• Since the plan was approved, there have been changes in income tax laws which affect the amounts which may be tax-sheltered. Therefore, the example calculations, which were valid in 1991, may not be valid in all details under current tax law.

Recommended:

That the Coordinating Committee approve, on behalf of the Board of Governors, the Early Retirement Compensation Plan (below), as ratified by the UWO Faculty Association.

This faculty early retirement compensation plan will enable eligible faculty members to elect early retirement and receive a retiring allowance and/or a monthly payment for the lesser of the period between the early and normal retirement dates and 60 months. This monthly payment will be in addition to any regular early retirement pension provided by the Academic Pension Plan.

DEFINITIONS:

In this agreement, "faculty member" will mean a full-time regular member of faculty at The University of Western Ontario or such an individual with reduced responsibility under the provision of the ACORD document; "Chair" will mean the chairman or chairwoman of the faculty member's department in units with departmental structure; "Dean" will mean the dean of the faculty in which the faculty member holds an appointment.

Faculty members who are eligible to elect early retirement under the terms of the Academic Pension Plan, and whose age and full-time service added together equal at least 75 years, may apply for participation in the Plan.

Under the current provisions of the Academic Pension Plan, a faculty member may elect early retirement at any time within ten years immediately preceding Normal Retirement Date, which is July 1^st coincident with or next following the faculty member's 65^th birthday.

Discussions concerning an eligible faculty member's early retirement may be initiated by one or more of: the faculty member, the Chair, the Dean, or the Provost. Initial discussions on the general terms of early retirement will involve the faculty member and the Chair and/or Dean. Faculty members who are eligible for participation in the Plan and who do not receive a favourable response from the Chair and/or Dean may appeal directly to the Provost.

Step 1
A request will be made by the Dean or Provost to the Pensions and Benefits Department for a calculation of the cost implications of the proposal to the Faculty or Department. The faculty member will be directed to contact the Pensions and Benefits Department to discuss the benefits and options available should the proposal be approved.

Step 2
If the faculty member agrees to the terms of the proposal, a formal request will be sent to the Provost for initial approval. This action will normally occur at least 8 months prior to the early retirement of the faculty member. The Provost will normally respond within 1 month of receipt of the proposal.

Step 3
If the Provost approves the proposal, it will be presented to the Board of Governors for formal approval.

Step 4
Once formal approval is given by the Board of Governors, a contract stating the terms of the early retirement will be drawn up by the Dean and signed by the faculty member and the Dean. A copy of the completed contract will be forwarded to the Provost for implementation.

Application for benefits under the Early Retirement Compensation Plan will normally receive favourable consideration provided academic programs are not impaired as a result of the faculty member's early retirement. Decisions relating to the participation in this plan by faculty members will be determined solely by the Provost whose decision shall be final. Decisions will be communicated to the faculty member in writing by the Provost.

The benefit amount will be the number of years (with partial years pro-rated) between the early and normal retirement date times 25% of the annual base salary in effect in the month prior to the early retirement date. For members under the reduced responsibility provisions of the ACORD agreement, the salary used for the calculation will be the nominal full-time rate which would be in effect had the faculty continued on a regular full-time non-reduced employment arrangement.

The amount calculated above will be paid to the retiree in one of two ways:
 

(1)

The amount will be divided equally over the number of months between the early and normal retirement dates, to a maximum of 60 months, and paid monthly as taxable income. The monthly instalments will commence at the first month-end following the early retirement date and will increase each July 1st by the basic salary increase extended to full-time continuing faculty members (excluding PTR and merit adjustments).

(2)

As an alternative to (1) above, the faculty member may elect to take a portion of the supplement as a tax-sheltered Retiring Allowance payment which may be transferred to a personal Registered Retirement Savings Plan or deposited in the Voluntary Account of the University Academic Pension Plan. Current legislation limits a tax-sheltered Retiring Allowance to $2,000 for each full and part calendar year of service while a member of the University Pension Plan, and $3,500 for each year of service while not a member of the pension plan. The balance of the supplement not paid as tax-sheltered Retiring Allowance will be paid in equal monthly installments as described in (1).

Should the faculty member die prior to the completion of the payment period specified in (1) and (2) above, any unpaid balance will be paid as a lump sum payment, less withholding tax, to the named beneficiary.

Faculty members participating in this plan will be provided with the retirement benefits normally provided to University retirees. These include the following:

• A $15,000 paid-up life insurance policy.
• Continued coverage under the Dental, Supplemental Health and Visioncare Plans.
• A retirement gift to a value of $250.

In all three example calculations shown in Annex 6, base salary increases are assumed to be 5% each year, and it is assumed that employment has been continuous since the date of first appointment.
 

Distribution T.J. Collins W.R. Trimble K. Gee

A P P R O V E D By the Coordinating Committee on behalf of the Board of Governors on February 28, 1991   Secretary of the Board (original signed by J.K. Van Fleet)

Case 1:	Early retirement date:	July 1, 1990
	Normal retirement date:	July 1, 1999
	Current annual salary: :	$85,230.00
	Date of first appointment:	July 1, 1969
	Joined pension plan:	July 1, 1970
	Benefit	9 x 0.25 x $85,230.00 = $191,767.50

Option (1): $191,767.50/60 = $3,196.13 per month.

Monthly payments:
    July 31, 1990 - June 30, 1991: $3,196.13
    July 31, 1991 - June 30, 1992: $3,355.94
    July 31, 1992 - June 30, 1993: $3,523.74
    July 31, 1993 - June 30, 1994: $3,699.93
    July 31, 1994 - June 30, 1995: $3,884.93

Tax-sheltered allowance⁽¹⁾: $3,500 + (21 x $2,000) = $45,500
Remaining benefit: $191,767.50 - $45,500.00 = $146,267.50
$146,267.50/60 = $2,437.79 per month.
Monthly payments:
    July 31, 1990 - June 30, 1991 : $2,437.79
    July 31, 1991 - June 30, 1992 : $2,559.68
    July 31, 1992 - June 30, 1993 : $2,687.67
    July 31, 1993 - June 30, 1994 : $2,822.05
    July 31, 1994 - June 30, 1995 : $2,963.15

Option (1): $41,365.00/30 = $1,378.83 per month.

Monthly payments:
    Jan. 31, 1991 - June 30, 1991 : $1,378.83
    July 31, 1991 - June 30, 1992 : $1,447.77
    July 31, 1992 - June 30, 1993 : $1,520.16

Option (1): $138,500.00/60 = $2,308.33 per month.

Monthly payments:
    July 31, 1990 - June 30, 1991 : $2,308.33
    July 31, 1991 - June 30, 1992 : $2,423.75
    July 31, 1992 - June 30, 1993 : $2,544.94
    July 31, 1993 - June 30, 1994 : $2,672.19
    July 31, 1994 - June 30, 1995 : $2,805.80

Tax-sheltered allowance: 19 x $2,000 = $38,000.
Remaining benefit: $138,500.00 - $38,000.00 = $100,500.00
$100,500.00/60 = $1,675.00 per month.

Monthly payments:
    July 31, 1990 - June 30, 1991 : $1,675.00
    July 31, 1991 - June 30, 1992 : $1,758.75
    July 31, 1992 - June 30, 1993 : $1,846.69
    July 31, 1993 - June 30, 1994 : $1,939.02
    July 31, 1994 - June 30, 1995 : $2,035.97