||Volume 21, Number 3, November 2008
Teachers’ Pension Plan
Your basic pension is the payment you will receive each month in retirement. Once you retire, the plan guarantees that this payment will continue for the rest of your life. The plan may also guarantee that all or part of this payment will continue to your spouse, dependent, or estate after your death, depending on what kind of pension option you choose at the time of retirement.
Inflation protection, or indexing, is an annual increase to your pension payment to offset cost of living increases. Once the annual increase is granted by the Teachers’ Pension Board of Trustees and applied to your pension, it becomes a guaranteed part of your basic pension. However, the plan cannot guarantee that it will provide additional indexing in the future.
Group benefits include extended health (EHB), voluntary dental, and Medical Services Plan (MSP) coverage. Currently, the plan fully or partially subsidizes EHB premiums for retired teachers, depending on the individual’s amount of pensionable service. The plan cannot guarantee that it can continue to subsidize EHB premiums in the future.
The plan does not subsidize voluntary dental and MSP premiums, which means retirees must pay the full premiums for this coverage. The EHB and voluntary dental plans use group “purchasing power” to give retired teachers access to comprehensive health coverage at a cost that would not be available to an individual outside the plan. These benefits offer good value, whether the premiums are subsidized by the plan or not.
How a benefit is funded determines if it can be guaranteed. Your basic pension is funded by member and employer contributions plus investment income from these contributions. The basic account from which the basic pension is paid is managed to ensure there is enough money to pay current pensions in pay and future pensions. The Teachers’ Pension Board of Trustees has the authority and obligation to increase the contribution rates for basic pensions when an actuarial valuation identifies a funding shortfall, as was the case July 1, 2007. Because of this funding arrangement, the plan can guarantee your basic pension will be paid for as long as you live and, depending on the pension option you choose at the time of retirement, may continue to be fully or partially paid to your surviving spouse, beneficiary, or estate.
Inflation protection is also funded by member and employer contributions plus the investment income from these contributions. Some of the current employer contribution is used to subsidize EHB and so is not invested for future inflation protection. As EHB costs increase and use up a larger portion of the employer contributions, there is less money available for inflation protection. At the same time, more money is needed for inflation protection because there are more retirees and they are living longer.
So while the plan can guarantee that inflation protection increases already added to pensions will continue to be paid, it cannot guarantee that further increases will be available in the future. The Teachers’ Pension Board of Trustees does not have the authority to increase contributions to the account that funds inflation protection and EHB premiums as it does for the basic pension. That authority rests with the plan partners—the BCTF and the BC government.
The Teachers’ Pension Board of Trustees is carefully monitoring the funding challenges for both accounts and keeping in contact with both plan partners regarding the funding challenges ahead, particularly for the account that provides inflation protection and EHB subsidies.
To see what post-retirement group benefits are currently available and what they cost, visit the Publications page in the Retired Members section of the Teachers’ Pension Plan website at tpp.pensionsbc.ca. Group benefits updates are published in the News page of the Retired Members section, and there is a history of past changes in the News Archive page.
BCTF group RRSPs
All BCTF members have access to payroll-deducted group RRSPs. The advantages of group RRSPs are:
- Convenience: automatically deducted from your paycheque
- Tax-deducted: no tax is paid, so you do not have to wait for a refund
- Investment: funds invested earn income through the whole year
- Choice: group RRSPs available offer a variety of investment options, as well as access to some funds not regularly available to individuals
- Savings: RRSP limits have been increased allowing for more savings
- Pension: RRSPs can later be used to purchase pension service if applicable.
For more information, contact your local teacher’s union office or Arnie Lambert, Income Security Division, 604-871-1921 or 1-800-663-9163 or firstname.lastname@example.org.
Enrolment forms are available from your school district employer.
Thinking about retirement
If you are within five years of retirement, this free seminar, jointly presented by BCTF staff and BC Pension Corporation staff, is for you.
Burnaby—January 15— 5–7:00 p.m.
Burnaby—January 17— 9–11:00 a.m. or 12:00–2:00 p.m.
Courtenay—January 22—5–7:00 p.m.
Vancouver—January 29—5–7:00 p.m.
Vancouver—January 31—9–11:00 a.m. or 12:00–2:00 p.m.
Nanaimo—February 12—5–7:00 p.m.
Nanaimo—February 14—9–11:00 a.m. or 12:00–2:00 p.m.
Your Pension/Your Future
Your pension benefits will be explained to you in plain language to help you understand how choices/ decisions you make today can impact your pension income in the future.
Burnaby— January 15—8–9:30 p.m.
Courtenay—January 22—8–9:30 p.m.
Vancouver—January 29—8–9:30 p.m.
Nanaimo—February 12—8–9:30 p.m.
Pre-registration is required: on-line at tpp.pensionsbc.ca; e-mail email@example.com; telephone: Victoria 250-356-2466; toll-free 1-877-558-5574.
There’s more to it than money
The BC Retired Teachers’ Association has developed a workshop for those of you about to retire.
The workshop is designed to compliment the Teachers’ Pension Plan/BCTF Pension Seminar, but with limited class size to facilitate sharing and learning. It’s a workshop—not a seminar.
Attend a pension seminar and you will realize that “there’s more to it than money” and who better to share experiences with you than retired teachers?
Retirement living brings with it life-altering situations and a wide variety of choices, some financial, some legal, and all connected with life-style.
If a pension seminar is coming to your area, ask the BCTF local president to contact the BCRTA to book this highly acclaimed follow-up workshop.
BCRTA contact information: Website: www.bcrta.ca. Telephone 604-871-2265; toll-free 1-877-683-2243.