On the Level April, 2001 Vol 37 No 1
Contents:
Pension plan on road to recovery - Is a 30 per cent cut inevitable? page 1
What you need to know page 2
Making the plan stronger - We’re still one of the best page 3
Financials: Auditor’s Report / Statement of Assets / Note to Financial Statements pages 4-5
Questions & Answers - New Investment Policy page 6
The Board and its Team page 7
Every Question Gets an Answer - Come and find out more - What’s next? page 8
Why you’re getting this special issue
What’s happening with our pension? Why were the recent changes necessary? Will our pensions be safe in the future?
We’ve put together this special issue of ON THE LEVEL to help answer all these questions and more. Right up front, we want to tell you this: Your pension is on much more solid ground today. A lot of progress has been made in the last few months. You’ll find the details inside.
We know how important your pension is to you and your family. You deserve to know you’ll be able to rely on your union’s pension plan when the time comes to hang up your tools. And that applies whether you’re just starting out, or looking at retiring sometime soon.
Pension plan on road to recovery
It was a rude awakening for BC Carpenters when members learned last November that our pension plan was facing difficulties.
But things have been turning around since the problems were discovered. With the help and guidance of a new team of professionals, the Carpentry Workers’ Pension Plan of BC has set out on the road to recovery.
“The board has taken some really difficult decisions, after a lot of careful deliberation and much soul-searching,” says pension administrator Jane Richey. “But above all, they’ve done their best to minimize any cuts to members.”
There are four key ways the pension plan is getting back on its feet:
• There’s a new team of professionals advising our board of trustees. We have new actuaries, auditors and investment managers on the job.
• We’re getting a better picture of where we stand, with a top-to-bottom audit of the pension plan – and an examination by the provincial government’s
Superintendent of Pensions.
• A new investment strategy has already improved the returns members are seeing
on pension contributions.
• A series of changes to the pension plan – some of them in place now, some deferred to later – are helping to ensure the fund can afford to pay out benefits for the long term.
How we got here
Back when the pension plan first started up, it was immature — that is, few members had retired and the vast majority were still paying into the plan.
“That’s when you don’t have big concerns about unfunded status,” says Don Cooper, legal counsel to the CWPP. At that stage, “payouts are nominal; it’s mainly receiving contributions.
“But with an aging membership and more numbers retiring, you have to get a good return on investments to maintain your funding base. Contributions pale in comparison to the amount the fund gets in investments.
“And that’s where this plan has become embroiled in difficulty.”
The fund had a higher-than-average percentage of its investments in real estate – a market that wasn’t getting good returns. Near historical low interest rates didn’t help, either.
Pressure on the fund came from the other end, too. The CWPP offered substantial subsidies for early retirement, intended to help open up jobs for apprentices and new members. But with more and more members taking advantage of those early retirement subsidies, the costs to the plan skyrocketed.
The plan was also hit by the slump in unionized construction, which meant fewer members contributing to the plan.
The upshot was an unfunded liability: a situation where there wasn’t going to be enough money in the pension fund to pay the benefits the plan promises.
“None of this has happened to the Carpenters in isolation,” BC Provincial council of Carpenters president Len Embree points out. “It’s been part of the difficulty faced by all the multi-employer plans.”
In fact, the office of the provincial Superintendent of Pensions, Sherallyn Miller, is taking a careful look at all multi-employer plans in BC.
“In the current circumstances, multi-employer pension plans – where there’s no opportunity to increase employer contributions except through collective bargaining – are the most vulnerable,” says Michael Peters, a pension analyst with the Superintendent’s office.
The road back
The first hints of trouble came in mid-1999, with an interim valuation of the pension plan. Around the same time, to accommodate the early retirement of the former Administrator, scheduled for July 2000, the board of trustees hired an outside professional, Jane Richey, to join the plan and take on the administrator’s role, effective January 1, 2000.
Ms. Richey has over 20 years experience with pension and benefit plans and had served for eight years with the Vancouver Hospital and Health Sciences Centre as manager of Compensation and Benefits.
