All proposed changes to the benefits of the Plan have been carefully examined by the EJPC and the UA and are meant to achieve a specific purpose. They are also to be considered as a whole and not individually. You will see that most of the proposed changes help reduce inequities in the Plan. The following table describes all changes to the Plan:
Pension Accrual Rate 1.2% of salary below the YMPE and 1.7% of salary above the YMPE Flat 1.85% of salary Eliminating the tier system is more equitable for all members, and the higher Pension Accrual Rate provides for higher monthly pension at retirement.
Age and service totaling 90 points. More equitable for all members by reducing intergenerational subsidies (i.e members retiring later paying for members retiring early).
Early Retirement Reduction (for retirement after age 55) 5% prior to Unreduced Pension Age, with grow-in Actuarial Equivalent Reduction prior to Unreduced Pension Age, without grow-in More equitable for all members by reducing intergenerational subsidies.
Deferred Members Indexed at 3% per year from the date of termination or age 45, whichever is later, to age 65 or date of commencement of the pension, if earlier.
Indexed at the same rate as retirement pensions from the date of termination or age 45, whichever is later, to age 65 or date of commencement of the pension, if earlier. More equitable for all members, ensuring that Deferred Members are not getting a higher indexing than retired members.
Disabled Members None. Pensionable Earnings indexed at the same rate as the salary increases that they would have received had they not become disabled and had remained working in the same position. More equitable for all members, disabled members would receive a monthly pension similar to what they would have received had they not become disabled.
Married Members: Joint and 50% Survivor All members: Life Guaranteed 5 Years More equitable for all members, married and single members would have the same Normal Form of Pension.
Commuted Value Option Available upon termination (prior to age 55) and retirement (on or after age 55) Available upon termination only (prior to age 55) Pension plan is better suited to provide a monthly income and not a lump sum amount upon retirement. Removing the Commuted Value option upon retirement after age 55 will help improve the financial health of the Plan.
Excess Surplus Distributed among Plan members (through a money purchase account) Use to reduce contributions or provide benefit improvements To improve the financial health of the Plan, Excess Surplus would not be distributed.
The following are examples of how the proposed benefit changes including the impact of the one-time salary increase could affect your pension. The examples use the 2018 YMPE of $55,900 as the Average YMPE on the date of retirement and assume an Actuarial Equivalent Reduction of 5.5% per year between age 60 and age 65. The EJPC and UA believe that the proposed changes will provide the vast majority of members with a higher monthly pension, regardless of their retirement date.
Please also note that the one-time salary increase will increase your pension earned before and after January 1, 2020 as the same earnings will be used in the calculation.
The co-sponsorship between the University and the plan members would not happen all at once. Rather, a phased-in approach would be taken.
In relation to the cost sharing, you would start contributing to the Plan on January 1, 2020. The University would raise the salaries of the Plan members by 6.75% of their existing salary effective January 1, 2020 and the members would then contribute 6.33% of their raised salary to the pension fund. (Note that 6.75% of the existing salary is the same amount of money as 6.33% of the raised salary). As the contribution is in pre-tax dollars and is tax deductible, your take home pay would not go down.
You would also be contributing an additional 1.1% of salary, phased-in by diverting the following amounts from your future successive wage increases until the full 1.1% has been reached:
For example, if the plan members negotiate a 1%-1%-1%-2% employment agreement, and there is a BC Economic Stability Dividend special wage increase of 1.8% in the second year, the contributions would be as follows:
The three amounts sum to 1.4%, which is more than enough to cover the 1.1% top-up required. Therefore, only 1/3 of the 1.8% wage increase (or, 0.6%) would be required to finish off the top-up contributions.
The full cost of the Plan is therefore expected to be shared as follows between Plan members and the University:
In relation to the risk sharing, Plan members would assume 40% of the risk of future changes in the cost of the Plan as they relate to post 2019 service only after a 10-year transition period. The cost of the Plan is determined by an actuarial valuation every 3 years and any Plan member contribution rate change would be effective from one year after the date of the actuarial valuation giving rise to the change. Based on an actuarial valuation as at December 31, 2019, Plan members would assume the following risk during the transition period:
For more clarity, the initial actuarial valuation on December 31, 2019 would result in no change up or down to your contribution rate. Any contribution rate changes resulting from this initial actuarial valuation would only impact the cost of the University. If the following triennial actuarial valuation as at December 31, 2022 results in a change in contribution rate for post 2019 service, you would be impacted by 20% of the change (i.e. should the contribution rate increase by 1% of salary, your contribution would increase by 0.20% of salary, should the contribution rate decrease by 1%, your contribution would decrease by 0.20%). This change in contribution rate would be effective January 1, 2024. The subsequent triennial actuarial valuation as at December 31, 2025 would result in you being impacted by 30% of the change in contribution rates for post 2019 service, with the change in contribution being effective January 1, 2027. The next triennial actuarial valuation as at December 31, 2028 would result in you being impacted by 40% of the change in contribution rates for post 2019 service, with the change in contribution being effective January 1, 2030. All future actuarial valuations would result in you being impacted by 40% of the change in contribution rates for post 2019 service.
In addition to the changes above, the EJPC and the UA are also proposing changes to the governance of the Plan. Those changes would:
strengthen the governance processes by ensuring strong oversight of the Plan by the Sponsors and the Trustees; and
provide guidance for the elaboration of policies and procedures to maintain the ongoing viability of the Plan in the future, ensure benefit security and reduce the risk of future contribution increases.
Plan amendment ratification By majority votes by Board of Governors and simple majority of each of the three employee groups By majority votes by the SFU Board of Governors and at least 75% of the voting Plan members must agree to amend the plan.
Plan termination The University may terminate the plan at any time The SFU Board of Governors and at least 75% of the Plan members must agree to terminate the plan.
Board of Trustees: Chairs Board elects a chair from among themselves. Chair and Vice-Chair roles rotate between employer rep. and employee rep. each year
Board of Trustees: Observers No observers. The UA can appoint 3 observers. APSA, CUPE and Poly Party can each appoint 1 observer. They may have voice but no vote.
You can find a link to the full Memorandum of Agreement between the EJPC and the University Administration detailing all changes here (Insert link to MOA).