Pension shortfalls taking a bite out of university operating budgets

January 23, 2012

Facing staggering pension plan deficits, some Canadian universities are struggling to continue funding plans and are resorting to desperate measures such as dipping into operating budgets and negotiating higher employee contribution rates. The University of Toronto's pension plan has posted a shortfall of nearly $1 billion, and Dalhousie University's pension deficit has risen to $270 million. An independent researcher says his analysis of 20 years of university spending data suggests that an increasing proportion of operating expenses are being diverted to pay for employee benefits. CAUT's assistant executive director of collective bargaining says universities have asked staff to help with pension deficits by accepting higher contribution levels and reduced benefits. Both institutions and unions need to get serious about reforming pension plans, says one pension critic. Possible solutions, he says, include raising the retirement age, not allowing retirees to collect full pension and come back to work, and basing calculations on average career salary instead of end-of-career salary. University World News