She took a hard look at the plan and made a number of recommendations after discovering problems with proper accounting and valuation of assets, as well as with the assumptions and processes used by the plan actuaries at the time. When Ms. Richey’s appointment was confirmed by the Board, she began forming an experienced and professional advisory team – including a new actuary, and new auditors and accountants.
The board appointed BDO Dunwoody as accountants and auditors in January 2000; the next month, they hired Hewitt Associates as the new actuary. The team started the long, hard task of digging through CWPP records, getting a clear idea of the pension fund’s true financial state.
The picture that emerged was of a plan that lacked proper accounting procedures and an up-to-date management approach. The new actuary and auditors told the trustees in May of 2000 that there were serious funding problems that had not been previously reported to the trustees: higher-than-expected costs, and lower-than-expected returns.
The answers weren’t going to come easily. New members alone wouldn’t have solved the problem. Contributions account for less than four per cent of the fund.
Trustees take action
Commencing in the spring of 2000, the Trustees began meeting much more frequently than the usual quarterly meetings to receive the reports and recommendations of the actuaries, auditors and lawyers.
Over the summer, the trustees considered a wide range of options, providing information and details to Sherallyn Miller and the Pension Standards Branch.
It was clear from the start that reductions of some sort were in the cards, which for confidentiality reasons meant the board couldn’t consult with the membership. (See Why didn’t the board consult the members? on page 6.) It was also clear that whatever action the board was going to take had to come quickly to prevent the situation from getting even worse.
The announcement came last November. The board announced major changes to the plan, including:
- an end to subsidies for self-payment
- limits on eligibility for early retirement
- restrictions on qualifying for disability pensions.
The board’s chief goal, after ensuring the plan’s financial security, was to keep pension benefits as close as possible to their current levels.
The actuaries advised that without changes pensions would have to be cut by 30 per cent to meet the unfunded liability. But they came up with a plan to keep pension benefits at their current levels, at least for the next three years.
Three years to recover
The Superintendent agreed to have the cut deferred for three years while the fund recovers. If the fund recovers enough, the cut could be much smaller than 30 per cent —and could perhaps be deferred even further. The Trustees’ goal is for the plan to recover to the point where the pension is not cut at all.
“We certainly appreciate the guidance and support we received from the Superintendent’s Office,” says Jane Richey.
The signs are promising. Changes to the investment policy have had a positive effect on investment performance so far. The examination by the Superintendent’s office is complete and the Board is hoping to get the final report in the next few weeks. The audit as at June 2000 is moving ahead, although not as quickly as hoped.
“This has all probably proven just how reliable a group pension plan is,” says Embree. “We withstood a pretty serious hit. And we still have one of the best plans available in the construction industry.”
Is a 30-per cent cut inevitable?
A few months ago, the CWPP trustees announced that – on top of the changes to self-payment and early retirement – the plan was facing a possible cut to benefits by 30 per cent in 2003 in order to meet its liabilities. The cut would only come if there was no recovery in the pension fund.
That’s why the trustees made the hard decision to reduce early retirement provisions. At the same time, a team of professional specialists is helping the Board to put a new investment strategy into effect. The goal: to improve the return on the investments made with your pension fund. (See Many (happier) returns, page 6.)
Changes to the investment strategy and the management of the assets are being implemented to improve the plan’s investment performance. The success of these changes will determine the extent to which the proposed benefit cut can be minimized or deferred.
Where will it be in 2003, when the deferred cut takes effect? That depends on the economy. Good
performance will allow the fund to recover even more quickly, which could mean a smaller cut, a further deferral of any cut – or hopefully, in the best case, no cut at all. A stiff economic downturn, on the other hand, could make recovery slower.
ON THE LEVEL will keep you updated on the progress of the fund’s recovery.
On the Level April, 2001 Vol 37 No 1 Page 2
What you need to know:
How your pension plan is changing
Getting our pension plan onto a solid footing again won’t happen overnight. The board of trustees has had to make some tough choices. There were two ways they could approach the problem: cutting costs to make the plan more affordable, and improving investment performance to make the plan stronger.
They chose to do both, aiming to maintain pension benefits as close as possible to their current level. Here’s how your pension plan has changed as a result:
Making the plan affordable
Early retirement
The CWPP had extremely generous subsidies for members who wanted to retire early. It was one of the costliest parts of the plan. The changes the Board has made are aimed at reducing those costs, while still providing support for working members who want to retire early:
• You now have to be 55 to get a full pension under rule 80. And you need at least 10 years of pension credit.
