October 2009:
The election of our new Premier is now history:
Dear Colleagues:
On Tuesday, October 6th and again on Tuesday, October 13th , we sent the following request for information to both Mr. Ashton and Mr. Selinger.
Dear Mr. Ashton: or Dear Mr. Selinger:
As you are aware, retired teachers have been concerned with decreasing Cost of Living Adjustments (COLA’s) for the past 10 years. In fact since 2003, the annual COLA has been less than 50% of CPI. While the government has made a substantial commitment to the unfunded liability of teachers’ pensions, the 1.5 billion trust fund does not have an impact of the continued decline of COLA.
In 2008, Bill 45 promised:
improved COLAs up to 2/3 CPI;
a reserve account and
a new method of interest crediting.
Unfortunately, for the second consecutive year these changes have not produced an improved COLA (see chart below) leading retired teachers’ to the conclusion that more work and funding are needed to provide fair COLAs for both present and future retired teachers in Manitoba.
Year CPI COLA Awarded Monthly increase % CPI 2/3rds CPI achieved Reserve Fund
2008 2.2% 1.33% due to Bill 45 $29.78 60.45% NO NO
2009 1.2% 0.37% $6.78 30.8% NO NO
As a candidate for the leadership of the NDP and future premier, what would you do as premier to solve this long standing funding problem? We recognize any solution will include both short term and long term strategies.
We would appreciate receiving your response as soon as possible so that it can be circulated to our members.
I look forward to your reply.
Sincerely
Richard Benoit
President
Retired Teachers’ Association of Manitoba
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There were four follow-up telephone calls made before obtaining replies.
We have received the following replies (both on October 14th in the afternoon) and our goal is now to circulate these to as many members as possible prior to this weekend convention.
In regards to Mr. Selinger’s reply, you will note that a major part of his letter does not specifically address the COLA issue. However this is to be balanced with his offer to meet personally with RTAM to discuss our issues.
As you will note, Mr. Ashton’s reply is very short and very general in nature.
We trust that retired teachers will make use of this information in making their decision as to whom to support.
Once again, please disseminate this information to your Chapter members as well as other retired teachers who might be interested.
Yours truly,
Richard R. Benoit Wayne Hughes
President Chair
RTAM Political Action
Attached: Provincial COLA Comparisons; Reduced Purchase Power (Click link to see it.)
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Mr. Selinger’s reply sent October 14th at 4:56 pm
Richard Benoit
President
Retired Teachers’ Association of Manitoba
Dear Mr. Benoit:
Thank you for your recent request for my views on teacher pension issues.
Over the past 10 years few matters have engaged our Ministers of Education as thoroughly as pensions for teachers. I believe I can state confidently that, during that time, the Manitoba government has approached this issue with thoroughness, diligence and goodwill.
We have amended the Teachers’ Pensions Act on several occasions. These initiatives have substantially improved the plan for teachers and enhanced the long-term financial stability of the Teachers’ Retirement Allowances Fund (TRAF). Since 1999 we have:
· contributed $1.5 Billion to the TRAF fund to ensure that the employer (government) portion of the fund is 75% funded- the first contribution to the unfunded pension liability since 1963;
· made improvements to specific benefits arrangements such as part-time service and adoption and maternity leave;
· committed to matching the contributions of new entrant teachers on a go forward basis as of 2000; and
· increased premium contributions by 1.1%, the first increase to government and teacher contributions in over 25 years;
All of this amounts to a very significant financial commitment on behalf of Manitobans to support the pensions of retired teachers.
With respect to the cost-of-living adjustment (COLA), the Teacher Pension Task Force recommended a plan that would give retired teachers up to 2/3 COLA for at least 10 years, provided there are sufficient funds in the PAA. As you know, legislation in 2008 followed through on the recommendations made by the Task Force.
Bill 45 changed the interest crediting formula for the Pension Adjustment Account (PAA), with a view to increasing the funds available for COLA. For the current year and each of the two prior years, the net rate of return on fixed income investments (this includes mortgages, bonds, debentures, etc.) is compared to the net rate of return on all investments. The “greater of” these rates will be the PAA rate for that year. As well, the percentage of member contributions allocated toward the PAA will increase 0.1% every five years until it reaches 17.0%.
The intent of the legislation is to provide an improved basis for enhancing COLA over a 10 year period. We anticipate this plan will put up to $130 million into the Teachers’ Retirement Allowances Fund (TRAF) over ten years to provide for a better COLA and ensure the long-term stability of the Fund.
All pension plans in Canada have struggled in the financial environment of the past year. The TRAF annual report for 2008 indicates an 11.7% decline in the investment portfolio. But without Bill 45 there would likely have been no COLA at all in 2009. I am confident that TRAF will have more funds available for COLA in future years. Improved interest crediting should result in a better COLA over the longer term. I believe the legislation must be given a chance to work.
My own preference is for solutions that balances the needs of taxpayers, retired teachers and active teachers. I commit to meeting with you in the coming months, at your request, so that we may all better understand the issue.
Sincerely,
Greg Selinger
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Mr. Ashton’s reply sent on October 14th at 2:42 pm
I will be reviewing the funding of and stability of all public pension plans and reviewing the regulations respecting private pension plans in light of the current issues they are facing.
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See Provincial Comparisons of Teachers' COLA here.