FAQ

As we receive questions from the plan members, we will post the answers to questions that are either common or that may be of interest to a broad number of plan members.

Check out the Most Recent Questions page to see answers to questions we have recently received from plan members.

The Amendments

1. How would the amendment affect my pension?

The interaction of the different components of the amendment can affect everyone differently. This is why we have retained Eckler, an actuarial firm, to develop a tool to allow everyone to compare pension benefits, with and without the amendments applied. You can input data such as the estimated salary at retirement and the retirement date to see the difference in pension benefits under various scenarios.

Give this tool a try here:  Pension Illustrator

2. What other effect would the proposed salary increase have on my pension?

The proposed salary increase would increase your pensionable earnings, thereby leading further to an increased pension amount at termination or retirement.  This applies to all service under the plan, including pre-2020 service.

3. Will the higher salary increase the taxes that I have to pay, effectively decreasing take-home pay?

No, since the salary increase would be fully offset by pension contributions, your net income for the purpose of determining taxes would remain unchanged.  However, if your salary is below the YMPE, you would make additional CPP contributions on the increased salary. Additionally, if you haven’t reached the maximum annual EI premium ($858.22 in 2018), the additional salary may lead to a small increase in EI premiums.

4. Why do I have to contribute an additional 1.1% of pay after the initial contribution?

The BC Government’s Public Sector Employers’ Council (PSEC) gave us clear directions that there could not be any employer funded benefit increases. Since the benefits being provided under the proposed amendment are overall more generous than the current Plan, Plan members are contributing an additional 1.1% of salary to the Plan.

In addition, since the funding policy envisioned by the EJPC and the UA allows for a more conservative approach, hence reducing the probability of future contribution increases, the University will also be contributing an additional 1.1% of salary to the Plan.

5. How will this affect part-timers?

Part-timers who are members of the Plan would be contributing the same percentage of salary to the Plan as full time members and would receive an equivalent salary increase to offset their contributions. They would also be accruing the same benefits as full time members, only pro-rated based on their actual service.

6. Will part-time and temporary employees who are not yet members of the Plan get the 6.75% pay increase to offset contributions if and when they join the Plan?

There are many different categories of employees in this situation.  The University and the EJPC are working together to craft the best strategy for handling all cases with the following objectives in mind:

a) The pay increase will take effect as at January 1, 2020,
b) All employees will be treated fairly,
c) The University does not want separate pay scales for Plan members versus employees who are not yet Plan members, and
d) There will be no increase in take-home pay as a result of the changes.

7. What will happen for new hires?

New hires would start contributing to the Plan automatically upon hire, based on the contribution rate of all other members at the time of hire. They would also share future cost increases or decreases in the same way as all other members at the time of hire.

8. If I have 80 points (under “Rule of 80”) on December 31, 2019, do I now need to work towards 90 points to get an unreduced pension?

Your whole service (before and after January 1, 2020) is used when determining your Unreduced Pension Age. In addition, your pension earned before January 1, 2020 will always be subject to the current plan rules. As a result, if you retire after January 1, 2020 and have between 80 and 90 points at that time, your pension based on your pre January 1, 2020 service would be unreduced and your pension based on your post January 1, 2020 service would be reduced in accordance with the proposed provisions.

For members who have most of their service before January 1, 2020, most of their pension would therefore be subject to the current early retirement provisions (i.e. 80 points, etc.)

9.  Will the Pension Illustrator available on this website give me the same numbers as the pension calculator currently provided by Human Resources (the HR Calculator) for the pre January 1, 2020 service?

No, numbers will be slightly different since the two tools use a different methodology. The key differences are as follows:

a) The Pension Illustrator projects both your salary and the YMPE up to your estimated retirement date, whereas the HR Calculator uses your current salary and the current YMPE as the salary and YMPE at your estimated retirement date.

b) The HR Calculator uses your actual historical earnings to determine your Final Average Earnings whereas the Pension Illustrator estimates your Final Average Earnings based on your current and projected salary. The impact of this difference is more significant for members who are within 5 years of retirement.

c) The Pension Illustrator converts the pre January 1, 2020 pension from the current Normal Form of Pension (Life Only for single members or Joint and 50% Survivor for married members) to the proposed Normal Form of Pension (Life Guaranteed 5 Years for all members), so that the Pension Illustrator shows both the pre January 1, 2020 and post January 1,2020 pensions under the same Normal Form of Pension.

