Guide for plan members
Municipal Pension Plan is committed to helping you make the most of your pension. This guide is a provincial requirement. Please use the links at right to explore the topics most relevant to you.
How does the plan work?
BC's Municipal Pension Plan is a defined benefit pension plan. Each time you are paid, both you and your employer contribute to the plan. These contributions are pooled and invested so that you receive a lifetime, monthly pension when you retire. In fact, about 75 per cent of the average pension payment is currently paid by the plan's investment returns.
Your lifetime monthly pension will be based on a specific formula. This formula includes:
- The number of years of pensionable service
- The average of your highest years of salary
When you retire, you will receive a monthly pension for your lifetime.
After you die, depending on the pension option you chose at retirement, the plan may continue to pay:
- A pension to your spouse (if you have one) for their lifetime
- Pension benefits to another beneficiary(ies)
- A lump-sum payment to your estate or an organization that you have named as your beneficiary
As a new member, once you have made your first contribution to the plan, you can receive a pension at your earliest retirement age. If you're an inactive member who joined the plan before September 30, 2015, other conditions apply.
Your pension and your job
As a full-time, part-time or casual employee you may be eligible to join the plan. If you join, both you and your employer will contribute to your pension every paycheque for as long as you are an active member of the plan.
You will be automatically enrolled in the plan if you are:
- A full-time employee in a permanent position
- A full-time employee in a permanent position still on probation, but employed in a continuous, full-time capacity with the same employer for 12 months
- An employee not in a permanent position, but employed on a continuous, full-time basis with the same employer for 12 months
- An employee not in a full-time position, but instead filling a permanent, full-time position on a temporary, continuous basis for 12 months
If you are a part-time or casual employee, you can enrol in the plan if both of the following apply:
- You have completed two years of continuous employment (which can include breaks of up to 52 weeks)
- Your salary, including overtime and other payments, is equal to at least 35 per cent of the year's maximum pensionable earnings (YMPE) for two calendar years in a row
As a part-time employee, you can also join the plan if your employer passes a resolution under the terms of a negotiated collective agreement.
What happens if you change jobs
If you change jobs or move from a full-time position to a part-time or casual position for the same employer, you will continue to be an active member and contribute to the plan. Your contributions (and your employer’s contributions) will be adjusted to reflect your new salary.
If you move from a casual position to a part-time or full-time position, you will need to meet the eligibility criteria described above before you can enrol in the plan.
What happens if you start a new job
You will remain an active member of the plan if you:
- Take a new position with the same employer
- Take a job within one month with a new employer that also participates in the plan
- Take a job within 90 days with a new employer that also participates in the plan; however, you will need to meet the eligibility rules again to contribute to the plan
What happens if you leave your job
If you leave your job and are not working or you start working for an employer that does not participate in the plan, you will need to decide what to do with your pension. Your options depend on:
- Your age
- If you are retiring
- If your new employer’s pension plan has a transfer agreement with the Municipal Pension Plan
Your options could include:
- Deferring your pension (leaving your money in the plan and taking a monthly pension when you retire)
- Transferring the commuted value of your pension to a locked-in retirement vehicle
- Applying for your pension
- Transferring your service in the Municipal Pension Plan to your new employer’s pension plan
We will send you either a Termination selection statement or a pension estimate outlining your options.
What happens if you are laid off
You are no longer an active member of the plan if you:
- Are not working
- Have not contributed to the plan for one year
What happens if you are laid off but on a seniority or recall list
If you have been on a seniority or recall list for a year without contributing to the plan, you will be terminated for pension plan purposes. Once you are recalled back to work, you will have to meet the eligibility rules again to rejoin the plan.
How much do I contribute?
As an active member, you contribute to your pension through automatic deductions from each paycheque. (If you have reached 35 years of pensionable service or are on long-term disability, you may no longer be contributing.)
The amount of these contributions depends on:
- when you earn the service, and
- your member group
Through December 31, 2021
The contribution rate for all plan members (except Group 5) is:
- 8.5% of your salary up to and including the year’s maximum pensionable earnings (YMPE)
- 10.0% of your salary above the YMPE
The contribution rate for group 5 members is:
- 10.44% of your salary up to and including the YMPE
- 11.94% of your salary above the YMPE
Beginning January 1, 2022
You will contribute a flat rate on all salary based on your member group:
- Group 1 (all plan members who are not police officers or firefighters): 8.61%
- Group 2 (police officers and firefighters not in group 5): 8.92%
- Group 5 (police officers and firefighters not in group 2): 11.12%
Your contribution includes a portion that is transferred to a fund called the inflation adjustment account.
