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Understanding the “Pension Plan for the Employees of Concordia University ”

Understanding the “Pension Plan for the Employees of Concordia University ”. Part-time or non-permanent employees Contributory status. January 2017. Agenda. Review information package

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Understanding the “Pension Plan for the Employees of Concordia University ”

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  1. Understanding the “Pension Plan for the Employees of Concordia University” Part-time or non-permanent employees Contributory status January 2017

  2. Agenda • Review information package • What is the Act respecting the restructuring of university-sector defined benefit pension plans and amending various legislative provisions (ARUSDBPP)? • Pension Sustainability Forum • Governance Structure • Current Pension Plan and what is changing? • What are your choices? • Benefits of participating in the Pension Plan • Next steps

  3. Review Information Package • Copy of today’s presentation • Declaration Form • Glossary, Pension @ccess tool user guide and FAQs on C-space Please note that the examples used in this presentation are for illustrative purposes only. Should any discrepancies arise, final interpretation will be governed by the provisions of the official Pension Plan text.

  4. What is ARUSDBPP? An Act respecting the restructuring of university-sector defined benefit pension plans and amending various legislative provisions. • Tabled November 11, 2015 • Received assent June 8, 2016 • Came into effect June 8, 2016

  5. What is ARUSDBPP? • Changes take effect January 1, 2018 (you are required to make a decision by September 29, 2017) • Required to have equal sharing of total pension plan costs between employee and employer: Act imposes 50%-50% cost-sharing if no agreement between parties (a minimum cost-sharing of 45%-55%) • Legislation results in eliminationof Non-contributory (NC) status • Past service deficit, prior January 1, 2016, remains the responsibility of the University. • Future deficits shared between the University and active members (not retirees)

  6. Pension Sustainability Forum (PSF) • Established in 2014 in anticipation of Pension Reform • PSF: representatives from all union and employee groups, internal members of CEBC* and members of administration and leadership. • Goal: sharing of information among forum members and to discuss various options in anticipation of proposed legislation • Met numerous times to date • PSF will continue to meet *(Concordia Employee Benefits Committee)

  7. Concordia Pension Plan Governance Structure Role of the Pension Committee A Pension Committee is required by the Supplemental Pension Plans Act and has a fiduciary role. The pension committee also must: • See to the financial health of the Plan and its sustainability • Administer the Plan in accordance with the Plan text and applicable legislation Role of the Benefits Committee The Benefits Committee consists of employee and employer representatives with the role of : • Reviewing the pension plan; and • Recommending plan changes to the Board of Governors

  8. Overview of the Concordia Pension Plan Current vs Revised Good news: • The plan remains a Defined Benefit Plan (DB) • The pension accumulation formula remains unchanged • Contributory formula = accruing service formula • Concordia opted for the minimum employee cost sharing percentage required (45%) rather than the 50% suggested. Note: Non-contributory ≠ non-accruing

  9. Overview of the Concordia Pension Plan Current vs Revised Automatically join on January 1st of the year following the calendar year which you meet one of the following qualifications: a minimum of 700 hours worked OR remuneration equal to at least 35% of the YMPE. 2017 YMPE = $55,300

  10. Accruing Service vs Not accruing Service • Member accruing service*: Prior to January 1, 2018, all active members accumulating service under the Pension Plan, consists of contributory and non-contributory members. As of January 1, 2018, consists of a member contributing to the Pension Plan unless exempted to make the required contributions pursuant to a specific provision of the Plan. • Member not accruing service*: A member of the Pension Plan on December 31, 2017 who has decided not to make the required contributions to the plan as of January 1, 2018 and who will therefore not accrue any pension benefits under the Plan for service on and after January 1, 2018 *Credited service under the Pension Plan ≠ Employment service

  11. What is a Defined Benefit Plan? • Defined Benefit plan means a plan member retiring from the plan receives a guaranteed lifetime pension • Pension benefits are defined ahead of timebased on a set formula using your pensionable earnings and years of credited service • You know ahead of time what your retirement income will likely be. You also know it is guaranteed for as long as you live and may continue to your spouse or beneficiary after your death depending on the option you select at retirement. • This certainty makes budgeting for retirement a whole lot easier Peace of mind for the future!

  12. Eligibility and Enrolment 2017 YMPE = $55,300 Everyone will be required to make a decision about their pension by completing and signing the “Declaration Form”

  13. Concordia Pension Benefit Formula

  14. Changing participation status

  15. Concordia Pension Benefit Formula (retirement at age 65) Non-contributory = no longer available and 2% formula = unchanged!

