Municipal Pension Plan contribution rate increase set for July 1, 2014

October 15, 2013

Summary

  • All BCGEU members in the Municipal Pension Plan will see their pension contribution rate increase on July 1, 2014;
  • Pension plan members and employers will share the rate increase equally: each will contribute an additional 0.7 per cent of salary;
  • Your pension continues to provide excellent value and unmatched retirement income certainty:
    • For every one dollar you contribute today, you will receive up to eight dollars in retirement;
    • Unlike RRSPs, your pension will provide you with a guaranteed retirement income – a paycheque for life;
  • The Municipal Pension Plan is healthy, with over $30 billion in assets. The contribution rate increase is required as part of a rigorous funding policy to ensure the pension promise is kept, despite the economic downturn that started in 2008;
  • BCGEU members in the Municipal Pension Plan include Community Social Services (Component 3), Community Health workers (Component 4 and 8) as well as some members in the Education, Scientific, Technical and Administrative Component (Component 7), and General Services members (Component 17).

 

Municipal Pension Plan contribution rates will be increasing by 1.4 per cent on July 1, 2014, the Plan has announced.

BCGEU members in the Municipal Pension Plan will see an extra 0.7 per cent of their salary automatically deducted for pension contributions as of this date. Employers will contribute the same increased amount.

If you are a BCGEU Community Social Service worker (component 3) or a Community Health worker (Component 4, 8), you may be in the Municipal Pension Plan. Some BCGEU members in the Education, Scientific, Technical and Administrative Component (Component 7) and General Services members (Component 17) may also be in the Municipal Pension Plan.

Despite the short-term pain of a contribution rate increase, you should know that the Municipal Pension Plan continues to provide excellent value and unmatched retirement income certainty.

The Municipal Pension Plan will likely become an important source of your retirement income. Pension benefits are designed to help ensure an adequate retirement income when combined with Canada Pension Plan benefits and other potential sources of retirement income.

For every one dollar you contribute today, you will receive up to eight dollars in retirement. The amount you will be paid by the pension plan in retirement is guaranteed and predictable, unlike an RRSP or other financial instruments. 

In short, a pension is a paycheque for life.

With over $30 billion in assets, the Municipal Pension Plan is healthy because the Plan addresses any funding shortfall in a timely manner via a contribution rate increase. It is the sixth largest defined benefit pension plan in Canada, and remains 96.5% funded.

Last year, the Plan did an actuarial valuation that determined that there were some unfunded liabilities. This is in large part due to lower investment returns following the 2008 economic downturn. Periodic contribution increases are implemented to ensure the pension plan’s long-term health.

The Municipal Pension Plan is well funded, affordable and sustainable. Unlike most of the US and other Canadian provinces, BC’s public sector pension plans are pre-funded. Pre-funding means that each generation pays for its own retirement benefits.

Your pension savings are safe and growing, even if you need to contribute a bit more every month.

And don’t forget - your pension is guaranteed retirement income for as long as you live.

BCGEU Members in Component 3 – Community Social Services participate in a variety of retirement arrangements. Most eligible workers elected to join the Municipal Pension Plan effective April 1, 2010. 

The majority of members in Component 4 and 8, specifically those in the facilities, community health and health science professional sectors, are participants in the Municipal Pension Plan. Some members are "grandparented" in the Public Service Pension Plan.

BCGEU members in other sectors may be in the Municipal Pension Plan, including in the Education, Scientific, Technical and Administrative Component (Component 7) and General Services members (Component 17).

Resources

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Remember: Municipal Pension Plan members who joined on or after April 1, 2010 may be eligible to purchase past pensionable service with their employer, thereby increasing their guaranteed retirement income. If you are considering purchasing past service, you will save costs if you complete your purchase before July 1, 2014, when the contribution rate increase kicks in.

Read more here.