Why Mercer must be replaced
WUFA members are concerned about the lack of independence between the Administration and Mercer, the pension plan actuary.
Our pension plan requires the actuary to be independent of the Administration. Nonetheless, the Administration hired Mercer to provide it with private collective bargaining advice during the 2011 round of negotiations.
WUFA filed and won a policy grievance on this issue, and Arbitrator Picher ordered the Administration to disclose the details of its relationship with Mercer during the 2011 negotiations. The Administration appealed Picher’s decision to the Ontario Superior Court of Justice, and WUFA won again. Arbitrator Picher is now considering WUFA’s claim for remedial relief and recently ordered further disclosure by the Administration about its relationship with Mercer during the 2014 negotiations.
This grievance may take a long time to resolve -- and we’ve just learned that the Administration has changed lawyers, which will definitely lengthen the process. But WUFA members can’t afford to wait. Mercer Canada must be replaced before the next round of negotiations.
During the 2011 round of negotiations, Mercer projected a pension plan deficit of $49 million. In negotiations, the Administration used this estimate to argue that the pension plan was chronically underfunded, and WUFA agreed to increase member contributions from 6% to 8% of salary.
During the 2014 round of negotiations, Mercer projected a pension plan deficit of $55.8 million, and the Administration used this estimate to demand a further 1% increase in member contributions starting July 1, 2016. In fact, the actual pension plan deficit as of July 1, 2014 was only $36.4 million, and $7 million less than in the summer 2011. This $20 million difference has never been adequately explained.
Most importantly, the increase in member contributions that began January 1, 2012 was reducing the deficit as expected. But members were led to believe the deficit was growing. There was no need to increase member contributions by another 1% of salary starting July 1, 2016.
WUFA members have lost confidence in the ability of the Administration and Mercer to create and maintain a truly independent relationship. It is imperative that Mercer be replaced and soon if the 2017 negotiations are to proceed in a spirit of trust and mutuality