Member Update: Thursday, Sept. 23, 2004

EDMONTON — More than 100 AUPE members attended a one-day seminars on pension issues in Edmonton and Calgary this week organized by the union to inform and prepare members and gather their feedback on the current and anticipated state of their pension plans.

The Edmonton seminar took place yesterday, the Calgary seminar on Tuesday.

AUPE’s goal was to ensure members are aware of changing trends affecting pension, said AUPE Executive Secretary-Treasurer Ed Mardell.

“As Canada’s Baby Boomers grow older, pension plans are coming under stress as they meet the demands of an aging workforce,” Mardell said. “That’s why it’s important for our members to talk about these issues now, at seminars like this one.”

Morning sessions contained a variety of presentations including updates on two of the key pension plans that AUPE members are involved in — the Local Authorities Pension Plan (LAPP) and the Public Service Pension Plan (PSPP).

Ron Liteplo, representing LAPP, and Larry Murray, representing PSPP, described for members the recent volatility in the investment market and the arguments for increases in contributions to ensure the system continues to meet its ever-growing responsibilities.

“We have to have more in our kitty to pay out our benefits,” said Liteplo, emphasizing the seriousness of the matter. “When interest rates are high, our liabilities are low,” he explained. “When interest rates are low, like they are right now, our liabilities are high.” As a result, returns are lower than expected."

As of December 2003, he said, LAPP’s net market value assets were $9.66 billion, with net liabilities of $11.11 billion. As a result, the plan currently has a deficit of $1.45 billion.

Similar sobering numbers affect the PSPP, said Murray, who quoted December 2003 figures that show net market assets of $4.07 billion, net liabilities of $4.65 billion and a deficit of $580 million.

As a result, Murray said members of the PSPP should expect an increase to their plan contributions in 2006.
LAPP similarly has reconsidered current contribution levels and contribution increases will be implemented in 2005.

AUPE recently submitted proposals for both plans, asking that the Cost of Living Allowance be topped up to 100 per cent, and the benefit formula to be increased to a full two per cent above and below the yearly maximum personable earnings.

The proposals were derived from resolutions passed with delegates during previous AUPE conventions.

Educating younger union members on the advantages of defined benefit pension plans like the PSPP and LAPP is vital to the future success of these types of pension, said Carl Soderstrom, AUPE Union Representative and Staff Advisor to the union’s Pension Committee.

“If the younger generation does not philosophically support defined benefit plans, they could come under attack by employers,” he explained.