Transcript AESRP - Faculty Pension

SHARED RISK PLAN FOR
ACADEMIC EMPLOYEES
OF UNB (AESRP)
Pre-Retirement Seminar
UNB Human Resources &
Organizational Development
History
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Pre-1993 - Province of NB expresses concern over pension
inequities caused by differences between regular PSSA Plan
Members’ salaries and those of UNB Faculty Members.
UNB and the AUNBT create AEPP. Plan provisions mirrored
the PSSA (NB).
1998 – 85-Factor Unreduced Early Retirement integrated
History (cont)
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2003 – CPP integration age changes from age 65 to age 60
AND Pension Escalation capped at 4.5% (previously 6%)
2004 – Pension Escalation capped at 0.5% plus the lesser of
excess return on the fund over 7.75% or the excess of the 3year average percentage increase in the Pension Index over the
increase in the CPI to a maximum of 0.5% AND same-sex
survivors’ pensions added
2007 – Accrual rate changed from 1.3% / 2.0% to 1.0% / 1.7%
2013 – Parties agree to convert Plan to a Shared Risk Plan.
Accrual rate initially set at 1.1% / 1.8%
Contribution Rate History
Start
End
Contrib
Rate to
YMPE
Contrib Rate
above YMPE
January 1, 1993 June 30, 1995
6.90%
8.60%
July 1, 1995
7.10%
8.80%
$641,000
January 1, 1998 June 30, 2000
7.14%
8.84%
$5,485,000
July 1, 2000
June 30, 2003
7.63%
9.33%
$9,268,000
July 1, 2003
June 30, 2006
9.30%
11.00%
$22,518,000
July 1, 2006
June 30, 2007
10.52%
12.22%
$46,943,000
July 1, 2007
June 30, 2009
9.11%
10.81%
$46,545,256
July 1, 2009
June 30, 2010
9.65%
11.35%
$55,700,000
July 1, 2010
June 30, 2011
10.68%
12.38%
$61,557,985
July 1, 2011
December 31, 2012
11.45%
13.15%
$74,499,412
January 1, 2013 June 30, 2013
12.27%
13.97%
111.0%
July 1, 2013
10.55%
12.25%
113.0%
December 31, 1997
June 30, 2014
Unfunded
Liability ($)/
Funded Ratio
(%)
Shared Risk Pension (SRP)
Model
The Parties agreed that, effective July 1, 2013, the Plan was to be
converted to a Shared-Risk Plan.
The Shared-Risk Plan “targets” a base benefit that reflects the
defined-benefit pension model that was used previously.
Some of the major changes of the Plan were:
 Final 5-Year Average Salary Plan is changed to an enhanced
career average plan.
 Indexing is conditional upon the funded status of the Plan – is
targeted at 75% of indexing formula
 Early retirement reduction is the “actuarial equivalent”
Contributions to the AESRP
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
Shared equally between you and UNB (50/50)
10.55% of earnings to YMPE ($53,600 in 2015)
12.25% of earnings above YMPE
EXAMPLE
For a $120,000 Salary, the calculation is as follows:
53,600 X 10.55%
= $5,654.80
(120,000 – 53,600) X 12.25%
= 8,134.00
$13,788.80
UNB SHARE
$13,788.80
TOTAL
$27,577.60
Eligibility for Retirement Pension
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2 years of Plan Membership
REDUCED PENSION
55 years of age or older
- reduction for retiring early is equal to the “actuarial
equivalent” to the normal form of pension
UNREDUCED PENSION
For Service Up to the Date of Conversion - Anytime
your age plus years of service is equal to or greater
than 85 OR 65 years of age, whichever is earlier
For All Other Service - 65 years of age
Five Factors that Determine your
Pension Entitlement
1.
2.
3.
4.
5.
Salaries
- The average of your 5 highest years’ salary to June 30, 2013
- The 3-year average of the YMPE
- Actual salaries and YMPE’s from July 1, 2013
- PTR Scale
Pensionable Service
Equal to the total of
- service to June 30, 2007
- service between July 1, 2007 and June 30, 2013
- service after July 1, 2013
- disability service earned while in receipt of a benefit from UNB’s LTD
program
- purchased service
Reduction Factor for Age (if applicable)
Pension Accrual Rates
Conditional Indexing
Examples of Pension Calculations
UNREDUCED RETIREMENT AT AGE 65
Pre-Conversion Pension – “Base Benefit”
Factors:
5-Year Average Salary:
$100,000
3-Year Average YMPE:
$49,833
Years of Pensionable Service
to June 30, 2007:
15 years
Years of Pensionable Service
between July 1, 2007 and June 30, 2013:
6 years
Post-Conversion Pension
Factors:
July 1, 2013 Salary:
$110,000
January 1, 2014 Salary:
$112,000
July 1, 2014 Salary:
$114,000
January 1, 2015:
$116,000
2013 YMPE:
$51,100
2014 YMPE:
$52,500
2015 YMPE:
$53,600
UNREDUCED RETIREMENT AT AGE 65 (cont.)
