Pension Plan as of June 30 pension year end ($000s)
Pension plans with a solvency ratio of 85 per cent or less are required to file annual valuations instead of triennial valuations. As the pension plan had a solvency ratio of 105 per cent, the next valuation will be required by July 1, 2020. For more information on the Brock University Pension Plan, visit brocku.ca/human-resources/pension/ ii. Post-retirement benefits Brock University’s non-pension post-retirement benefits liability as at April 30, 2017 was $24.5 million. Figure 36 describes the nature of these future obligations. Figure 36 Employee future benefits (as at April 30, 2017) Retiree benefits
14,904
Retirement allowance benefits
1,259
Disability 2011
2012
2013
2014
2015
2016
2017
2018(1)
3,296
Health-care spending account Sick leave
Assets 283,889 301,612 341,391 402,252 438,141 449,900 481,842 502,888 11.1% 16.7% 10.3% 3.7% 10.4% 5.8% Return 13.8% 3.0%
($000s)
Total
361 4,710 24,530
The increased going concern deficit required the special payments into the plan to increase by $1.53 million and the current service cost payments for the defined benefit component of the plan to increase by $0.44 million for a total increase in University contributions of $1.97 million annually. For 2018-19, the annual budgeted contribution is $3.6 million. There was no increase to the 2018-19 budget as a result of proactive test valuations performed in 2016-17 to estimate the impact of this valuation. Those tests suggested a $2.0 million increase in pension contributions would be required by the University and as a result, the increase was funded in the 2017-18 budget.
Brock has traditionally had a “pay as you go” model to fund immediate requirements. For example, in 2017-18 Brock paid an estimated $0.17 million related to BUFA’s health-care spending account. As the institution ages, continuation of this practice would impact Brock’s financial sustainability. This would occur as people retire, become sick or disabled, and the University becomes obligated to pay these benefits, in addition to the benefits of the replacement employee. The reality is these postretirement costs are similar to Brock’s pension liability, which is funded while employees earning the benefit perform their employment responsibilities. It is in the interest of Brock and its employees that these postretirement benefits are funded in a similar manner as the pension liability to ensure these future obligations can also be met.
It should be noted that the Ontario Pension Benefits Act has recently changed to allow for a 12-month deferral on changing required payments into the pension plan. The Financial Planning and Investment Committee approved a recommendation to take advantage of this deferral and invest the 2017-18 budgeted savings of $1.6
For these reasons, starting in 2015-16, the budget includes an annual allocation of $900,000 to begin setting aside assets for this obligation. This amount is in addition to the “pay as you go” funds already in the budget. It is important to note that in DBRS’s most recent credit rating they noted, ‘Brock’s decision to begin reserving for
(1) Represents the 8- month period ending December 28, 2017.
BUDGET DETAILS
Figure 35
million into a pension stabilization reserve as at April 30, 2018, to be drawn upon at the next valuation in July 2020, should the funded status of the pension plan deteriorate.
39 2018-19 Budget Report
based on industry best practices guided by the Canadian Institute of Actuaries. The University has no control or influence over the assumptions used by the actuary. The largest contributor to the going concern deficit is active members (65 per cent of the total deficit). The University contribution ratio – that is the amount the University contributes to the plan for every dollar put into the plan by the employee – is 2.09 (1.82 as at July 2014), which remains high. The Province is working on a joint-sponsored pension plan (JSPP) where one of the requirements to join this plan would be a 50/50 cost sharing ratio with plan members.