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March 5, 2001
Caution urged in reviewing employer changes to private pension
For plans under Appendix L of the PCA the promise of higher returns also means greater risk
Recently, your employer might have made changes to your pension plan, the one governed by Appendix L of the Provincial Collective Agreement. Such employers have introduced these changes without discussion with the Union.
The changes include a choice of options in how you can invest your pension funds. BCNU is not opposed to expanding your investment opportunities. However, we do not agree with the way this change has been introduced and are contacting employers to discuss the matter.
Under Appendix L of the PCA, investment options are limited to guaranteed investment certificates only. Because of very low interest rates, the returns on your investment have been low. With expanded options to invest in fixed income, equity and balanced funds comes an opportunity for increasing your investment returns. However, the opportunity for higher returns can mean higher risk.
It is in your interest to be clear about the issues, such as: the content and risk level of each of the investment fund options; how you can switch between funds; any charges that are hidden within each fund; any charges that may accrue in either the switching out of a particular fund or withdrawing from the plan if you terminate employment, or if the plan winds up due to your inclusion in the Municipal Pension Plan. The carrier must make a contact person available to you for ongoing questions.
In order to be clear about the risks and possible rewards of any particular plan and options provided by the plan, a financial adviser is your best source of information. BCNU expects that one option will be to continue to invest your funds in guaranteed investment certificates. That is the safest place for your retirement funds, although it may not be the best for return on investment.
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