The Key Arguments on the Pension Surplus   Bank Position   Pensioners’ Association Position The Bank’s only obligation to pensioners is to meet its pension liabilities and make pension payments as set out in the Pension Fund contract (By-law 15). The Bank has over-charged Pension Plan Members for the pensions to which they are entitled and as a result there is an enduring structural surplus in the Pension Plan. The Bank is ethically obligated to remedy the funding error that has resulted from its decision to use unduly conservative actuarial assumptions and higher than necessary contribution rates for all Members and for the Bank. All benefits of the pension surplus should accrue solely to the Bank since it has put additional funds into the Plan in the past and is responsible to cover any future funding risk. The surplus is significantly in excess of the additional funds the Bank has contributed in the past (to cover both periodic deficits and legislated improvements in benefits) and is expected to contribute in future. Since the surplus is the result of higher than necessary contribution rates for all Members and the Bank, the benefits of the surplus should be shared by all parties in a proportional way. An appropriate portion of the surplus should therefore be rebated to all Members and to the Bank in proportion to their contributions plus interest. The Bank is entitled to make changes to the Pension Fund contract to make use of surplus funds without ensuring that the changes are equitable for all Members. The case in point involves changes to the contract to grant a contribution holiday to benefit active Members of the Pension Plan during the years 2000 and 2001, without an equivalent benefit for non-active Members. The Pension Fund surplus is contained in the trust fund set up to benefit all of its Members and administered by the Bank. Members have a right to expect that decisions taken with respect to the use of the trust fund will be fair and equitable to all Members and that the Bank or certain Members will not derive any benefits from the funds that are not available to all Members. As a minimum, non-active Members are entitled to receive a benefit that is equivalent to the contribution holiday received by current staff and the Bank, since the surplus has been created by the over-contributions of all Members and the Bank. Conclusions The Bank’s position on the distribution of the Pension Fund surplus is based on a legalistic interpretation of what it is minimally required to do for all Members and what it is able to do to suit its corporate objectives. It is not based on principles of fairness and equity for all Members. The Pensioners’ Association position is based on an ethical interpretation of what is the right thing to do.