British Columbia’s Teachers’ Pension Plan is decreasing its employer contributions from July 1 after its most recent valuation results showed the plan is in surplus.
The valuation, published in January 2016, showed the plan’s basic account had actuarial assets of $22.9 billion and actuarial liabilities of $22.4 billion as at December 31, 2014, meaning the plan is 102 per cent funded.
According to the pension plan, it had agreed that when the plan was in surplus it would work towards balancing the employee and employer contribution rates similar to other public sector pension plans.
So, effective July 1, employer contributions to the plan’s basic account will be reduced 3.77 per cent and contributions to the inflation adjustment account to support a cost-of-living adjustment will be increased 1.95 per cent. Therefore, the overall contribution reduction for employers will be 1.82 per cent.
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“[The surplus] did result in a significant employer contribution rate reduction, which was interesting because one of the issues out here was, when rates were being driven up after [2008-09] we shared those contributions equally between the members and the employers, and governments didn’t fund the school districts to cover that, so they were having to eat that as a cost pressure,” says Bruce Kennedy, executive director of the Teachers’ Pension Plan.
“There was considerable speculation, actually, when those rates started coming back down, how government would respond. They left them in so school districts will benefit from these reductions that are going into effect shortly.”
Additionally, effective January 1, 2017, all retired members will receive a cost-of-living adjustment; they will no longer need to be age 56 or older.
Meanwhile, members of the New Brunswick Teacher’s Pension Plan will see their pension contributions rise by five per cent on July 1. Those on a salary up to $54,900 will contribute 9.5 per cent, up from nine per cent before the changes, while those on a salary above $54,900 will begin paying 11.2 per cent, up from 10.7 per cent previously.
According to a notice to members, an additional five per cent increase will take effect from July 1, 2017, while employer contributions will remain unchanged.
The B.C. Teachers’ plan serves more than 91,000 active, inactive and retired members and their employers in the province, while the N.B. Teachers’ plan has just over 18,500 total members. According to Benefits Canada‘s 2016 Top 100 Pension Funds, the B.C. Teachers’ fund is the ninth largest in Canada, while the N.B. Teachers’ plan came in at No. 51.