  16. Definition of terms – Pension Benefit Formula Final Average Earnings (FAE): The average pensionable earnings during the 36 consecutive months of earnings that produce the highest average. Year’s Maximum Pensionable Earnings (YMPE): This refers to the maximum annual earnings on which employers and employees contribute to the Canada Pension Plan or the Québec Pension Plan. The government increases this amount every year, according to the increase in the Average Industrial Wage Index in Canada. For 2017, the YMPE is $55,300. Final Average YMPE: The Final Average YMPE is the average of the YMPE for the last 36 calendar months preceding the determination of plan benefits. If you have less than 36 months of membership, the average will be taken over your entire membership

  17. Your Contribution Current Pension Plan Revised Pension Plan *estimated %, the final % applicable January 1, 2018 only available once actual participation rate determined and thereafter is subject to change at each actuarial evaluation. (actuarial evaluations are required by law every 3 years)

  18. How contribution rate is determined The contributions to be taken into consideration for the purposes of subsection 6.2 in the plan text and as required by law are: • the current service contribution; • any amortization payment related to a deficit in connection with the service subsequent to December 31, 2015; and • the new stabilization contribution provided for in subsection 6.4 of the pension plan text.

  19. What are your options for the Revised Plan? • Continue to accrue pension benefits based on the contributory formula (IRREVOCABLE) • Make contributions (8% / 9.5%) to the pension plan through payroll deductions (tax deductible) • Once accruing service, you can no longer become Member not accruing service. 2 Options Accrue service in the Revised Pension Plan • No longer accrue pension benefits (accumulated benefits remain) • No contributions to the pension plan • Option to start accruing on any January 1st • No option to buy-back past service Not accrue service in the Revised Pension Plan

  20. Deadline to make your decision September 29, 2017 Every employee must complete, sign and submit the “Declaration Form” by September 29, 2017.

  21. Estimate of Concordia Pension Benefit age 65Currently contributory • Deemed Full-time salary = $61,666 (Lecturer) • Annual earnings = $15,000 • Credited service at age 65 (accrue) = 4.86 years = $15,000/$61,666 x 20 years • Credited service at age 65 (not-accrue) = 2.92 years = $15,000/$61,666 x 12 years Decision to Accrue service 4.86 years ofCredited service (assumes pension service prior to 2018 all contributory and choose to accrue service in the plan from January 1, 2018 going forward) $4,650* per year for yourlifetime ($388 per month) Decision to not accrue service 2.92 years of Credited service (assumes pension service prior to 2018 all contributory and choose not to accrue service in the plan from January 1, 2018 going forward) $2,793* per year for yourlifetime ($233 per month) *Concordia University pension only, excludes Government plans. *Excludes any potential indexation Average YMPE = $55,300 (2017)

  22. Estimate of Concordia Pension Benefit age 65Currently contributory • Deemed Full-time salary = $61,666 (Lecturer) • Annual earnings = $25,000 • Credited service at age 65 (accrue) = 8.11 years = $25,000/$61,666 x 20 years • Credited service at age 65 (not-accrue) = 4.86 years = $25,000/$61,666 x 12 years Decision to Accrue service 8.11 years ofCredited service (assumes pension service prior to 2018 all contributory and choose to accrue service in the plan from January 1, 2018 going forward) $7,759* per year for yourlifetime ($647 per month) $4,650* per year for yourlifetime ($388 per month) Decision to not accrue service 4.86 years ofCredited service (assumes pension service prior to 2018 all contributory and choose not to accrue service in the plan from January 1, 2018 going forward) *Concordia University pension only, excludes Government plans. *Excludes any potential indexation Average YMPE = $55,300 (2017)

  23. Estimates of Concordia Pension Benefits at 65Currently contributory

  24. Estimation of Pension Contributions under Revised Plan • A pension contribution calculator is available on C-space to allow you to estimate your bi-weekly contributions The actual pension contribution rates for the year 2018 will be available in November 2017. The actual pension contribution rates may differ from those used in the Calculator (8%/9.5%) to reflect any subsequent changes in actuarial assumption and methods, in estimated Plan demographics at January 1, 2018 and/or newly received actuarial guidance from regulatory authorities.

