for an arduous journey few people would accept, let alone endure. He is now free to be a regular plaintiff in the rest of the trial. Fantastic job Harry and well done.
Court will resume in the fall, commencing Sept. 2, 2008 at 10:00 a.m. in Courtroom 128, Law Courts Building, 408 York Avenue Winnipeg, Manitoba. All are welcome to attend. The trial should extend into November 2008.
The Pension Formula
I have recently identified that the formula that is used to calculate a plan member’s pension may not in all circumstances be entirely accurate. This has been brought to the attention of MTS and we are waiting for the results of their cross section of test cases to be completed by the plan administrators and the plan actuaries. Plan members will be advised when more information is available.
The Financial Status of the Plan
The latest financial reports that are available are the MTS actuarial valuations as of Jan.1, 2008 provided by Watson Wyatt.
GOING CONCERN (the assumption that the plan will continue indefinitely) Going Concern surplus has increased slightly from $119.2 Million to $122.0 Million, however without the asset smoothing (average over 3 yrs) the Going Concern position would be $101.3 million or $20.7 million lesser in value.
The Going Concern position did not change significantly due to a market value rate of return of only 0.1%.
SOLVENCY POSITION AND SPECIAL PAYMENTS
The Solvency Position (the ability to pay out if the plan was wound up) has deteriorated further going from an overall deficit of $157.3M to $188.9M. This further deterioration in the Solvency Position must be financed by a new series of special payments equal to $6.2M per year over the next 5 years. These new special payments bring the total annual special payments required to $30.2M for the next 5 years after which they drop to $24.1M and continue at that level for a further 3 years.
NORMAL COST – The Company required normal cost contributions for 2008 are equal to $14.5M or 147.6% of what employees are expected to contribute? The Company normal cost contributions of $14.5M plus the special payments of $30.2M bring the total Company contribution requirements to $44.7M for 2008.
Cola effective July 1/08 is recommended to be 1.59% which is the required 2/3 of inflation at 2.38%.
The deficit in the Cola Account has increased from 5.0M to 17.0M with the 20 year pre-funding test resulting in a huge deficit of approx. 240M.
The solvency relief the Company availed itself of (10-year amortization of overall solvency
deficit at Jan.1, 2006 over the period 2006 – 2015) was not available January 2008.
Defined Benefit Pension Plan (DBP): A type of registered pension plan that provides a pension based on a plan member’s salary and years of service. Our plan is a DBP. In our DBP your guaranteed pension benefit will be provided as long as you live. Some additional benefits are early retirement options, survivor benefits, portability to other pension plans, disability and inflation protection.
We wish to remind all plan members that our objectives have not changed – that we regain for the plan members the level of governance and equality of benefits that we had as members of the Civil Service Superannuation Plan.
TEAM Pension Committee Representative