Under the old system, you could retire with a full pension at age 50, provided your age and your years of pension service totaled at least 80. You can still retire between 50 and 55, but your pension will be reduced by 0.5 per cent for every month between your retirement date and your 55th birthday, provided you have at least 10 years of pension credit.
You get one year of pension credit for:
• every five units of pension (1,750 hours) earned by employer contributions on or after July 1, 1989; or
• every two years up to and including June 30, 1989 in which you earned some pension.
If you don’t have 10 years of credits, you can still take early retirement after your 55th birthday, but your pension will be reduced by that same 0.5 per cent for every month between your retirement date and your 65th birthday.
Termination of active status
You used to be able to maintain active membership just by paying union dues. Now, a three-year break-in-service will end your active membership (in the pension plan, not in the union).
• If you don’t earn any pension for three straight years, your active membership in the plan will end.
At that point, you can withdraw your pension and transfer it to an RRSP, or stay in the plan. However, you’ll no longer be eligible for early retirement subsidies. If you start earning pension contributions again, your active membership will be reinstated – but you’ll be starting from zero in earning credits for early retirement. Note: this change has been delayed, and only takes effect on July 1, 2002.
Contribution refund
The amount you can transfer out of the Plan on termination of active status is the lump sum that is actuarially equivalent to your earned pension.
Under the old system, the transfer amount in respect to your membership prior to 1993 was subject to a minimum equal to a percentage of the employer contributions and self-payments made on your behalf before 1993. The percentage varied from 50 per cent after two years of pension service to 140 per cent after 20 years of pension service.
Now, the transfer payment is subject to a minimum equal to your total self-payments accumulated with interest.
Self-payment
The old system had a member earning a unit of pension, or $22.50 per month on normal retirement, for every block of 350 hours of employer contributions and member self-payments.
If you had at least 25 hours of covered employment in a given year, you could top-up employer contributions at a rate of $2.34 an hour to get you to the next level. So, if you had 300 hours, you could pay $117 for 50 more hours and get a unit of pension. You could buy up to five full units of pension in a single year.
But the members who’ve chosen to make self-payments – at an average age of 50 – are older than the overall active membership, whose average age is 42. That costs the plan a lot more, because their payments aren’t in the fund long enough to earn much interest before the members are drawing on the money in the form of pension payments. What’s more, a partial unit doesn’t cost the plan anything; so allowing members to top up contributions means less money in the fund for everyone.
The result is that, in 1999/2000, self-payments from members brought in $591,000. But the pensions those members will draw will cost the plan $1,671,000 (before calculating the across-the-board benefit reduction – see below). In other words, there’s a very big subsidy. And members who can’t afford to make self-payments end up subsidizing those who can. “A certain minority of the plan members are getting a benefit at the expense of the other members,” explains Allan Brown, the plan’s actuary.
As of July 1, 2001, that subsidy ends. A new schedule of self-payment rates will reflect the true cost of the benefits.
Pension benefits
A key goal for the board of trustees has been to keep the impact on pension benefits to a minimum. But even with the other changes they’ve made to our pensions, there could still be an effect. That potential reduction could occur in 2003.
As of last November, assuming no improvement in the fund, there would have had to be a 30 per cent cut in pension benefits in three years’ time.
Disability pension
If you are totally and permanently disabled, and qualify for a Canada Pension Plan disability pension, the old system would give you an automatic pension, even if you hadn’t reached retirement age. The new system requires you to have at least 10 years of pension credit.
On the Level April, 2001 Vol 37 No 1 Page 3
Making the plan stronger
The key to your security in the future is solid performance by the pension plan’s investments. A sound investment strategy puts your pension contributions to work, getting the maximum benefit for you.
There’s something else we need, too: a clear picture of where we’re at. The board has made changes to ensure we get both.
