Court ruling allows Laurentian University to reduce value of pension plan payouts
A court ruling this month as part of Laurentian University's ongoing insolvency process will allow the school to reduce pension plan payouts to more than two dozen former staff. (File)
SUDBURY -- A court ruling this month as part of Laurentian University's ongoing insolvency process will allow the school to reduce pension plan payouts to more than two dozen former staff.
Affected are 27 former employees who opted to cash out -- or commute, in accounting terminology -- their pensions. In the past, LU provided 100 per cent of the value of the pension, even though the pension isn't fully funded.
Under a court ruling released March 17, they will now receive what's known as the transfer ratio, which is a reflection of the assets in the pension fund compared to its liabilities.
A transfer ratio of 100 per cent would mean the pension plan is fully funded. In Laurentian's case, the transfer ratio is 65.8 per cent and by reducing the payout amounts, LU will save about $1.6 million.
In its arguments, Laurentian said allowing the former employees to cash out their pensions at 100 per cent threatens the viability of the defined benefit pension plan (DBPP) for all members.
"LU takes the position that this will help to mitigate any potential deterioration of the DBPP’s financial position and will treat all plan members equitably, as it avoids having certain individuals remove assets from the DBPP at a rate greater than the transfer ratio," the transcript of the decision said.
Laurentian also got relief from making a special $842,000 payment into a special fund meant to ensure the pension fund is safe in the event of insolvency. The payment into the Pension Benefits Guarantee Fund was due March 30 of this year. LU argued that the payment should be delayed because it was ordered before the university entered into insolvency, and the court agreed.
Robert Hache, president of Laurentian, issued an update on the process March 17. Hache said the restructuring the school is undergoing will "result in a revitalized university that will not only survive, but thrive."
"The next six weeks are critical to Laurentian’s future as we continue with the first phase of the university’s transformation," he said. "Provided Laurentian and its stakeholders are able to meet those conditions, we anticipate that by mid-April, current and future students will start to see emerging clarity around important issues such as how Laurentian’s academic offerings will be restructured for the fall of 2021."
And this week, the faculty association at Nipissing University called on the province to halt the insolvency process at LU and instead provide the university the funding it needs.
"If a public university can be dismantled by a secretive, closed-door process intended for private businesses, then why not any other public institution?" the Nipissing University Faculty Association said in a news release March 23. "A Crown corporation, perhaps? Or a hospital? The province needs to act immediately to stop the inappropriate and radical misuse of the (insolvency) process at Laurentian."
"There should be little doubt in anyone’s mind that what is happening at Laurentian would not be permitted to happen in vote-rich southern Ontario," the release continued. "The threat to Laurentian – and the underfunding of northern universities, generally – is part of a familiar story in the north, where unequal access to healthcare, under-funded education systems, and inadequate transportation networks are all well-known and long-standing problems."