Letter from the Municipal Pension Plan Board of Trustees and plan partners: March 29, 2021
The plan partners have reached agreement on plan design, and the board has received the agreement and adopted new rules that will take effect January 1, 2022.
To: Municipal Pension Plan appointing authorities, unions, associations, employers and members
Re: Municipal Pension Plan redesign
As previously announced, the plan partners reached an agreement on plan design. The board received the formal agreement at the March board meeting and adopted new rules that will take effect January 1, 2022. In our joint oversight of the Municipal Pension Plan, all parties support the redesign of the plan.
These decisions followed a comprehensive review of the plan and how members use it today and a comprehensive engagement with members, employers and key stakeholders. In our review, we were guided by the following principles:
- Improving equity for members
- Aligning benefits with how the majority of members use them
- Setting a strong foundation for the long-term sustainability of the plan
- Staying within the current costs of the plan
With the rule changes, most members will receive an improved lifetime pension. This is the amount members receive throughout retirement, excluding the bridge benefit. To make this enhancement possible, there will be changes to the bridge benefit and early-retirement subsidies on future service for most members.
We determined that a flat group contribution rate on all salary is a more equitable way to manage contributions for future service. Contribution rates are also better aligned between members and employers, as contemplated by the original joint trust agreement.
The plan redesign also helps stabilize contribution rates and strengthen inflation protection to support cost-of-living adjustments over the long term. We also are introducing a new health benefit trust to further support retiree benefits.
We are grateful for the work and persistence of many to help us reach this decision. The changes will greatly improve equity in the plan, provide benefit improvements for most plan members and protect the plan’s sustainability.
A full explanation of the changes is on the plan website. Member and employer online courses and webinars have been updated with information about the changes. Members in group 1 can also use the personalized pension estimator to see how the changes will affect retirement after January 1, 2022. Members in groups 2 and 5 will see the changes for post-January 1, 2022 retirement in the personalized pension estimator in July 2021. Information for employers, including contribution rates, is on the employer website.
Sincerely,
Union of BC Municipalities and BC Provincial Government (employer partner)
Municipal Employees’ Pension Committee (member partner)
Health Employers Association of BC (trust signatory)
Municipal Pension Board of Trustees