Pension increase for service between 2006 and 2018
Learn how the value of your lifetime pension is increasing for service you earned between 2006 and 2018.
A future boost to your pension for past service? Yes! Of course, receiving a higher lifetime pension sounds good, but it may also sound a bit confusing. Let’s make this clearer by first defining what a lifetime pension is and then going back to the start.
Note: If you retired before April 1, 2006, these changes do not apply to you.
Your lifetime pension is the pension payable to you for your lifetime. The money you and your employer contributed when you were working plus investment earnings is used in a formula that calculates how much you will earn monthly once you retire. Your pension is guaranteed for the rest of your life; you will never have to worry about it running out. And depending on the option you choose at retirement, payment may also continue on to your spouse or beneficiaries. A lifetime pension does not include the bridge benefit or a temporary annuity.
To understand why your lifetime pension is increasing, let’s go back to April 2006.
|April 2006||This was the first year BC’s Public Service Pension Plan contribution rates increased by a substantial amount. Back then, the anticipated rate of return on the plan’s investments was lower than expected. So, if you have pensionable service between 2006 and 2018, you paid higher contribution rates than other plan members in previous years.|
|December 2017||After the plan’s 2017 valuation results were finalized, your trustees reported the plan was sustainably funded, with a $1.9 billion surplus. They decided to use part of the surplus funds to address the plan’s equity for past contributions.|
|March 2018||Your plan trustees announced some great news: If you have pensionable service between April 1, 2006 and March 31, 2018, inclusive, your lifetime pension will increase. This change will take effect on October 1, 2019.|
|October 2019||Plan changes take effect. See “What will the change look like on October 1, 2019?” below.|
|Note: If you’re a public safety member, this change applies to you, too. Members in this group include correctional employees and certain BC Ambulance Service paramedics in the Canadian Union of Public Employees Local 873.|
If you’re considering retirement, this change doesn’t mean you need to wait until October 1, 2019, to retire. As long as you have pensionable service within the specified time period and you haven’t taken a lump-sum payment of your pension out of the plan, you will receive the increase on October 1, 2019, when the change takes effect.
What is the change?
We can look at the change in two parts:
- Your lifetime pension accrual rate below YMPE will be 1.65 per cent, up from 1.35 per cent
- Your bridge benefit accrual rate below YMPE will be 0.35 per cent, down from 0.65 per cent
Your pension accrual rate and bridge benefit accrual rate are linked and can only add up to two per cent. This is required by the Income Tax Act.
What will the change look like on October 1, 2019?
That depends on whether you’re an active or retired member, and what your age is at retirement.
Active member: Effective April 12, 2019, for pension estimates on or after October 1, 2019, you can see an estimate of how the changes will affect your future lifetime pension by using the personalized pension estimator in My Account.
Retired member under age 65: You won’t see a change to your total pension payment. At age 65, when your bridge payment ends, you’ll see a higher lifetime pension amount than in your original pension calculation.
Retired member age 65 and over: You will see a higher lifetime pension immediately. This means your October 2019 pension payment will be higher than your previous pension payments.
A more valuable pension
Looking back to 2006 and understanding the changes coming on October 1, 2019, will help you see the higher value of your pension. It’s a source of retirement savings you can count on for the rest of your life, so you can be proud of what it has earned for you.