Contribution Rate Increase
Recent rate increase July 1, 2014 of about 0.7% of salary from employees and employers each is due to a independent actuary’s review of the plan in 2012, the valuation showed the plan was 96.5% funded which was due in part to lower than expected investment returns and members living longer. A contribution rate increase was necessary to ensure the plan is in a fully funded position.
Cost of Living Adjustments
The MPP Board of Trustees need to address the cost of living adjustments granted to retired members which in it’s present form is not sustainable in the long term. The cost of living adjustment, if granted, becomes effective January 1st of each year, these adjustments are not guaranteed; however, once granted, adjustments become a permanent part of your guaranteed basic lifetime pension. Increases vary from 1.1%- 2014 to 1.9%-1994 these funds are provided thru the inflation adjustment account (IAA) which has issues/constraints that must be followed by the plan rules.
Changes in nominating a beneficiary
Effective March 31, 2014, The Wills, Estates and Succession Act sets out new rules for nominating your beneficiary for pension purposes. As a result, you may have more options to protect your family, leave a legacy to your community and customize your estate planning the way you want.
Pension Option Factor Tables Changing January 1, 2015 see board communique dated July 8, 2014
The changes do not impact how a member’s basic (normal) pension is calculated: however; for a member it may change the amount payable at retirement, depending on the pension option selected. The terms for converting from normal form to other forms of lifetime pension are going to improve; however, the cost for converting lifetime pension into a temporary annuity will increase. Please contact the MPP (mpp.pensionsbc.ca) for the above mentioned changes.
To summarize this pension report there needs to be an inclusion of the Conference Board of Canada’s Economic Impact of British Columbia’s Public Sector Pension Plans Report October 2013, Chapter 5 page 37 concludes that Defined benefit plans like the ones covering many B.C.’s public sector employees are a good way to save for retirement, public sector employees will not face a precipitous drop in their standard of living in retirement as a result of more retirement savings that lead to higher disposable income in retirement.
The Municipal Pension Plan is well manged, well run and has an expected long term achievement for it’s members, community and province.
Some must do’s for you and your family members:
- Apply to Canada Pension Plan for your “Statement of Contributions”
Reason, your previous earning (contributions to CPP thru your current/previous employer’s) can be scrutinized to ensure accuracy, any discrepancies (ie: incorrect reporting by employer) need to be addressed sooner rather than later for no loss in service as you are responsible for bringing forward active reporting.
- Apply to Canada Pension Plan for the “Child Rearing Provision” which allows applicant’s to qualify for or receive a higher Canada Pension Plan benefit amount. If you were not working or had low earnings while caring for a child under the age of seven the Child Rearing Provision can be used to exclude these periods of time from the calculation of your benefit. This may help you qualify for benefits or increase the benefit amount you receive.
- Apply to Municipal Pension Plan (MPP) to use the child-rearing provisions in the Municipal Pension Plan to increase your contributory service. The plan rules allow you to count periods of time during which you were off work caring for a child under seven years of age as contributory service.