Changes that will make a difference to retired members
Read about the changes that support the longevity of your pension plan.
Changes for retired members
The plan changes have no effect on the pension you are currently receiving. There is nothing you need to do at this time other than stay informed.
The changes support the long-term sustainability of the plan, including enhancing the inflation adjustment account (IAA) and establishing a new health benefit trust.
Strengthening the inflation adjustment account
The IAA is funded by member and employer contributions and earns investment income.
The plan changes strengthen the IAA with future surpluses being used for any funding shortfalls. The surpluses will be shared equally between the IAA (to further support inflation protection) and the rate stabilization account (to reduce the likelihood of contribution rate increases for active members and employers). In other words, future surpluses will be used to benefit both active and retired members.
In addition, the plan’s inflation protection continues to be strengthened for these reasons:
- After the 2015 valuation, the plan partners introduced a sustainable cost-of-living adjustment (COLA) and made the decision to increase contributions to the IAA. Since 2016, the plan has increased contributions to the IAA, which has helped grow its sustainability.
- Excess investment returns are moved out of the basic account into the IAA in line with the board’s funding policy. That happens when the five-year annualized rate of return exceeds the actuarially assumed rate of return. The excess investment returns have totalled about $1.2 billion since 2015.
New retiree benefit trust
As part of the plan changes, the plan partners created the Municipal Retiree Benefit Trust (MRBT), which now provides the group extended health and dental plans available to retired members. The trust provides more flexibility in funding retiree group benefits.
Funding for the trust comes from:
- 0.6 percent of payroll in employer contributions, on an ongoing basis
- Participating member premiums
- A $100 million one-time transfer from employer contributions as part of plan design changes
These funds can accumulate and earn investment income over time to support retiree group benefits. Retired member premiums will continue to be a key component of funding these group benefits.
If you participate in the plan’s retirement health coverage, you continue to:
- Have the same coverage
- Have the same insurer—Pacific Blue Cross (PBC)
- Use your PBC ID card
- Use the same group health number
- Make claims the same way
- Have premiums deducted and sent to PBC by your selected method, e.g., from your monthly pension payment
Plan members applying for a pension can continue to enroll in the retirement health coverage through the trust. Retiring members can also enroll their spouses and dependents.
Retiree group benefits are not fully pre-funded and not guaranteed. Access to benefits are subject to decisions of the MRBT. The MRBT can increase, decrease or eliminate coverage, including changes to deductibles, annual limits, maximum subsidies and premiums.
Contact Pacific Blue Cross with questions about coverage and claims. Contact the Pension Corporation if you want to adjust your coverage or make a change to a dependant.
You can learn more about the MRBT in the About us > Who we are section.