Municipal Pension Plan

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					Municipal Pension Plan
      Report on Pension
      and Other Benefits

                   Vancouver, Victoria, Kamloops,
                   Nelson, Prince George

                   November 8, 2003
   Pension and non-pension benefits
   Major Benefit Issues in 2003
   How changes are made to plan rules and
What Are Pension Benefits?
   Pension Benefit on Retirement
       your basic entitlement under the Plan
   Commuted Values
       taking contributions out of the Plan
   Pre-retirement death benefit
   Disability pension benefit
   Service accrual while on approved long term
Enhancing Your Basic Pension
   Purchase of past service
       payment for arrears
       purchase of past leaves of absence or
        probationary periods
       rules simplified beginning in 2002

   Transfer of service
       there may be an advantage to consolidating
        service in other plans in the Municipal Plan
What Are Non-Pension Benefits?
   Medical Service Plan of BC (MSP)
   Extended health benefits plan
   Dental plan

   Provided outside the Basic Account
       Supplemental Benefit Account
   Provided on a “funding available” basis
       No guarantees
   Retirees share in the costs
Pension Plan Rules
   Detail the contribution requirements and
    benefit rules
   Existed prior to joint trusteeship in the
    Pension (Municipal) Act
   Adopted by the Board of Trustees at
    beginning of Joint Trusteeship
   Provincial Legislation and Joint Trust
    Agreement requires that “vested” rights be
Changing a Non-vested Benefit
Who Has the Power to Change?

   Trustees can change benefits
       If no increase in contributions is required
   Plan partners can change benefits
       If contribution increase is required
Significant Benefit Changes in 2003

1.   Group benefits for retired members
2.   Special Agreements
3.   Other Benefit Changes
       1. Post Retirement Group Benefits
                How Are They Funded?
                                                                              1.0% of plan
                                                                           members salaries
                        Employee Contributions                             paid by Employers
                                                                            are used to pay
                        Employer Contributions                               Group Benefit
                                                                            costs, with the
  6.5% of
                                                                               balance to
pensionable                                          1.0% of
                      5% to 13% of plan                                         Inflation
   salary                                       pensionable salary
                       members salaries                                        Adjustment

              Basic                          Inflation               Supplemental
                                           Adjustment                    Benefits
                                             Account                     Account

      Basic Pension                       Future Indexing             Group Benefits
                                                                     Non-Pension Benefits
1. Post Retirement Group
      Why Were Changes Made?

 Not   enough money to pay for benefits as
    currently designed:
         demographic changes result in greater usage
         MSP changes increase premium costs
         Pharmacare changes shift costs to health plans
         drug costs and usage soars

 Costs increase $20 million (65%) in three years
 Available funding not growing to match cost
 90% of funding used to pay 2002 costs
 Cost projections indicate further increases
1. Post Retirement Group
        Constraints on Funding

   Benefits for current retirees paid from
    limited employer contributions
       current contributions fund retiree benefits
   Pension contributions and fund investments
    cannot be diverted to fund group benefits
   Only Plan Partners can increase the funding
    available for benefits
   Projections show insufficient funds to pay
    for current benefit package in 2004
       all benefit payments cease once funding
1. Post Retirement Group
      Benefit Change Principles

1.   Long term horizon
        find benefit package that can be sustained in
         the longer term

2.   Concentrate program on protection
     against “catastrophic events”

3.   Extend coverage for retired members
     living in Canada, outside of BC
1. Post Retirement Group
   Benefits Changes Effective
     January 1, 2004

   Coverage to retired members living in Canada,
    outside of BC
   No out-of-country coverage
      must purchase separate coverage if traveling

   Increased lifetime limit to $100,000
      up from current $40,000
   Partial premiums to be paid by plan members for
    EHB and dental coverage
      amount depends on pensionable service

   Changes in deductibles and co-insurance on
    EHB and/or dental
2. Special Agreements
   Special arrangements between employers
    and employees for additional payments for
    pension purposes
      payments made into an RRSP like account

      funds available to purchase additional
       pension at retirement
   Funds held outside of the Basic Account
      not a basic pension benefit

   Most commonly used by Fire and Police
      approximately 6,000 members have special
2. Special Agreements
   Basic Pension                 Special Agreement Pension
       Based on a fixed              Based on amount of
        formula that                   contributions and
        considers years of             actuarial factors that
        service and highest            determine cost of pension
        average salary
       Basic Pension=                         SA Pension=
    Service X HAS X 2%                 Contributions plus interest
                                           X actuarial factor

                       Total Retirement
2. Special Agreements
   Actuary indicated tables used to calculate
    Special Agreement pensions did not reflect
    current actuarial experience and
      Mortality rates too low – resulting pension
       should cost more
      Inadequate provision for indexing of SA
       pension – other plan members subsidizing
       non-basic SA pension benefits
   New conversion tables result in smaller –
    but more appropriate - pension benefit
      Changes being implemented over three
Other Benefit Issues
   Criteria for approved LTD plan
   Definition of full time employment
   Co-habitation rule
   Contributions on rehabilitative employment
How Benefit Issues Come
to the Board
   Regulators (CCRA or PBSA)
   Plan Actuary
   Plan members
   Plan employers
   Pension Corporation
     Benefit Decision Making
                                                     Issues identified by
                          Benefit Issue           Regulators, Actuary, Plan
                            Identified           Members, Plan Employers or
                                                      Plan Administrator

                            Issue Paper
                         Prepared by Plan
                                                                Benefits Committee
                                                             reviews topic, gets legal
                                                               or actuarial advice as
                           Board Review
Full Board makes
  final decision
                                                        Review by
                                      referral      Benefits Committee

        Board Decision
Pension Plan Benefits