TRAMTelephone Retirees Association of Manitoba

Harry Reatall Report to Retirees 2012


TO: M.T.S. Defined Benefit Plan Retiree Plan Members.

From: Harry G. RESTALL

          Retiree Representative 0n Defined Benefit Plan Pension Committee



On the June 6 meeting of the DB Pension Committee the plan actuary reviewed the Jan. 1,2012 funding and indexing reports. MTS is preparing and will be sending to all D.B. plan members their yearly report on the status of the plan. It will show that on a going concern basis the actuarial value of the plan liabilities exceeds the actuarial value of the plan assets by $19.561 M. It will also show that on a solvency basis the windup deficiency exceeds the market value of plan assets by $560.595M after crediting the market value of plan assets with $140.659M with letters of credit. The true solvency deficit is therefore $701.3M. The deterioration of the solvency position is due to a) poor investment results and b) a substantial decrease in the solvency discount rate that must be used to value the solvency liabilities. The result is a high cost to MTS to secure lines of credit and to meet the required special payments to offset the huge solvency deficiency.

The root cause of these huge financial obligations to MTS is privatization itself. When MTS staffs were in the Civil Service Superannuation Plan there was no requirement for a solvency test. By privatizing, MTS was required to move from under Provincial jurisdiction  to Federal jurisdiction which required the plan be subjected to the solvency test. If the plan failed this test the plan sponsor (MTS) is required to make special payments to bring the plan back to a fully funded solvency position. This is the major source of the special payments that MTS has been making and that are reflected in the letter that plan members recently received from MTS. Those huge payments are not to fund plan member benefits – they are to satisfy MTS’s solvency obligation of having enough assets to meet the plan benefit commitment if the plan were to be terminated. The decision to privatize was made by the Provincial Government and MTS excluding any input by Plan members. Any costs associated with privatization rightly belong to MTS   and special payments to resolve solvency under funding should not be credited to MTS as contributing to the plan. These are purely the cost of privatization and cannot be claimed as contributions to fund the plan benefits.


At the meeting I advised the MTS representatives that the Telephone Retirees Association is endeavouring to determine if  TRAM qualifies as the retiree representative organization under P.B.S.A. section[19-924]. If TRAM qualifies under this section the selection of the retiree representative on the Pension Committee would be named by TRAM similarly to IBEW, CEP and TEAM. 


The funding and administration of the Indexing account continue to be a concern. These issues were brought to the attention of the committee several years ago and they were detailed in a paper drafted by our actuary and me and presented to the committee. Our concerns were acknowledged by the MTS representatives who stated that on legal advice they could not be addressed until the law suits have been resolved. For the same reason discussions relating to the formula issue were suspended and there was no alternative but to appeal to the courts.


As all retirees have been advised that my term as your representative on the Defined Benefit Pension Committee is now complete and an election has been called to elect a new representative. If it is determined that TRAM is authorized to select the new representative an election would not be required. Due to several factors (mostly age and health problems) I will not be a candidate for the position. As I have indicated above there are issues other than the two lawsuits that must be addressed in the future so I  recommend that all retirees give strong support to your new representative. I wish to thank all retirees for the support that I had as your representative . We all should be grateful to TRAM for providing the funding for me to provide reports to retirees on the issues before the Pension Committee. I would urge you all to support the TRAM endorsed candidate in the coming election.