A professional advisory team
At the beginning of 2000, the board of trustees, together with the new administrator, started assembling a new professional team of advisors. The team includes Don Cooper of the law firm Davis and Company — the pension plan’s legal counsel — Dale Harper of the firm BDO
Dunwoody as accountants and auditors, and Allan Brown of Hewitt Associates as the actuary.
The new team means the board can count on solid, well-informed advice as the trustees develop
a new governance structure for the pension plan that will continue to evolve in the months and years to come.
A new investment policy
With many of the pension fund’s investments performing poorly, the fund wasn’t growing quickly enough to meet the demand on its resources. A new investment policy is reducing investment in real estate, where the market hasn’t done well recently, and moving it to higher-growth areas. The new policy includes hiring professionals to manage our investments and get a better return on your pension dollar. See Many (happier) returns, page 6.
A thorough audit of the books
BDO Dunwoody completed the audit as at December 31, 1999 last November and issued their report at that time. The Trustees then had a comprehensive picture of the Plan’s financial state.
One of the auditor’s recommendations was to change the year-end to June 30 to correspond to the Plan year and to facilitate the actuarial calculations. They are currently working on the June 30, 2000 financial statements.
While there is a requirement to restate the investments at fair market value, most of this work was completed in connection with the December 1999 audit. The task now is to update that valuation work, consider the fair market value of the projects that were under development at December 31, 1999, and to bring the accounts up to date.
The most time consuming aspect has been bringing the accounts up to date and reassessing the fair market value of certain problematic real estate projects. This process has been frustrated further by the fact that the Plan’s new accountant was not hired until after the period being audited and the fact that she has not been able to commit as much time as hoped to this process due to other pressing issues.
BDO Dunwoody’s requirements for more accurate and complete accounting appear to exceed what was done in the past. While they could have sent in an army of accountants to bring things up to date, they have chosen to proceed more slowly so that the Plan’s staff could assist with the bookkeeping as much as possible.
A complete audit – covering all aspects of the Carpentry Workers’ Benefit and Pension Plans – is underway, led by our accounting firm. It’s a massive undertaking, requiring the restatement of all our investments based on fair market value. But it will be worthwhile, because the Board – and the members – will have a comprehensive picture of the Plan’s financial state.
A solid relationship with the provincial regulator
The provincial Pension Standards Branch, led by the Superintendent of Pensions, has been working with CWPP staff and trustees for some time now. The branch has finished an examination, and their report will give the Trustees important insights into the health of our pension plan. (See Your pension regulator, page 6.)
We’re still one of the best:
We started with one of the most generous pension plans in the province. How does it stack up after the cuts?
Have a look at this comparison. We’ve taken our benefits after the recently announced changes. Then we stacked our plan up against others, looking at the value of your pension relative to how much you pay into it every month.
Before the cuts, we were second out of twenty-one. After the cut, we slipped – but only to fifth place.
Nobody wants to cut benefits, and there’s a strong possibility the plan won’t have to. But it’s good to know that we still have one of the best pension plans going.
Carpentry Workers’ Benefit/Pension Plan of B.C. – Comparison of Contributions and Benefits with Construction Industry Pension Plans
21 total... Carpenters’ Plan is currently second, with deferred cuts will be fifth
On the Level April, 2001 Vol 37 No 1 Page 4
Carpentry Workers’ PensionPlan:
Auditor’s Report
BDO Dunwoody Ltd.
Why are the statements taking so long?
Since members found out about the problems facing our pension plan, they’ve been waiting for an audited statement for 1999. Understandably, you want to know where our plan stands.
Our auditor has been working hard to get that information for you. But converting the way our investments were previously valued to the correct standard takes a long time. Many of the plan’s records were inadequate. And many assumptions had to be rethought from square one.
“The previous actuaries used some assumptions about the rate of return the assets would earn, and about when people would choose to retire that in retrospect, were too optimistic,” says Allan Brown, the plan’s actuary.
Getting information fast would be great. But getting information right is even more important — and the board has asked the auditor to take the time needed to do just that.
You’ll find the audited financial statements to December 31, 1999 in this edition. The goal is to have the audited statements to June 30, 2000 available at the BC Provincial Council of Carpenters annual convention at the end of April.
On the Level April, 2001 Vol 37 No 1 Page 5
Carpentry Workers’ Pension Plan of B.C.
