retirement planning session - unb...this presentation is for information purposes only. no rights...

New Brunswick Public Service Pension Plan (NBPSPP)

Fall 2016

Vestcor Pension Services Corporation

www.vestcor.org/nbpspp

Retirement Planning Session

This presentation is for information purposes only. No rights are conferred by this presentation. The New Brunswick Public Service Pension Plan Document and Funding Policy, the New Brunswick Pension Benefits Act, and the Income Tax Act supersede this presentation where discrepancies may occur. For authoritative wording regarding this pension plan, please refer to the Plan Document for the New Brunswick Public Service Pension Plan.


Disclaimer

Agenda• Overview of NBPSPP

• Benefits Payable upon Termination/Death

• Other NBPSPP Provisions

• Insured Benefits

• Other Key Points

• Questions


NBPSPP GovernanceA Board of Trustees is responsible for the administration of the NBPSPP

6 individuals have been appointed as Trustees including:• 1 Trustee appointed by the New Brunswick Nurses Union • 1 Trustee appointed by the New Brunswick Union of Public and Private Employees • 1 Trustee appointed by Local 37 of the International Brotherhood of Electrical Workers • 3 Trustees appointed by the Province, one of whom is a retiree

2 observers

The Board of Trustees administers the NBPSPP in accordance with:

NBPSPP Overview www.vestcor.org/nbpspp

Employee ContributionsCurrent Rates• 7.5% of earnings up to YMPE• 10.7% of earnings in excess of YMPE

YMPE: Year’s Maximum Pensionable Earnings under theCanada Pension Plan (CPP) – 2016 YMPE = $54,900.

CPP deductions cease upon reaching the YMPE.


VestingEntitlement to pension benefits

Vesting under the NBPSPP occurs upon the completion of the earlier of:

• Five years of continuous employment; or

• Two years of pensionable service in the NBPSPP (including pensionable service in the Public Service Superannuation Act (PSSA)); or

• Two years of membership in the NBPSPP, including membership in any of the following predecessor pension plans:

The Pension Plan for Part‐Time and Seasonal Employees of the Province of NB (PT&S); or

The PSSA.


Pension Calculation

Basic Formula For Calculating Your Annual PensionAverage Salary XYears Of Pensionable ServiceX%


Basic Pension Calculation Example

Average Salary: $50,000XYears Of Pensionable Service: 25X%: 2.0%Annual Pension = $25,000 ($2,073 per month)


Benefits Accumulated

In determining the benefits accumulated, pensionableservice needs to be separated as follows:



NBPSPP Overview

Calculation prior to any early retirement reduction factorand Cost of Living adjustment


Active Member Calculation

NBPSPP Overview

COLA assumed to be 1.7% each year Same concept applies to benefits payable at age 65 Calculation prior to any early retirement reduction factor


Pension Calculation: Bridge Benefit

Basic Formula For Calculating Your Annual Pension Before Age 65

Average Salary XYears Of ServiceX%


Basic Bridge Benefit (Pre‐Conversion)

2%

2%2% 2% 2%

2%

1.3%

55 57 59 61 63 65Age

% Used In Formula


Basic Bridge Benefit (Pre‐Conversion)

Basic Formula For Calculating Your Annual PensionAverage Salary XYears Of ServiceX2.0% Under Age 651.3% After Age 65


Basic Bridge Benefit Example (Pre‐Conversion)

Annual Pension Under Age 65 Age 65 and Over

Average Salary $50,000 $50,000

X

Years Of Service 25 25

X

% 2% 1.3%

Annual Pension $25,000 $16,250


Bridge Benefit Prior to Age 65• The Bridge Benefit (also known as Integration) is intended to supplement

your income until age 65, at which time it ceases and you are eligible for an unreduced CPP pension.

• CPP contributions are required on earnings up to YMPE.

• NBPSPP contribution rates:

lower on earnings up to YMPE, to recognize required contributions into two plans.

higher on earnings above YMPE, as no CPP contributions.


Bridge Benefit Prior to Age 65

• Benefit accrual rates are based on contribution rates.

• The bridge benefit under the NBPSPP and your CPP benefits may not be the same amount.

• The NBPSPP bridge benefit is payable as early as age 55, regardless of age at which CPP pension begins.