Pre-Conversion Pension – “Base Benefit”
2.0% X 100,000 X 15
1.7% X 100,000 X 6
0.7% X 49,833 X 21
Annual Age 65 AEPP Pension =
Post-Conversion Pension
2013
1.8% X 110,000 X 0.5
0.7% X 51,100 X 0.5
=
=
=
30,000
+10,200
-7,326
$32,874
=
=
990
-179
$811
2014
1.8% X 112,000 X 0.5
1.8% X 114,000 X 0.5
0.7% X 52,500
=
=
=
1,008
+1,026
- 368
$1,666
2015
1.8% X 116,000
0.7% X 53,600
=
=
2,088
- 375
$1,713
$37,064
Total Pension at January 1, 2016
REDUCED RETIREMENT AT AGE 62
*Reduction only applies to Post-Conversion Pension due to the Factor of 85
Pre-Conversion Pension – “Base Benefit”
2.0% X 100,000 X 15
=
30,000
1.7% X 100,000 X 6
=
+10,200
0.7% X 49,833 X 21
=
-7,326
Annual Age 65 AEPP Pension
=
$32,874
Post-Conversion Pension
2013
1.8% X 110,000 X 0.5 X 82%
=
812
0.7% X 51,100 X 0.5 X 82%
=
-147
$665
2014
1.8% X 112,000 X 0.5 X 82%
=
827
1.8% X 114,000 X 0.5 X 82%
=
+841
0.7% X 52,500 X 82%
=
-301
$1,367
2015
1.8% X 116,000 X 82%
=
1,712
0.7% X 53,600 X 82%
=
- 308
$1,404
Total Pension at January 1, 2016
$36,310
REDUCED RETIREMENT AT AGE 62
Without having achieved the Factor of 85
Pre-Conversion Pension
2.0% X 100,000 X 15
1.7% X 100,000 X 6
0.7% X 49,833 X 21
Total before reduction
Less Red for Age (6%/12 X 36 months)
Pre-Conversion Reduced Pension
Post-Conversion Pension
2013
1.8% X 110,000 X 0.5 X 82%
0.7% X 51,100 X 0.5 X 82%
=
=
=
=
=
=
30,000
+10,200
-7,326
$32,874
-18%
$26,957
=
=
812
-147
$665
2014
1.8% X 112,000 X 0.5 X 82%
1.8% X 114,000 X 0.5 X 82%
0.7% X 52,500 X 82%
=
=
=
827
+841
-301
$1,367
2015
1.8% X 116,000 X 82%
0.7% X 53,600 X 82%
=
=
1,712
- 308
$1,404
$30,393
Total Pension at January 1, 2016
Post-Retirement Indexation
The target is 75% of the prior plan formula for indexation.
Also, for years where no indexation was given and where
the funded status of the Plan is sufficient enough, catch-ups
are allowed.
Canada Pension Plan
Retirement Pension
In 2015, the maximum annual Canada Pension
Plan benefit is as follows (6.96% per year
reduction before age 65):
At age 65
At age 64
At age 63
At age 62
At age 61
At age 60
$12,780
$11,937
$11,001
$10,112
$ 9,222
$ 8,333
Death After Retirement
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When you die, 60% of your AESRP Pension will be paid to
your surviving spouse on a monthly basis.
Dependants’ pensions will be shared to surviving children
under 18 if there is no surviving spouse.
If there are no dependants and your contributions and interest
exceed the pension payments already received, the difference
will be refunded to your Estate.
* The Pension Board may also grant a survivor’s pension to a
disabled child over age 18, or to another member of your
family who was dependant on you at the time of death.
NB Public Service Shared Risk
Plan (PSSRP)
If you worked full-time at UNB prior to January 1, 1993, you
probably qualify for pension benefits from the Public Service
Shared Risk Plan. For information concerning this pension
plan, you can consult the website at the following address:
http://www2.gnb.ca/content/gnb/en/departments/human_reso
urces/pensions_and_benefits.html
For personal service, contact UNB Human Resources or the
Province directly
Province of New Brunswick
Pensions & Benefits Division
Local calls
1-800-561-4012
453-2296
“Factor-85” Post-Retirement
Benefits
Factor-85 Faculty Members qualify for the
following benefits on a 50/50 cost share basis
until June 30th following the attainment of
age 65:
1.
Health & Dental Coverage *
2.
Group Life Insurance
* These would normally be paid 100% by the
retiree.
Retirement Allowance (Faculty)
UNB employees with 5 or more years of
continuous full-time service are eligible for a
retirement allowance payable the month after
they retire.
The retirement allowance is normally equivalent
to 1 week’s (5 days’) pay for each year of
service up to a maximum of 25 weeks. It is
based on the annual salary at retirement.
Retirement Allowance (cont)
In the Memorandum of Understanding regarding the elimination
of Mandatory Retirement, a special provision was included
that affects the amount of retirement allowance retirees will
receive.
If retirement occurs at a time later than the NRD, the
retirement allowance shall be decreased by 20% for each year
until age 70 at which time the entitlement is zero.
If an employee commits in writing to a specific retirement date
on or before the NRD, the retiree will receive an additional
amount equal to 5% for each 6 months of retirement prior to
the employee’s NRD. The maximum additional benefit that an
retiree can receive is 30% of their retirement allowance.
Group Benefits for Post-65
Active Employees
1.
2.
3.
4.
5.
6.
7.
8.
LTD terminates at December 31st before NRD
Optional Benefits terminate at NRD
Group Life terminates at NRD but has a guaranteed
conversion option.
Pension contributions and accrual continue
Participation in the UNB Extended Health Plan continues but
is 100% employee paid.
NB Prescription Drug Plan (100% ee paid)
NB Civil Service Retirees’ Dental Plan (100% ee paid)
Healthcare Spending Account (100% UNB paid)
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?QUESTIONS?
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