FAQ's
Frequently Asked Questions
Q How was the Pension Plan established?
A The Pension Plan for Academic Employees of the University of New Brunswick was established January 1, 1993, to provide defined pension benefits for eligible academic employees of UNB. Benefits previously accrued under the Public Service Superannuation Act (PSSA) for service prior to January 1, 1993 continue to be provided by the Province of New Brunswick. The Pension Plan was designed to provide benefits which were as close as possible to those provided by the PSSA at that time.
Q What are the roles and responsibilities of the two sponsoring parties, The Association of University of New Brunswick Teachers (AUNBT) and the University of New Brunswick (UNB)?
A The co-sponsors of the pension plan are AUNBT and UNB. They share the decision-making responsibility equally for the structure, benefits, and funding of the Pension Plan. They negotiated the original Pension Plan agreement, and the Trust Agreement establishing a Board of Trustees for the Plan. They have the responsibility to approve any changes to these documents, approve any changes to pension plan benefits or contributions, and appoint five members (including an alternate member) each to the Board of Trustees.
Q What are the roles and responsibilities of the Board of Trustees?
A The Board of Trustees operates within authority conferred on it by AUNBT, UNB, and applicable legislation. This authority is set forth in the Pension Plan document, the Trust Agreement between UNB and AUNBT, and the legislation and regulations issued under the Pension Benefits Act of the Province of New Brunswick and the Income Tax Act of Canada.
The Board of Trustees have a fiduciary responsibility for stewardship of the assets of the Plan. Specifically, the Board of Trustees sets investment objectives and policies, monitors investment strategy and performance, approves the actuarial assumptions used, and provides annual reports to UNB, AUNBT, and Plan members. The Board engages various professionals to provide expert advice. These professional experts currently include a plan actuary, legal counsel, auditors, investment managers, investment policy advisors, and investment performance monitors.
Q What is an actuarial valuation?
A The Pension Benefits Act requires that an actuarial valuation of pension plans be conducted at least once every three years. The results of the valuation are filed with the Superintendent of Pensions for the Province of New Brunswick. The actuary calculates the value of the pension obligations of the Plan (i.e. the value of the future payments that are expected to be made to Plan members in order to provide them with the promised pension benefits). The actuary then compares these obligations with the assets that the Plan has available for payment of pensions.
Q How does the actuary determine the pension obligations?
A The actuary must consider several factors including the demographic composition of Plan members (e.g., average age, longevity and marital status), the retirement experience of Plan members (e.g., the rate of take-up of the 85 factor retirement provisions and the average age at which retirements under those provisions occur), and a number of economic factors (e.g. assumed CPI, wage increases, and investment return). Some of these factors are known (e.g., average age and marital status of the Plan members), but many are unknown. The actuary chooses assumed values for unknown parameters to reflect the long-term over which pension benefit payments must be calculated (typically over 50 years or more). The assumptions to be used by the actuary are discussed with, and approved by, the Board of Trustees.
Q What is the difference between a going concern valuation and a solvency valuation?
A A going concern valuation is an actuarial valuation of the assets and obligations of a pension plan assuming that the plan continues in existence. A solvency valuation is an actuarial valuation of the assets and obligations of a pension plan assuming that the plan is terminated immediately. This is required mainly for minimum funding purposes.
These valuations will produce an actuarial surplus or deficit, depending on whether assets held in the plan are higher or lower than the actuarial value of the obligations for service up to the valuation date.
Q How can an actuarial deficit occur?
A An actuarial deficit can occur if one or more of the assumptions used by the actuary differ from actual experience. For example, a deficit can occur if the actual rate of return on investments is less than that assumed by the actuary, or if the actual retirement experience is different from that assumed. There need not be actual investment losses to produce an actuarial deficit.
Q What happens if the actuary determines that there is an actuarial deficit?
A The Pension Benefits Act of New Brunswick requires that the deficit be removed by either reducing benefits or increasing contributions, or a combination of both. The actuarial valuation filed with the Superintendent of Pensions of the Province of New Brunswick must include a plan for eliminating the deficit. If it is decided to eliminate the deficit by increasing contributions, the additional contributions required to reduce the deficit can be amortized (spread) over a prescribed period of time. This requirement sets a minimum on the extra contributions required to eliminate a particular actuarial deficit.
Q Who will decide whether to reduce benefits or increase contributions (or a combination of both) in order to eliminate the actuarial deficit?
A The Plan sponsors are UNB and AUNBT. The costs of the Pension Plan are shared equally between the University and the members of the Plan. Both Parties must agree in order to make changes to the benefits or the contribution rates.
Representatives of UNB and AUNBT are having discussions to come to an agreement on funding the Plan in light of the new valuation, and will be consulting with their principals (the University's Board of Governors, and the Association's Executive Committee and general membership) on recommended actions.
Q I am retired and being paid a pension from the Plan. Is my pension safe?
A Yes. The Plan has a positive monthly cash flow in addition to the substantial assets that are invested. Monthly contributions by active members are considerably greater than the monthly costs of the pensions paid to retirees. New Brunswick law allows reductions in benefits paid to retirees only if the plan is terminated. In this case, benefits could be reduced if a deficit exists at termination.
Q I opted to suspend my pension contributions while on leave and later wish to repurchase this pensionable period of service. If contribution rates change in the interim, will I have to repay at the new pension contribution rate or the old?
A Any opportunity to repurchase past service will be based on the contribution rates that would have applied during the leave period, plus interest. If the rates change during your leave, you will pay at the old and new rates for the relevant periods.
Q Before coming to UNB, I worked at another institution and contributed to a pension plan. Can I transfer my pension credits to the Pension Plan for Academic Employees of the University of New Brunswick?
A No.
Do you have a question or comment about the Pension Plan for Academic Employees? We'd love to hear from you. Please send your comment through this email address: hrandod@unb.ca