Notes to Financial Statements
December 31, 1999
1. Description of the Plan
The following description of the Carpentry Workers' Pension Plan of B.C. (the “Plan”) is a summary only. For more complete information, reference should be made to the Trust Agreement and Plan Text.
(a) General
The Plan was established December 30th, 1971, between the British Columbia Provincial Council of Carpenters and the Trustees.
The Plan operates on the basis of Collective Agreements between the
Provincial Council of Carpenters and Participating Employers. The Plan is administered by a Board of Trustees who are elected by the Members of the Plan.
The Plan is a multi-employer, negotiated cost, defined benefit plan covering
all the members of the participating Carpentry Worker locals who have applied for membership in the Plan.
(b) Funding Policy
The Plan is financed entirely by contributions made by the Participating Employers under the terms of Collective Agreements. The rate of contribution from the participating employers is $2.34 per hour.
(c) Pensionable Service
The most common way a member accrues future service pension is through contributory service. Contributory service period is a twelve month period from July 1st to June 30th (“plan year”) in which a person was a member of the Plan and was employed by a Participating Employer. The monthly pension earned is based on the number of hours worked in the Contributory Service period. The minimum hours required to earn a future service pension is 350 hours while the maximum is 1,750. The monthly future service pension earned ranges from $22.50 for 350 hours to $112.50 for 1,750 hours.
A member of the Plan may make self-payments to increase the monthly service pension earned.
(d) Benefits
The Plan is designed to provide a monthly life income for members and spouses who retire under the Plan after completing certain age and service requirements.
(e) Disability
A disability pension is available for members of the Plan at any age with a minimum of 10 plan years of credited service.
(f) Survivors’ Pension
A survivor pension is available for a Plan member’s spouse.
(g) Death Benefit
A death benefit is available for a member’s spouse, designated beneficiary or Estate.
(h) Withdrawal Refunds
Upon application and subject to lock-in provisions, withdrawal refunds, with interest on the contributions, are payable when a member ceases to be a member of the Plan.
(i) Income Taxes
The Plan is a Registered Pension Plan and Trust as defined in the Income Tax Act and accordingly is not subject to income taxes.
On the Level April, 2001 Vol 37 No 1 Page 6
Questions & Answers
Why was our plan in trouble?
The short answer is that we had an unfunded liability – that is, there was going to be more demand on the plan than the fund could cover.
As of June 30, 1999, the estimated value of the pension plan’s assets was $215 million.
But depending on how you calculate it, liabilities were between $276 million and $279 million. That means the plan was going to be able to fund less than 80% of the benefits it owes.
“An unfunded liability in and of itself isn’t necessarily a problem,” notes Michael Peters of the Ministry of Labour’s pension branch. “The problem is where a plan, such as the Carpenters’, has contributions that are insufficient to meet all of its funding obligations.”
That unfunded liability happened for two main reasons: the pension fund investments performed very poorly, and benefits were higher than the plan could afford. A third reason had less impact: weak employment conditions meant little growth in income from contributions. Since contributions account for only about 3.5 per cent of the fund, this wasn’t a big factor.
The package of changes the Board made in the pension plan wipe out that unfunded liability. The proportion of assets to liabilities changes from less than 78 per cent to over 100 per cent — in other words, assets are sufficient to fully cover all the benefits members are entitled to receive.
Why didn’t the Board consult the members before announcing all these changes?
Consultation can work well when you’re increasing a pension plan’s benefits. It’s happened before with the CWPP, and the Board consulted with members in those cases.
But consultation isn’t always possible when benefits have to be cut. It allows some members to take advantage of the notice period to improve their situation — and benefits — at the expense of others. To make sure everyone was treated fairly, the Trustees decided they had to keep the cuts confidential until they were to be implemented.
Is there definitely going to be a 30 per cent cut in benefits?
That’s going to depend on how well our investments perform between now and June 30, 2003. Changes made so far have had a positive effect. See Is a 30 per cent cut inevitable? on page 1.
Does the change to the break-in-service rule mean I’ll be kicked out of the union?
