Contribution Changes
Starting July 1, 2012, the contributions of each plan member will rise to 7.5 per cent from 7 per cent for earnings below the Year’s Maximum Pensionable Earnings ($50,100 in 2012), and will rise to 9 per cent for earnings above the Year’s Maximum Pensionable Earnings (YMPE). Contributing at a higher level above the YMPE makes sense since the pension formula provides a greater benefit on earnings above the YMPE. These contributions are credited directly to the member’s individual Money Purchase Account, so in effect members are contributing more to their own individual retirement savings accounts.
Based on this integrated formula, employee contributions as a percentage of pay will vary based on salary level as illustrated in the table below.
|
Annual Salary |
7.5% up to YMPE* |
9% above YMPE |
Total % Contribution |
|
$50,000 |
$3750 |
n/a |
7.5% |
|
$60,000 |
$3757.50 |
$891 |
7.7% |
|
$80,000 |
$3757.50 |
$2691 |
8.0% |
|
$100,000 |
$3757.50 |
$4491 |
8.2% |
* YMPE is $50,100 in 2012
The University will continue to contribute 7 per cent to each employee’s individual Money Purchase Account. It is important to note that the University’s overall contribution to the pension plan is currently more than 16 per cent and is expected to rise to more than 20 per cent in 2013. This additional contribution is required to cover current service costs and the special payments needed to fund the Minimum Guarantee Pension (MGP) (defined benefit) component of the pension plan. The chart below shows the contributions made by individual plan members and the university as of January 1, 2010.
|
|
Member’s Money Purchase Accounts |
Current Services Cost to fund MGP* |
Special Payment to fund MGP |
Total Contributions |
|
|
Member contribution |
7% |
0% |
0% |
7% |
|
|
University contribution |
7% |
3.52% |
5.68% |
16.2% |
*MGP is Minimum Guarantee Pension
It is also important to note that the University and WLUSA/OSSTF District 35 have signed a Letter of Understanding that states that should the pension plan return to a fully funded position, a first priority would be to bring the member contributions and the University contributions back to a one-to-one ratio, either through an increase to the University contributions to the money purchase accounts or a reduction to the member contributions, or a combination thereof. Further, if the University’s overall contributions ever become less than the member contributions to the Money Purchase Accounts, then the University's combined contributions in that plan year will be made equal to the member contributions. This will be done either by increasing the University contributions to the money purchase accounts or decreasing the member contributions, or a combination thereof.
