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Changes to Worker Benefit Plans

Changes to Worker Benefit Plans. 2010 All Church Workers Conference. AGENDA. Introduction Why are benefits changing? Consultation Process Details of Pension and PRB Financial Challenges Overview of plan changes Questions. Consultation and Change Process. Process to date:

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Changes to Worker Benefit Plans

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  1. Changes to Worker Benefit Plans 2010 All Church Workers Conference

  2. AGENDA Introduction Why are benefits changing? Consultation Process Details of Pension and PRB Financial Challenges Overview of plan changes Questions

  3. Consultation and Change Process • Process to date: • Survey of employers and employees • Strategic Planning session with representative stakeholders • Focus groups held with members and employers across Canada • Announcement of changes in July

  4. Why are the benefits changing? • Employers’ concerns regarding increasing pension and benefit costs and costs for part- time members benefits • Increasing post-retirement benefit plan costs • Substantial increases in Pension costs because of: • Lower investment returns than expected • Historically low interest rates resulting in pension plan liabilities being dramatically increased

  5. DB Pension Plan Cost DetailsFinancial Position – (000’s)

  6. Post-Retirement Benefits Plan Estimated Future Cash Costs Estimated Future Costs - Current and Future Retirees 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

  7. Reasons for Post Retirement Benefits Increases • Medical and Dental increases above inflation • Increase in utilization • Government cost shifting to private plans • Increasing number of retirees • We are all living longer

  8. Summary of Changes Employer Match on DC pension suspended Post-retirement benefits discontinued Long Term Disability to be paid by members Least Cost Alternative required on drugs Minimum hours increased for benefits eligibility

  9. Pension Plan ChangesDefined Contribution (DC) • Effective January 1, 2011 employer match to the DC Plan suspended

  10. Pension Plan ChangesDefined Benefit (DB) No immediate changes to the DB Pension Plan Alternatives being reviewed (could be either DB or DC) Will be contributory in the future

  11. Changes to Post-Retirement Benefits (PRB) • PRB consist of Health, Dental and Death Benefit • No longer offered to future retirees except: • Eligible members who retire before July 1, 2012 • Anyone age 60 with 15 years at July 1, 2010 • All retirees will be required to pay a premium for PRB (most will pay $11.70 - single; $24,03 - family)

  12. Changes to Post-Retirement Benefits (PRB) • Extended Health • Deductible added • Least Cost Alternative Drugs added • Dispensing fee cap of $ 7 per prescription • Private Nursing coverage capped at $10,000 per year • Dental • Check ups, x-rays, now once every nine months

  13. Long-Term Disability (LTD) Effective January 1, 2011 members will be required to pay the cost of LTD Costs increase for members but so do benefits When members pay the premium, benefits at the time of claim are non-taxable

  14. Long-Term Disability (LTD) – 60% option

  15. Long-Term Disability (LTD • Members will be able to elect coverage under the following non-taxable LTD options: • 50% non- taxable • 60% non- taxable • 60% non- taxable with a 2% per year cost of living adjustment (COLA)

  16. Long-Term Disability (LTD Costs

  17. Least Cost Alternative Drugs Several provinces enacted legislation to lower the price of generic drugs When a generic is available we will pay for the least cost alternative (brand name or generic) Generic has same active ingredient but filler, binder or dye maybe different Will pay for brand name if medically required

  18. Least Cost Alternative DrugsExample : Lipitor Information from Manulife Financial

  19. Least Cost Alternative DrugsExample : 20% Coinsurance • Member buys brand name: Information from Manulife Financial

  20. Eligibility for Permanent Part-time (PPT) Benefits Employers concerned with providing full active benefits to PPT Benefits significant part of compensation Pension legislation specifies pension eligibility; no legislation for benefits except Saskatchewan Eligibility generous compared to other Canadian employers.

  21. Eligibility for Permanent Part-time (PPT) Benefits Eligibility: 24 hours per week Current PPT employees will continue to be covered under current benefits plan until January 1, 2011; thereafter coverage depends on hours worked. Membership in pension continues regardless if hours are less than 24 hours per week.

  22. Questions

  23. Thank-you for listening!

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