No. All it means is, if you don’t earn any pension for three years running, you stop being an active member of the pension plan – which affects your eligibility for the early retirement subsidy. Your union membership continues so long as you keep paying your union dues. And the pension contributions you’ve made to date still count toward your pension benefit. (Note: this change has been delayed until July 1, 2002)
Why aren’t you allowing excess hours to be carried forward?
Our plan caps the number of pension units and credits you can earn in a given year at 1,750 hours. But unlike our plan, a few multi-employer pension plans allow you to carry forward any hours you’ve worked over the maximum, so you can count them in a following year.
This doesn’t happen in most construction industry plans. Usually, you’ll find such a provision in plans that set a lower maximum number of hours per year; a cap of less than 1,500 hours is typical.
Instead, our plan has chosen to use those excess contributions to help finance the pension benefit. Keeping this rule in place will help us when it comes to keeping any cuts to a minimum.
Why have the Trustees signed confidentiality agreements?
The Trustees have been dealing with highly sensitive reports and financial information – material that affects the rights of third parties and the interests of the membership. Recognizing the importance of confidentiality in the circumstances, they passed a resolution to that effect. This helped to ensure nobody got advance knowledge of changes to the plan, so all members were on a level field when those changes were announced.
Why should I be penalized on early retirement just because I can’t find eligible work?
It’s absolutely crucial that our pension plan can afford to meet its commitments. And the unfortunate fact is that, under the old rules, the CWPP was subsidizing early retirement at the expense of other members.
That gave the Board a choice: either limit those subsidies, or cut back the pension formula. And the Trustees were determined to preserve as much of the benefit as possible.
Bear in mind, the goal of subsidizing early retirement is to encourage older members to leave and create jobs for apprentices. It’s a good goal. But if we subsidize early retirement for someone who isn’t working in covered employment, we haven’t freed up a job for anyone.
Why did you pick June 30, 1989 as the dividing line for calculating early retirement credits?
That’s the date where records start being available on computer. After that date, we can make more precise calculations; before that, an estimate makes the most sense.
Many (happier) returns:
the new investment policy
If there’s a single key to the security of your pension, it’s the performance of the CWPP’s investments.
Investing your pension contributions brings in enough money to ensure that, by the time you retire, the fund will be large enough to pay your benefits.
But in recent years, the fund’s investments weren’t doing nearly well enough. The plan’s investment guidelines allowed up to 15 per cent of the assets to be invested in real estate, and that market has been sluggish at best. “Returns in real estate have been abysmal,” actuary Allan Brown says bluntly.
And the plan tended to invest more in fixed-income securities like bonds and mortgages that didn’t provide a balanced mix — or adequate returns.
The plan’s new investment policy changes that. It sets a target of eight per cent of the fund’s assets to be invested in real estate, with a maximum of 10 per cent. That process will probably take several years to complete.
“The ultimate goal will be to liquidate unsatisfactory real estate investments,” says CWPP legal counsel Don Cooper, “and reduce the overall holdings to a low-risk base that meets or exceeds minimum performance standards.”
As well, from now on, an external firm of professional specialists will manage the fund’s fixed assets.
The goal is, simply, to start making money again. The better the performance by our fund’s investments, the less reduction there will have to be in benefit levels.
On the Level April, 2001 Vol 37 No 1 Page 7
Belonging to a union means you aren’t alone when you face an employer. And belonging to a union pension plan means you aren’t alone when it comes to planning for your retirement.
Your pension is being managed and protected by committed professionals, as well as a dedicated board of trustees. These are the people working to make sure your pension is there for you, with all the benefits you’re expecting.
Your Board of Trustees
The pension plan is governed by a board of trustees — a group of elected members who make the ultimate decisions that guide overall policy.
There’s no salary. It’s a position that carries a lot of responsibility for very little reward — except the knowledge that you’re helping to ensure a secure retirement for thousands of your friends and co-workers. “I don’t think you can say enough good things about how the trustees have stepped up to the plate and made this work,” says plan administrator Jane Richey.
The trustees are responsible directly to you. So feel free to call or write them with questions, either about the latest changes or about the pension plan generally.
Your management team
One of the keys to turning the pension plan around is ensuring we have the most professional team possible. Your board has assembled a group that offers experience, skill and proven commitment.
