Dal seeking pension relief

Dalhousie University is asking the provincial government to waive pension fund requirements better suited for companies than public institutions.

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Dalhousie University is hoping the provincial government will help ease its pension fund problems. Photo: Adam Miller

Dalhousie University is bracing for bad news with its next pension fund checkup on the horizon, but the school is hoping an appeal to the province may ease its pain.

By law, provincial regulators must valuate Dal's pension fund every three years. The next one is set for this June, but this time the university wants the rules bent a bit in its favour.

Dal is arguing it should be exempt from the "solvency test."

As one of the regulator's standards, the solvency test looks at how the fund would fare if it were ended immediately, and had to pay out all its obligations at once.

"Well, the university has been here for 200 years, and it's not going to go bankrupt," said Alan Shaver, Dal's Vice-President (Academic).

If hundreds of years of history isn't enough assurance, Shaver said the government's backing of the university should set it apart from the average company.

"The other issue is, if you're a company and the regulator says you have to invest more money in the pension plan, you can usually pass at least some of those costs on to your customers," said Shaver.

But with tuition fees frozen in Nova Scotia under the current memorandum of understanding, Dalhousie's operating budget would have to take the hit.

"That would eventually lead to fewer teachers, fewer administrative staff, fewer advisers for students and smaller renovation budgets," he said.

"That's why we feel it's an undue hardship on the university and probably doesn't apply to the university anyway," he said.

"It means we don't have as big a bill."

If approved, this exemption would give Dal some much needed relief as it faces the possibility of a nearly nine per cent cut due to its pension crisis.

Contributions need to double

An update last June revealed Dalhousie needs to nearly double its annual $19.5-million pension fund contributions by another $17 million, according to a document entitled "Context for development of the 2010-11 university operating budget."

This nearly 87.2 per cent increase would put the school's yearly contributions at $36.5 million.

But when or whether the Nova Scotia Office of the Superintendent of Pensions approves the exemption is anybody's guess, according to Ken Burt, Dalhousie's Vice-President in charge of finance.

While Dalhousie and other universities have sought similar relief before, Burt said the new NDP government makes the outcome of this unprecedented request - backed by both management and unions - even more unpredictable.

Also unprecedented is the scale of the damage done by the recent recession. Many universities felt a similar pension crunch and sought government relief after the burst of the dot-com bubble nearly 10 years ago, said Burt.

Then, Dalhousie fared fine without a helping hand. Now, the university is likely facing a pension shortfall of more than $130 million.

"We're about halfway where we need to be," he said. "We were closer to $300 (million) underwater at the bottom of the market."

While the exemption Dalhousie is seeking for this June would only be temporary, Burt said the university wants more than just a quick fix.

"I fully expect that we will go back and ask for a permanent exemption from that provision of the regulations," Burt said, adding that the fund's structure still needs tweaking.

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