||Volume 17, Number 3, November/December 2004
Pension-planning tips for all teachers
by Dale Lauber
If you, as I am, are planning to retire this year, there is some planning to do. The key to preparing for a happy and successful retirement is good planning that starts early and is thoughtful and thorough. The two dimensions essential to good retirement planning are financial and psychological. While the power of investment returns generally encourages an early start to the financial aspect of planning, preparing mentally for retirement is an equally important aspect of planning and should also begin early, well before the event. What can you do to plan well for retirement?
1. Attend a BCTF Pension Seminar early in your career. Pension information seminars review the basics of the Teachers’ Pension Plan and incorporate changes to the plan rules and regulations as they occur. The information in the seminars will help you maximize your pension benefits and help you to make informed pension decisions throughout your career. The schedule of seminars, held for one half day on Saturdays, appears in this issue, and a poster is sent to each school. There is no cost for the seminars, and registration is unnecessary.
2. Visit the BCTF web site on pensions. That web site has a great deal of helpful information regarding the Teachers’ Pension Plan. Topics such as purchasing leaves of absence and tax implications of such purchases are covered. You will also find a link to the Personalized Pension Estimator and the Purchase of Service Cost Estimator. Visit bctf.ca/pensions/.
3. Visit the Teachers’ Pension Plan web site. This site is another good source of information about the Teachers’ Pension Plan. Under "Publications" you will find information about purchasing leaves of absence, transferring service from other provinces, applying for child-rearing credit, and even a copy of the Pension Plan Rules. Under "Tools" you will find the Personalized Pension Estimator and the Purchase of Service Cost Estimator. There is also a section of "Forms" so you can print out and use the application forms for different services. Visit www.pensionsbc.ca, then select "Teachers."
4. Consider purchasing your leave of absence. The purchase of a leave of absence will increase your pension. In some cases, however, that purchase may not be cost effective. For example, the purchase of a maternity and parental leave of absence, as defined by the Pension Plan Rules, is always cost effective, as the employer is required to pay its share of the contributions. On the other hand, the purchase of a general leave of absence may not be cost effective for you. For more information on the purchase of leave of absence, visit the Teachers’ Pension Plan web site, and use the Purchase of Cost Estimator. This will give the cost of purchasing a leave of absence. Then use the Personalized Pension Estimator to determine your pension at a specific date. Calculate your pension, then go back and add in the pensionable and contributory service being purchased and recalculate the pension for the same date. Compare the increase in the pension with the cost of the purchase to determine if the purchase is cost effective. All leaves of absence since April 2002 must be purchased within five years of the termination of the leave or termination of employment from the employer, whichever is earlier. Old leaves, leaves that terminated before April 1, 2002, must be purchased before March 31, 2007.
5. Do some financial planning. The power of time and investment return on savings makes financial planning an important part of planning for retirement. The earlier in your career you start these savings and investments, the more time they have to grow. If necessary, use the assistance of a financial planner or the services of a financial institution.
6. Contact the BCTF Income Security Division. Though we are not able to provide personal appointments, we will certainly respond to specific questions. Use e-mail, firstname.lastname@example.org or email@example.com, phone 604-871-1921 or 1-800-663-9163 or fax 604-871-2287.
7. Contact the Teachers’ Pension Plan. Your specific pension information is held by the pension plan, and the plan staff can also assist you with your pension questions. Contact Teachers’ Pension Plan, P.O. Box 9460, Victoria, BC V8W 9V8, toll free: 1-800-665-6770, Vancouver: 604-660-4088, Victoria: 250-953-3022, fax: 250-356-8977. Web site: www.pensionsbc.ca, e-mail: TPP@pensionsbc.ca
Other pertinent pension issues
A reinstatement repays to the Teachers’ Pension Plan funds that were taken out of the pension plan at some date prior to 1996. The refunds, plus interest, may now be reinstated in the pension plan. There is no time limit on the reinstatement; however, the interest will accrue until the application for the cost of reinstatement is received by the pension plan. Application forms are available from your employer, your local, the BCTF, and the pension-plan web site.
Purchase of less-than-half-time service
A new provision of the Teachers’ Pension Plan allows current active members to purchase the time during which they may have worked less than half-time and did not contribute to the pension plan. An application form and detailed information in a publication entitled Pensionfacts is available from your employer, your local, the BCTF, and the pension plan web site.
Joint trusteeship of the Teachers' Pension Plan
The Teachers' Pension Plan is a jointly managed pension plan. The Joint Trust Agreement, reached in April 2001, established that the BCTF and the government are the two partners of the Teachers’ Pension Plan. Each partner appoints five trustees to the Teachers’ Pension Board of Trustees. The trustees manage the administration of the pension plan and the investment of the pension fund.
Dale Lauber is director of the BCTF's Income Security Division.