Some Queen's University retirees are expressing frustration over the new University Pension Plan (UPP) and its impact on their retirement security. The UPP, a professionally managed multi-employer fund launched in 2021, was designed to address funding shortfalls and maintain defined benefit pension plans for university retirees. However, the transition to the UPP has led to concerns among retirees, particularly regarding the indexation formula tied to investment performance.
The retirees argue that the UPP's investment style, which includes a shift towards private assets like infrastructure and real estate, has resulted in stagnating payouts. Since 2021, when the UPP took over pension management, pension increases have been minimal, despite rising inflation. This is in contrast to the previous pension plan, which provided additional payouts due to strong stock market performance.
One retiree, Gordon Crawley, highlights the challenge of dealing with inflation while his pension remains stagnant. The UPP's statement indicates that any shortfall in returns below the target level must be made up by future returns, causing concern among retirees about their financial security. The current inflationary environment, marked by rising food prices and oil costs, exacerbates the issue.
The UPP spokesperson acknowledges the challenges, emphasizing that the pension structure ensures pension payments don't decrease. However, they also note that the return-based indexation formula can deliver higher increases during low inflation periods compared to CPI-based calculations. The debate revolves around the balance between protecting the endowment for future retirees and ensuring current retirees receive adequate benefits.
The article concludes by mentioning the consideration of changing the CPI-based indexation formula, which could address the concerns of both current and future retirees.
