Follow-up Q&As from 2022 AGM

If you are taking a leave of absence approved under the Employment Standards Act, which includes maternity leave, and you wish to continue making pension contributions while on leave, you must apply to the plan within 30 days of starting your leave. You can do this by submitting your purchase application to your employer.

Alternatively, you can choose to buy service by making a lump-sum payment once you return from your leave. You will need to complete a Purchase of Service Application form and submit it to your employer within five years from the end of your leave, or 30 days after terminating employment with the employer you were working for when the leave occurred (whichever happens first).

For more information, visit Taking time off work and buying service under related content.

Yes, a member may request BC Pension Corporation provide them with an estimate that contains options other than the default options that are in the standard retirement statements.

In a special agreement, a member’s account balance includes the accumulated value of the contributions plus interest at the fund interest rate (the five-year annualized rate of return for the fund). This means that special agreement balances are affected by how the market’s five-year annualized rate of return changes.

The current estimator reflects the January 1, 2022 changes to the group 5 (and group 2) plan provisions. Any earned or projected service after December 31, 2021 will include the plan changes. For service earned before this date, the estimator will reflect the pension and bridge benefit accrual rate from when the service was earned. For members who start their pension in February 2022 and later, it also includes the new four year highest average salary (HAS) and new normal form of pension (Single Life guarantee 10 years option) on all service.

Note that if you have special agreement contributions, you will need to contact the plan to request an estimate. This is because the online estimator tool does not calculate how the special agreement balance can be used to increase the lifetime pension.

No. You had five years after the end of your leave (or 30 days from date of termination, whichever occurred first) to buy your service.

Yes. We still promote MPRA. During the webinars Approaching Retirement, Choosing Your Pension Option and Planning for Retirement, we present a slide listing the benefits of MPRA membership and provide a link to the MPRA website where attendees can sign up. In addition, the MPRA site is typically included in the chat column during the webinars.

Canada’s Income Tax Act requires pension payments to start no later than December 1 of the year you turn 71. In addition, the Act prevents a member from both receiving a pension and contributing to the pension plan. For these reasons, there is no ability to extend the age beyond 71 for contributions to MPP. This would require an amendment to the federal legislation.

The average age of retired MPP members is 70.9, as reported in the 2021 valuation report. The average age when an MPP member starts their pension is 62.

In 2016, the board concluded that granting a cost-of-living adjustment (COLA) at the rate of inflation was not sustainable in the long-term. This conclusion accounted for assets in the plan and contributions to the inflation adjustment account. Without a cap, the worry was that then-current retirees would receive COLAs that could not also be provided to future retirees.

Therefore, on the advice of the plan’s actuary and to ensure fairness over time, the board implemented a sustainable method of calculating future COLA, namely placing a cap on future COLAs. The sustainable COLA cap was initially set at 1.95 percent; it was increased to 2.1 per cent effective 2017 and remained in place through 2022.

Unexpectedly recent strong investment returns have improved the financial position of the plan, and based on the 2021 valuation results and the advice of the plan’s actuary, the board cautiously removed the cap for the next three years. The ability to provide sustainable COLAs is assessed every three years, so the removal of the cap applies until 2024.

It is not anticipated that the removal of the COLA cap will impact the ability of the plan to take advantage of opportunities that arise during this market downturn.

The board considered the current weakness in investment markets, among other issues, when making the decision to remove the COLA cap. In general, there is no reason to think that the long-term return expectations will change due to the removal of the COLA cap.

The board sets the investment beliefs and financial goals of the plan through the Statement of Investment Policies and Procedures (SIPP), including decisions about asset allocation and which asset classes are permitted to be held in the investment portfolio.  

Meeting the pension promise is the board’s primary objective. To achieve this objective, the board has adopted a long-term asset mix and allowable ranges for each type of investment that reflect the desired risk-return profile of the plan. A copy of the plan’s SIPP is available on the plan website.

As our investment agent, BCI is responsible for implementing the asset mix and making day-to-day investment decisions. BCI will exclude securities when products of a company are prohibited by Canadian legislation or through international agreements, such as those relating to anti-personnel mines and cluster munitions.

Regarding market impact: London Interbank Offered Rate (LIBOR) was a key benchmark for setting the interest rates on adjustable-rate loans, mortgages and corporate debt. Many of the financial markets have already shifted away from LIBOR. Specifically, Europe and Asia LIBORs ceased publication at the end of 2021. While the U.S. dollar LIBOR interest rate remains in place until the end of June 2023, new derivatives, cash securities and loans have almost entirely shifted to the Secured Overnight Financing Rate (SOFR). No new LIBOR positions have been permitted since January 2022, and legacy LIBOR positions will be adjusted through various legal mechanisms once LIBOR stops being used in 2023. No material market impact is expected from the transition from LIBOR to SOFR.

In 2020, BCI created a corporate-wide working group to tackle benchmark reform globally. The focus of the group has been to create awareness of the change, determine the impact to BCI and its clients, and support the teams and stakeholders to ensure they are ready and able to implement the solution. The transition has not presented any concerns to date.

BCI regularly engages with all companies in its investment portfolio to make its climate management expectations clear and to actively support their transition to low-carbon operations, including support of net-zero commitments.

Puget Sound Energy and Thames Water are two examples of how BCI’s engagement has supported portfolio companies to make net-zero commitments.

Regarding Cleco and Open Grid Europe: Cleco has publicly announced commitments or aspirations to achieve net-zero emissions by 2050, and Open Grid Europe has established goals for the significant reduction of greenhouse gas emissions by 2025. You can find additional information on these companies and their climate-related initiatives on their corporate websites.

For more information about BCI’s approach to engagement, we encourage you to read BCI’s 2021 ESG annual report and supplementary case studies on BCI's website.

Since the AGM, BCI has published their most recent Climate Action Plan (CAP), building on more than 20 years of climate action. The CAP affirms BCI’s commitment to support the global goal of achieving net-zero emissions by 2050. It outlines the actions that BCI is taking to support this goal, while maximizing the likelihood of achieving the plan’s objectives in all future climate scenarios.

The plan and BCI do not publicly make projections or provide outlooks on future market events.

As a long-term investor acting in the best financial interests of clients like the Municipal Pension Plan, BCI incorporates environmental, social and governance (ESG) considerations into investment decisions, including those relating to human rights.

Human capital management is one of BCI’s engagement priorities as part of its comprehensive corporate-wide ESG strategy. Specifically, BCI leverages its influence as an active investor to encourage policies and procedures that ensure worker health and safety, the protection of human rights, and alignment with labour standards.
BCI collaborates with global investors to engage companies on board oversight, advocates for improved health and safety performance, and contributes to the development of new corporate standards.

Please refer to BCI’s 2021 ESG annual report on BCI's website for more information about BCI’s ESG strategy and specific case studies on activities in human capital management.