10. I was considering taking the Commuted Value of my pension when retiring. Should I now retire before January 1, 2020 in order to have this option available?

The Commuted Value option for members retiring on or after age 55 would not be available on and after January 1, 2020. We suggest you seek financial advice to help you answer this question.

We also suggest you consider the following when deciding whether to take the Commuted Value option or not:

a) Do I have a way to defer the taxes that I otherwise would be paying right away on a portion of my commuted value?

b) Will I be able to generate a sufficient return on my investments net of fees to at least replicate the monthly pension that the Plan is offering me (keeping in mind that you would be paying much higher fees on an individual basis than the Plan is paying)?

c) Will I have enough money if I survive well into my 80s or even 90s?

11. I notice that the Normal Form of Pension is changing from Joint & 50% Survivor for married members to Life Guaranteed 5 Years. Will my spouse no longer receive a pension after my death?

You would still have the option to elect a pension that continues to your spouse after your death. However, the amount of your monthly pension would be determined on an actuarial equivalent basis (i.e. it would be slightly reduced to account for the fact that it would most likely be paid for a longer period of time).

12. What happens if Plan members vote “No”?

The current Plan will remain in place for the foreseeable future. The proposed provisions have been well thought out and are the result of numerous discussions between the EJPC and the UA over a period of many years. Both the EJPC and the UA have no intentions of altering any specific terms of the proposed provisions as a result of a “No” vote.

13. Do these amendments ensure the viability of the Plan for the future or are there still concerns?

Although we can’t predict what the future will look like, this amendment will solve the current issues with the Plan and we do not anticipate having to amend the Plan again in the near future.

14.  I have been working for 20 years and, on December 31, 2019, I am 2 years short of an early retirement with an unreduced pension under the current plan since I would have reached 80 points on December 31, 2021. As a result of the new rules, will I then not have an unreduced pension if I retire on December 31, 2021?

When looking at how the early retirement provisions would be applied, there are two key elements to keep in mind:

a) The pension in respect of your service prior to January 1, 2020 is based on the current formula and current early retirement provisions (i.e. unreduced at 80 points). Only the pension in respect of service after January 1, 2020 is based on the proposed provisions (i.e. unreduced at 90 points).

b) Your whole service (i.e. before and after January 1, 2020) is used when determining eligibility for an unreduced pension. For example, if you reach 80 points on December 31, 2021, those 80 points are applied to both the service before and after January 1, 2020.

In this situation, the pension based on your service prior to January 1, 2020 (i.e. the pension earned on the 20 years of service based on the current formula) would be unreduced since you would have 80 points on December 31, 2021.

However, the pension based on your service after January 1, 2020 (i.e. the 2 years of service) would be actuarially reduced, since you would not have attained the required 90 points for an unreduced pension under the proposed amendments.

Overall, since most of your pension is based on service prior to January 1, 2020 and is unreduced as a result of you attaining 80 points, the impact on your pension of the change in early retirement provisions is minimal.

15. Will my vote on this impact what I could get through collective bargaining?

No, this is completely separate from collective bargaining. For example, the 6.75% salary increase would not affect future salary increases that you could get through collective bargaining.

The Process

1. Why are the UA and the EJPC recommending amendments to the Plan?

With the changing economic environment and evolving needs of the workforce, it became obvious to both the EJPC and the UA that amendments are necessary. The Plan has become significantly more expensive and measures have to be put in place to control costs. At the same time, a number of provisions are creating growing inequities within the membership and should be changed. This is however not a situation unique to SFU. A number of public sector pension plans have undergone similar changes over the last few years. The changes that the EJPC and the UA are proposing would bring the Plan more in line with other public sector pension plans.