Brandon University Pension Woes

November 12, 2011

Canadian Taxpayers Federation

Colin Craig

May 17, 2011

Public sector pension watchdog Bill Tufts recently crunched some numbers on Brandon University’s (Manitoba) pension woes.

Bill copied the CTF in an email to the Brandon Sun…with Bill’s permission, I’ve reposted the email below. Unfortunately it sounds like the all too common a situation – gold plated pensions for government employees, while taxpayers (in this case some of the poorest taxpayers out there – students) are feeling the pinch of paying for the over the top benefits first hand.

Check out Bill’s web site to see pension numbers he has calculated on public sector pension plans across Canada.


That was an interesting story about the cutbacks at Brandon University. .

This is unacceptable for the people of Manitoba at a time when there is an urgent need to provide university graduates in order for Canada to remain competitive in an increasingly global economy.

The financial problems seem to stem from the pensions paid to retiring university employees. These pensions are unsustainable and need permanent solutions. The solutions is to  eliminate the gold-plated pension and replace it with one that is fair to employees and future students as well. It is future students that will be paying for it through higher tuition.

Pension costs have skyrocketed at the university and they still prove to be woefully inadequate. Contributions to the pension plan have risen from $3 million in 2006 to $4.5 million in 2009. Yet the shortfalls grows. In 2007 there was a surplus of $4 million now there is a shortfall of $32 million, the math just does not work. This despite the fact the plan had a return on investments of 16.8% last year and at the last valuation the plan had rolling annual returns of 9.2% over 4 years.

The extra increase in annual pension funding of $1.5 million since 2006 could have been used to pay for the wages of 30 employes earning $50,000 per year.

The problem is with the amount of annual pension income guaranteed to employees. The plan is designed to pay 70% of final average salary, know as a defined benefit plan. These do not exist in the private sector and the university needs to convert to defined contribution pensions for long term sustainability.

Brandon U is on track to pay out some pretty sweet pensions. A couple of academic gurus are on their way to pensions in excess of $100,000 per year, based on incomes of $ 160,000 per year. There are 80 employees earning over $100,000 and most will be entitled to a pension in excess of $70,000 including CPP.

Management decides to allocate money into pensions and lay off staff. The money “saved” is is not money going into enhanced student services but to bolster the personal pension accounts of managers and other employees. We are now seeing the conflict plaguing all government organizations. It is the choice between more services for students or more gold-plated benefits for management and staff.

Statscan reports that the average student debt on graduation is over $19,000. Also the proportion of student borrowers who graduated with debt loads of at least $25,000 is over 27%. Is it fair for student to borrow to fund pension plans for very well paid employees of the university? You would think with these salaries they could save for their own retirement!

Forcing student to borrow to pay tuition is not fair, where do you think the money is going to; pensions or services?



Leave a Reply