Pension Plan Contribution Rate Increase January 2010

August 5th, 2009


The Pension Plan suffered significant investment losses in 2008 as a result of the global financial crisis. As well, low interest rates continue to keep the plan's liabilities high.

An actuarial valuation was conducted as of December 31, 2008. On a going-concern basis, the Pension Plan is still healthy. As at December 31, 2008 there is an actuarial surplus of $15,158,000 (compared to $30,764,000 as December 31, 2005).

The valuation showed a solvency deficiency of $1.1 million (compared to a surplus of $14,397,000 at December 31, 2005). The Board had decided to use a smoothing of asset values (over the last 5 years) method in the solvency valuation. Had we not smoothed the asset values, the solvency deficiency would have amounted to $71.7 million. The Board agreed to increase the Pension Plan contribution rate by a total of 1% to fund the solvency deficiency.

For members who participate in the Disability Income Plan, the contribution rate will be:

6.3% (was 5.8%) on CPP earnings and 7.5% (was 7%) on earnings above the CPP maximum

 

For members who do NOT participate in the Disability Income Plan, the contribution rate will be:

6.4% (was 5.9%) on CPP earnings and 7.6% (was 7.1%) on earnings above the CPP maximum.

 

Employers match the employee's contributions.