$54M pension surplus to be spent

In News /

By Caroline Alphonso

Ryerson has a $54.5 million problem to solve.

The university’s administration and its employees have exactly that much extra money to spend sitting in their pension plan fund.

Some October, Ryerson’s pension committee, made up of administration, staff and faculty members, have been negotiating on how to use their pension fund’s excess surplus. These funds are above the surplus cap allowed by Revenue Canada in the pension plan.

The committee has yet to decide how the school will use this extra money. Ryerson and its employees have three options:

Take a contribution holiday and stop paying into the pension plan until the surplus is used up;

Improve the plan by increasing pension benefits;

Or give employees cash dividends out of the plan.

“What happened, to really oversimplify this, is that we ended up with an excess surplus. It’s something to be very happy about. There was nothing inappropriate done,” said Linda Grayson, Ryerson’s v.p. administration and student affairs.

Ryerson, like other organizations, is allowed to have a surplus in its pension plan, which is invested in the stock market by OMERS, to act as a cushion against fluctuations in the market.

But Revenue Canada has a cap on how much surplus is allowed, determined for each organization, to restrict money-making companies from hiding money in their pension plan, said Bill Glassman, who represents faculty on Ryerson’s pension committee.

Based on the 1998 actuarial report of the Ryerson Retirement Pension Plan (RRPP), Ryerson has an $83.6 million surplus in its pension fund, and $54.5 million of that is in excess of the school’s allowable cap.

This is a result of high returns on investing the fund. Employee salaries, which have not increased in the past few years, were not a factor in the increase.

“The investment return on the pension fund was much better than assumed,” said Bill Buhlman, Ryerson’s manager of pension and benefits.

In 1997, Ryerson’s excess surplus had grown to $17.8 million from $1.3 million in 1995. To help balance this growth, Ryerson employee contributions to the pension plan were dropped by 1.5 per cent in July, 1996. Administration’s payments which match employees’ contributions also subsequently dropped.

But this did not decrease the excess surplus, which continued to rise to $54.5 million as of 1998.

The extent of the extra money in Ryerson’s pension fund was not recognized until last October, following the yearly actuarial valuation of the RRPP.

If Ryerson’s administration and employees stop paying into the pension plan until the excess surplus is used, Grayson said administration’s part of the contribution will be freed up for other services.

Administration matches employee contributions every year. As of January, 1997, 1,107 members of Ryerson staff and faculty contributed to the pension fund, and 333 people drew pension benefits.

“For so long we’ve been cutting back in services and we do need to invest. There is an extraordinary need to improve our information technology lab, to improve our buildings, to provide additional scholarships and bursaries,” Grayson said. “There is no end of areas of great need.”

But members of the pension committee would not release details of the proposal for spending the money they are now reviewing.

“We have an agreement in principle,” Grayson said.

Once this is approved by all members of the pension committee, it will be taken to Ryerson’s board of governors for final approval.

Stephanie Blake, president of OPSEU local 596 and support staff representative on the pension committee, said the money may mean Ryerson won’t have to lay off staff for a while and could enhance resources for students.

“Ryerson has been woefully underfunded and it’s a win-win situation,” Blake said.

Leave a Comment