  25. Estimation of Contributions under Revised Plan

  26. Estimation of Total Employee Contributions 2017 YMPE = $55,300 • Estimated calculation of your average bi-weekly contribution • 8%* of pensionable earnings up to the YMPE, plus • 9.5%* of any pensionable earnings in excess of YMPE • Employee contributions are made by regular payroll deductions and are tax deductible. • NB: * estimated % final %’s applicable January 1, 2018 will be finalized after October 1, 2017 when participation rate is known.

  27. Employee contributions vs Employee Pension benefit • Pension Estimate for retirement at age 65 • Deemed Full-time salary = $61,666 • Annual earnings= $12,500 • Average YMPE = $55,300 (2017) $20,000 employee contributions over 20 years (+ employer contributions) $3,879* per year for your lifetime * Normal form of pension: “Life Annuity with 10 years certain”

  28. Unreduced early retirement (without penalty) • In order to be eligible for an unreduced early pension, you must be a minimum of 55 years of age and you must complete a minimum of ten (10) years of Unreduced Early retirement service University employment service before Dec 31, 2017 + Accrued years of service in the Pension Plan as of Jan 1, 2018 = Min. 10 years

  29. Benefits of accruing service in Concordia’s Defined Benefit Pension Plan • Never too early or too late to start saving for your retirement • Not accruing means you are missing out on the 55% contribution from the university towards your retirement savings • By not continuing to accrue service in the pension plan, you are reducing your lifetime retirement income from Concordia • Contributions are deducted on your pre-tax dollars so lesser impact

  30. Benefits of accruing service in Concordia’s Defined Benefit Pension Plan • The plan does not allow for the buyback of service so the decision you make today impacts you forever • If you leave prior to retirement (i.e. prior to age 55) • you will be entitled to a deferred pension payable at age 65 OR • you can transfer the commuted value of your pension (employee/employer contributions) to your RRSP, LIRA or another registered pension plan (if that other plan accepts it)

  31. PENSION@access Tool • Current members of the Pension Plan will be able to project their pension under the revised Plan.

  32. What other savings options at Concordia are available to me? • In addition to the pension plan, you can participate in Concordia’s Group RRSP Program and/or Concordia’s Group TFSA Program • Open to all employees; • Low investment management fees; • No employer contribution; • Full details on C-space: Group RSP - https://cspace.concordia.ca/services/hr/benefits/group-rsp.html Group TFSA - https://cspace.concordia.ca/services/hr/benefits/group-tfsa.html

  33. Next steps • Members can expect to receive a letter including the “Declaration form” • Completed declaration form must be submitted to Human Resources by September 29, 2017 (hand delivered or registered mail) Drop-off locations: • Human Resources, Room FB 1130, Faubourg Tower, 1250 Guy St. or • Loyola Campus, Room AD 224 • If no form is submitted by: September 29, 2017 You will be deemed to have elected to contribute to the Pension Plan (irrevocable) and to accrue pension service from January 1, 2018

  34. Declaration Form

  35. Next steps • You are encouraged to seek independent financial advice about your personal financial situation • Pension and Benefit Servicesis here to provide you with informationabout the Pension Plan for Employees of Concordia University and Concordia benefits only, and does not provide financial advice.

  36. In conclusion • Concordia opted for the minimum employee cost sharing percentage required (45%) rather than the 50% suggested. • Completed declaration form must be submitted to Human Resources by September 29, 2017 • Once you choose to be a member accruing service in the Plan, the choice is irrevocable. • If no form is submitted, you will be deemed to have elected to contribute to the Pension Plan and to accrue pension service from January 1, 2018

  37. Information • Revised Pension Plan Related Questions • Email: pension2018@concordia.ca • Phone: 514.848.2424 x 4351 • Cspace is updated and will continuously be updated • https://cspace.concordia.ca/services/hr/benefits/pension/pension-plan-changes.html • Pension@ccess website • https://concordia.pension.hroffice.com • Information sessions starting January 31st, 2017 through September 2017. Registration is required.

  38. QUESTIONS?

  39. New employees hired AFTER January 1, 2018 • Shall become a Member of the Plan from the date of employment • unless such Employee elects, in writing, not to become a Member until January 1 of the year following completion of the two (2) full calendar years after the year in which the Employee was hired, at which point membership and participation in the Plan becomes mandatory • the Employee may elect to become a Member of the Plan earlier, on each of the two preceding January 1 • Once the Employee has filed the prescribed form to become a Member of the Plan and contribute to the Plan, the Employee’s decision shall be irrevocable

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