How pension contributions work
You contribute to your pension through automatic payroll deductions. Your employer also contributes to your pension.
Will my contribution rate increase?
It is possible that your contribution rate may increase in the future, depending on the outcome of future actuarial valuations. However, you will be notified in advance.
Valuation: what it is and what it does
A valuation is required by law and BC's Municipal Pension Plan Joint Trust Agreement (JTA), and is an important tool the board uses to monitor the health of the plan.
Every three years an independent actuary (a professional with specialized knowledge of the mathematics of finance, statistics and risk theory) analyzes the plan's funding and economic and demographic data. This analysis is called a valuation. Valuations help the board make sure there is enough funds available to meet plan members’ basic pension promise.
How valuations determine contribution rates
If the valuation determines the plan has a funding shortfall, your and your employer's contribution rates may increase to bring the plan back to full funding. Doing this ensures the Municipal Pension Plan maintains a fully funded status. Contribution rate increases are shared equally by members and employers.
The 2018 valuation determined the plan has a funding ratio of 105.1 per cent. This means the plan is fully funded on the basis that current contributions continue.
In addition, the rate stabilization account has a balance of about $2.5 billion. The board will draw from this account to help offset future contribution rate increases resulting from funding shortfalls. This is good news for active members and employers as well because this account will help the board keep contribution rates stable.
The next valuation will occur as at December 31, 2021. Results will be announced in fall 2022.