This account is used to pay for cost-of-living adjustments, or COLA, on current retiree pensions. COLA is not guaranteed but, once granted, becomes part of your lifetime pension.
You may also be contributing to a special agreement.
If you have 35 years of pensionable service, you will no longer contribute to the plan. However, you are an active plan member until you leave your job or retire.
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. This ensures the Municipal Pension Plan remains fully funded. 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, two accounts help offset future contribution rate increases:
- The rate stabilization account has a balance of about $2.5 billion, which helps the board keep contribution rates stable when there is a funding shortfall
- A group contribution rate rebalancing account (effective January 1, 2022) helps to protect against potential future contribution rate increases for both employees and employers in group 2 and group 5 because rebalancing disproportionately affects these smaller groups
The next valuation will occur as at December 31, 2021. Results will be announced in fall 2022.
When can I retire?
For most employees participating in the plan, the normal retirement age for members is 65 and the earliest retirement age is 55.
For group 2 and 5 members (police officers and firefighters), the normal retirement age is 60 and the earliest retirement age is 50.
The age at which you retire will affect your pension.
Your pension may be reduced if you retire before your normal retirement age.
According to the Income Tax Act, you must begin to receive your pension no later than the end of the year in which you turn 71. This is the age you must begin to receive your pension, even if you are still working.
What is a special agreement?
An employer participating in BC's Municipal Pension Plan may enter into a special agreement with the Municipal Pension Board of Trustees (board) under which employees contribute a fixed percentage of their salary and the employer contributes a fixed percentage to a separate account for each member that earns the fund rate of return. The rate of return is not guaranteed. The special agreement account balance grows in value over time, and the accumulated balance is paid or converted to a pension at retirement.
Are you covered by a special agreement?
Your Member's Benefit Statement will show whether you are part of a special agreement and will state both your and your employer’s contributions under the special agreement.
Special agreements negotiated before January 1, 2007
If your employer’s special agreement was negotiated before January 1, 2007, when you retire, the special agreement balance (consisting of employee and employer contributions with pension interest) can be used to increase your basic lifetime monthly pension or paid out to a locked-in retirement vehicle.
When you apply for your pension, we will send you two separate tables of pension options showing your monthly lifetime pension, one with the special agreement balance and the other without. You can use this information to help decide which option to choose.
Special agreements negotiated after January 1, 2007
If your employer negotiated a special agreement with the board after January 1, 2007, you can only take a lump-sum payment of your special agreement balance transferred into a locked-in retirement vehicle.
When you apply for your pension, we will send you your pension options based on your contributions to the plan excluding your special agreement balance, which will be paid to you as a lump sum.
When you can take your special agreement balance
Whether you're leaving your job or retiring from your job with an employer that participates in the plan, your special agreement balance can be transferred to a locked-in retirement vehicle. Depending on your agreement, you may also have the option to have the balance converted to a portion of your lifetime monthly pension benefit you can begin taking at retirement.
If you qualify, you may also be eligible for a small benefit refund for your entire pension benefit (the defined benefit and the special agreement portions). The Pension Benefits Standards Act considers special agreements to be a defined contribution provision, so your special agreement balance forms part of your entire pension benefit.
What happens to your special agreement balance if you die
If you die before you start your pension, your beneficiary is entitled to a lump-sum payment of your special agreement balance. If your beneficiary is your spouse, they may wish to use it to increase their monthly pension benefit. If you have a former spouse entitled to pre-retirement death benefits, they will also be entitled to a lump-sum payment of the applicable portion of your special agreement balance.
Employer rights and obligations
Each plan employer has certain rights and obligations to employees:
- Provide complete, accurate and sufficient personal information and records required to administer the plan for all members
- Collect your pension contributions and their employer contributions and provide them to us
- Provide you with any information or records supplied by us or otherwise required by the Pension Benefits Standards Act
- Enrol new employees or get a signed waiver for employees who have the option to waive enrolment
- Pay for any costs or damages from not meeting commitments such as reporting information on time or accurately
Nothing in the plan affects the employer’s right to dismiss an individual.
Guide for plan members: links to additional information