“The amount of cooperation and communication among the Board and the Advisory Team is amazing,” says Plan Administrator Jane Richey. She has held that post officially since January 2000, and led the effort both to identify the problems facing the plan and to deal with them.
Ms. Richey has extensive experience with benefit and pension plan administration, including eight years as manager of Compensation and Benefits for the Vancouver Hospital and Health Sciences Centre, and eight years as Administrator of the BC Transit Joint Management/ Union Benefits Trust.
Ms. Richey has a degree in psychology from the University of British Columbia. In November 2000 she completed the International Foundation of Employee Benefit Plans’ Advanced Trustee Management Standards program.
In assembling the new Advisory Team, “We chose every member not just for their skill and experience, but also for their ability to educate the board members, so the trustees can make informed decisions,” Richey says. “And they’ve been doing an outstanding job.”
Don Cooper of Davis & Company became the Plan’s overall legal counsel in December 1999. But Don’s involvement with the pension plan actually goes back more than 15 years, with his frequent advice on legal issues around real estate.
Dale Harper of BDO Dunwoody became the plan’s lead auditor and accountant in January 2000. They’re the sixth-largest accounting firm in the world, and are Canada’s leading accounting firm serving many unions and pension and benefit plans.
Allan Brown of Hewitt Associates became the plan’s actuary in February 2000. Responsible for preparing projections for the plan’s future costs, Allan has extensive experience with multi-employer pension plans in British Columbia. Hewitt Associates is also responsible for advising the Trustees on the investment policy.
Trustees Speak Out:
Here are comments on the pension plan and its future from individual members of the Board of Trustees:
John Davies
Carpentry Workers Pension Plan Board of Trustees chair John Davies, a millwright from Delta, says the reorganization of the Pension Plan is an ongoing, living process that will be never ending.
“The issues change from day to day and take on a different form as the industry and the economy changes,” says Davies, “and the Board of Trustees is committed to addressing those changes in the best interests of the members and the organization.”
Davies pledges that his team “will continue to diligently do whatever is necessary to make the Plan succeed. It’s your union and your Plan.”
Allan Scott
Northwest Trustee Allan Scott, from Prince Rupert, is surprised at how the role of the Trustees has changed in the two years he has been on the Board.
“I’m amazed at how little time had been spent on investment issues (in the past). We spent most of our time on management issues like the statistics of contribution hours but that has all changed.”
He says the Trustees meet regularly with the new actuary and accountants. “We don’t spend our time on administrative issues now, more on investment policy.”
Scott says, “We are going in the right direction but people must realize that we cannot change overnight. It may take a year or two before we can fix the problems.”
Scott is delighted with the commitment and dedication of his fellow Trustees. “I’m impressed with the devotion and commitment to the process and the long haul,” he explains.
Brent Rogers
“We’ve turned the corner,” says Central BC Trustee Brent Rogers, from Dawson Creek. “We can now look forward to rebuilding the plan.”
Rogers, commenting on the tremendous job done in a short time, says, “A system of checks and balances has been put in place, and the Trustees are in the process of developing written policy and procedures (which they never had before) to govern investment policy.”
The investment policy has to be reviewed at least annually, according to Rogers. “Probably bi-annually until we get everything cleaned up – and we must stick to it,” he said.
“We’re builders, we’ll get through it. If we run into a mistake in a structure we rebuild it. If we see a problem, we fix it. It’s not easy, some tough decisions had to be made.”
“We had a bend in the road but now we’re back on the track to Plan recovery.”
Shan O’Hara
Shan O’Hara, a Vancouver Island Trustee from Victoria, says he is convinced we now have “a good pension plan with a good fundamental basis” that “will be there in one form or another. It’s all going to depend on how well the money is invested and looked after in the near future.”
He said, “I’m hopeful our plan is going to come together to repair and rebuild. There are many problems yet to be overcome. It will be a couple more years before we are out of the woods.”
John Voykin
“It is what it is,” says new Trustee John Voykin. “We can’t change what happened so we must focus on where we have to get to.”
Voykin, from Castlegar in the Kootenays, was selected as a trustee only three months ago but is very optimistic about where the Plan is going. “We’re heading down the right road. We will do much better,” he says.
