Memorial's Pension Plan during the COVID-19 pandemic

May 20th, 2020

Memorial University

Memorial's Pension Plan during the COVID-19 pandemic

We are living in unprecedented socio-economic times. As a result, many pension plan members, both retired and still working, may be concerned about their pension and their own long term financial security.

As you might expect, the Memorial University Pension Plan, like many others across the country, has experienced some financial challenges due to the investment market turmoil brought on by the combined effects of the COVID-19 pandemic and world oil prices.

Status of the Plan

The pension fund began 2020 in good standing having earned 16.4 per cent for the year ended Dec. 31, 2019. However, in the ensuing months the fund declined by 8.3 per cent. Compared to other similarly invested funds, this result was relatively good. Out of 100 comparator investment funds, Memorial’s pension fund ranked in the 12th percentile. Only 11 per cent of funds did better.

The ups and downs of the economic cycle are normal activity and the pension plan has been through many such cycles over its lifetime with no impact to the pensions it pays. This is because Memorial pensions are not directly related to the performance of investment markets as the university has a defined benefit plan. With a defined benefit plan retirement pensions are based on a pre-determined formula contained in the plan rules. University pensions are paid for life and are calculated or defined by the formula: 2 per cent x years of pensionable service x best five-year average salary, less an amount at age 65 tied to integration with the Canada Pension Plan. Nowhere in the pension formula is there any reference to the impact of year over year investment performance of the pension fund. This is unlike an RRSP or defined contribution type of pension plan where investment performance and economic conditions will have a direct impact on the amount of annual pension a person receives.

What does the future hold?

The future remains to be seen. No one knows how long or how deep the current economic cycle will be or what the ultimate impact will be on pension plan funding. Annual actuarial valuations of the pension plan keep us informed of our financial position and highlight any changes in the plan’s cost structure. A valuation is currently underway for the year ended Dec. 31, 2019. With respect to funding, the University Pensions Committee has engaged the pension plan’s actuary and investment consultant to prepare an asset-liability study that will inform how the fund is invested in the future. This study will guide the plan’s investment policy with the primary objective of ensuring its future sustainability so that it is well positioned to meet its obligations and weather future economic downturns. In addition, since the beginning of this year, the university and employee groups have continued to work on a future governance structure for the pension plan that would entail joint responsibility for its management and funding.

As for the day to day administration of the pension plan, this is continuing. Human Resources staff are working remotely. People are retiring, pensions and refunds are being paid, plan expenses are being met and investment related activity is ongoing.

What can you do to help?

As the team has moved to a remote-based, paperless work environment, there are some things that employees and retirees can do to help Human Resources maintain a safe, secure and efficient workplace. If you are retired and still receive your pension payment by paper cheque, please request a change to direct deposit by contacting Communicate with Human Resources and submit pension related forms via e-mail at or direct e-mail with a pension specialist if you have already initiated your retirement process.

Above all, ask questions. Human Resources is available to help; however, please be patient as response times may be delayed.