Cost of Living Adjustment• Each year, based on the funding level of the NBPSPP, it will be determined

whether the plan is able to provide indexation – also known as Cost of Living Adjustment (COLA):

The financial report (Actuarial Valuation) will outline the funding level of the NBPSPP; and

The NBPSPP’s Funding Policy will outline how much COLA could be provided (up to average change in Consumer Price Index (CPI)).

• The NBPSPP is designed to provide average cost of living adjustments in excess of 75% of the CPI over a 20 year period.

• When COLA is provided, it will apply to active employees,retirees and deferred members.


Early Retirement Reduction Factors


Pension Estimate Calculator

NBPSPP Overview

• Can be used with or without the information provided on yourEmployee Statement of Pension Benefits.

• The Calculator Tool is located on our website at: www.vestcor.org/nbpspp

Example of a plan member approaching retirement: Employee will be 59 years old on Nov. 30th/15 will be terminating employment on Nov. 30th/15 Pension start date of Dec. 1st/15

Information on statement:

http://www.vestcor.org/nbpspp

Statement of Benefits


NBPSPP Overview

Pension Estimate Calculatorwww.vestcor.org/nbpspp

NBPSPP Overview

Pension Estimate Calculator Results

(3% x 1 year) (5% x 6 years)

Gross amounts


Forms of PensionThere are various forms of pension at retirement:

NBPSPP Overview

Normal Form of Pension

Life Pension –5 Year

Guarantee

Joint & Survivor at

50%*


Guarantee


Guarantee

Joint & Survivor at

60%

Joint & Survivor at

100%


Forms of PensionJoint and Survivor at 50%

• Payments made during lifetime of retiree.

• If retiree dies before spouse, payments continue to spouse (spouse at date of death) for remainder of spouse’s life.

• 50% of pension amount at age 65 (before application of any early retirement reductions) payable to spouse, or eligible dependent if spouse dies or no spouse.

• If member has a spouse, a Spousal Waiver form must be completed bythe member’s spouse at time of retirement.


Forms of PensionJoint and Survivor at 60% or 100%


• If retiree dies before spouse, payments continue to spouse (spouse at date of retirement) for remainder of spouse’s life.

• 60% or 100% of pension amount at age 65 (after application of any early retirement reductions) is payable to spouse.

• If no spouse or if spouse dies, 50% of pension amount at age 65 (beforeapplication of any early retirement reductions) is payable to eligible dependent.


Forms of PensionLife Pension Guarantee (5, 10 or 15 Years)


• If retiree dies before end of guarantee period, the Designated Beneficiaryreceives the remaining pension payments (being the pension payable at age 65, after application of any early retirement reductions) through monthly installments.

• If member has a spouse, a Spousal Waiver form must be completed by the member’s spouse at time of retirement.


Preliminary Retirement StatementUnder the Income Tax Act,an optional form of pensioncannot be larger than theNormal Form of Pension (Option A).

NBPSPP Overview

Date of termination: November 30, 2015 Date on which pension entitlement will commence: December 1, 2015 SECTION #1 – OPTIONS AVAILABLE Your retirement benefit options are: (choose only one) Monthly amount payable _________________________________ To Pensioner On death of

pensionerA. Joint Life and Survivor Option payable at 50% to the surviving spouse at member's death (or to eligible children if no spouse) from December 1, 2015 to November 1, 2021 $4,723.19 $1,906.62 from December 1, 2021 $3,643.14 $1,906.62 B. Joint Life and Survivor Option payable at 60% to the surviving spouse specified at time of retirement (or eligible children upon death of spouse based on Joint Life and Survivor Option payable at 50%) from December 1, 2015 to November 1, 2021 $4,700.83 $2,172.46 from December 1, 2021 $3,620.76 $2,172.46 C. Joint Life and Survivor Option payable at 100% to the surviving spouse specified at time of retirement (or eligible children upon death of spouse based on Joint Life and Survivor Option payable at 50%) from December 1, 2015 to November 1, 2021 $4,546.66 $3,466.59 from December 1, 2021 $3,466.59 $3,466.59 D. Life Pension with 10 Year Guarantee from December 1, 2015 to November 1, 2021 $4,723.19 $3,643.14 from December 1, 2021 to November 1, 2025 $3,643.14 $3,643.14 from December 1, 2025 $3,643.14 $0.00 E. Life Pension with 15 Year Guarantee from December 1, 2015 to November 1, 2021 $4,672.48 $3,592.42 from December 1, 2021 to November 1, 2030 $3,592.42 $3,592.42 from December 1, 2030 $3,592.42 $0.00


Designated Beneficiary• A member may designate a beneficiary or beneficiaries to receive any

benefit which may be payable under the terms of the NBPSPP upon the death of the member.