“We’ve changed the way business is being done. We’re on a go-forward basis now and all we need is time to get back on track.”
Voykin says the advisory team selected for the Plan has been very helpful.
“They are very informative,” he says. “They say there’s never a dumb question – they are happy to answer anything we ask, happy to make it clear to us.”
Voykin says the task now at hand is to work to recover the cuts over time as “the people who built this union deserve the best we can offer them.”
Randy Smith
Randy Smith, a new Trustee from the Lower mainland and president of Local 1995, predicts that the hardest of the changes are behind us.
“Our goal now is to turn it around to recover and improve the plan benefits,” he says.
Smith says the Plan has already been able to make a positive change by postponing the implementation of the Break-in-Service rule for a year to 2002.
Smith, now 38, says he joined the union as a young man because of the pension and benefit plans. “They are the best organizing tool we have. We need to sharpen it if we want to grow – a strong, viable pension and benefit plan can be our number one organizing tool.”
Smith commends the Administrator and the Plan office staff for their bearing up under extreme pressure and scrutiny over the past few months from both the membership and regulators.
“They have done a tremendous job,” he says. “I am extremely grateful to have a new Administrator who has the qualifications, reputation and ability to help pull us out of our situation.
“I thank Jane Richey for protecting the future of my family and our union,” Smith concludes.
Nick Ostoforoff
Nick Ostoforoff, a Trustee from Kamloops, said although the pension plan overhaul process was painful and will hurt a lot of retirees, it was necessary to rescue the plan.
“We have a much more stable plan now. One more professionally run where we have to be one hundred per cent in compliance with the Pension Standards Act,” he said.
The pension plan review, according to Ostoforoff, “wasn’t something that you could do one part at a time – you had to open it all up. This resulted in every aspect of the plan being painstakingly reviewed; we couldn’t leave any stone unturned.”
He indicated that the Trustees, working closely with the advisory team, had to fix anything that was even close to noncompliance with the pension legislation “and that can only be a good thing.”
Ostoforoff said the system of checks and balances put in place to ensure the full weight of decision making doesn’t rest on one person makes him feel better now. “It’s not as easy now for some individual to make a mistake.” He is especially appreciative of the fact he can go “eyeball to eyeball” with an advisory team member about any issues that need explanation.
Trustees were forced into a “steep learning curve,” said Ostoforoff, “to learn more about their responsibilities.” He indicated the Plan has a better educated Board of Trustees now and that any future Trustees initiated into the program will be better able to serve the membership.
Everything about the Plan has been overhauled, according to Ostoforoff.
On the Level April, 2001 Vol 37 No 1 Page 8
every question gets an answer
We’ve tried to answer most of the really urgent questions on members’ minds in this special issue of ON THE LEVEL. But we know that every member’s situation is a little different.
From the beginning, the Board of Trustees and the Administrator have been committed to answering every single question they receive.
“I know this is front and centre in the minds of our members, and with good reason,” says pension Administrator Jane Richey. “If you have a question, you deserve to get an answer.”
We hope you’ll understand, though, that it can take time to get an answer. CWPP staff are already hard at work implementing the changes to the pension plan. Every day, dozens of questions come into the office for them by phone, fax, e-mail and post.
On top of that, the staff are juggling unexpected absences and a major computer upgrade. “Everyone’s working as fast as they can,” says Carpenters’ President Len Embree. “They’re working 150 per cent.”
The staff and leadership at the CWPP understand how important your pension is to you. It’s just as important to them that the answers they give you are the right ones. You may need to show some patience, but your question will be answered.
Thanks for understanding.
Do you have a question?
Get the information you need.
Fill out this coupon, then mail or fax it to 300-2806 Kingsway, Vancouver, BC, V5R 5V1 fax 604-438-5348
Your Name:_________________________________________________________
Social Insurance No.:______________________________
Address:____________________________________________________________
City/Town______________________Postal Code____________________
My question is about:
___Pension benefits ___ Self-payment ___Early retirement ___Contributions
___Termination ___ Something else:
My question is:
ON THE LEVEL
now available for the first time as Adobe Acrobat Reader PDF Download