• Upon the death of the member, if there is no spouse, eligible dependent or designated beneficiary, any death benefits will be payable to the member’s estate.

• If an active or deferred member designates a person other than his/her spouse as a beneficiary, the entitlement of the spouse shall supersede the entitlement of the beneficiary to a death benefit.


Schedule of Pension Payments Paid on the 24th of each month Pension Benefit begins the month after you become eligible

Upon the death of a pensioner

Date of terminationMay 10th

First paymentJune 24th

Date of deathMay 10th

Last paymentMay 24th


Termination Benefits

If a member is not vested:

• Member receives a refund of their contributions with interest.

• The amount is payable as cash or can be directly transferred into an RRSP.

Benefits Payable upon Termination/Death www.vestcor.org/nbpspp

Termination BenefitsIf a member is vested (prior to age 55)

• Member can defer their pension benefit;

If the member defers their pension, the pension can begin as early as age 55 (reduced) and no later than age 65 (unreduced).

OR

• Member can elect to transfer the Termination Value to a retirement savings arrangement on a locked‐in basis (LIRA, LIF, etc.)

The Termination Value will not be less than the member’scontributions plus interest


Termination BenefitsIf a member is vested (on or after age 55)

• The member has the following options:

Choose to begin receiving their pension immediately; or

Defer their pension benefit until a date between their 55th and 65thbirthday and receive a reduced pension benefit; or

Defer their pension benefit until age 65 and receive an unreduced pension.


Prior to retirement (Non‐Vested Member)

• Refund of member’s contributions with interest to member’s surviving spouse or designated beneficiary/estate if there is no spouse.

Benefits Payable upon Termination/Death

Death Benefitswww.vestcor.org/nbpspp

Death BenefitsPrior to retirement (Vested Member)

• If member has a spouse, the spouse has the option to:

receive a monthly pension benefit of 50% of the amount payable at age 65 (before application of early retirement reductions); or

receive a lump sum payment equal to the Termination Value.

• If member does not have a spouse, the designated beneficiary/estate will receive a lump sum payment equal to the Termination Value.

• If an eligible dependent is the designated beneficiary, a monthly pension as described above is available instead of the Termination Value.

The entitlement of the spouse shall supersede the entitlement of any beneficiary designation.


A member may be able to purchase the following periods of service(certain restrictions apply):

• Previously refunded service

• Authorized leave without pay (e.g., maternity)

• Prior non‐contributory full‐time and part‐time service (e.g., casual employment)

• Long Term Disability Waiting Period

• MLA Service

Other NBPSPP Provisions

Purchase of Pensionable Servicewww.vestcor.org/nbpspp

• The cost to purchase service varies depending on the type of service being purchased.

• In most cases, the cost to purchase service will be the greater of:

one times the current contribution rate; or

the adjusted termination value.


Purchase of Pensionable Servicewww.vestcor.org/nbpspp

• A reciprocal transfer agreement (RTA) permits the portability of pension benefits between pension plans.

• Currently there are RTAs between the NBPSPP and:

the Pension Plan for Part‐Time and Seasonal Employees of the Province of New Brunswick (PT&S);

the national public service pension plans (this includes all 10 provinces); and

the Government of Canada Public Service pension plan.

• Other reciprocal transfer agreements are being negotiated.Members will be notified when new agreements come into effect.


Reciprocal Transfer Agreementswww.vestcor.org/nbpspp

Marriage Breakdown Provisions• The pension plan permits the division of pension assets upon marriage

breakdown.

• This applies to agreements, judgments or court orders dated afterDecember 31, 1996.

• Our office will determine, based on an actuarial calculation, the eligible amount available for division based on the agreement, judgment or court order.

• Funds are transferred on a locked‐in basis.

• There are no provisions in the pension plan for purchasing the lostbenefits as a result of a marriage breakdown.

Other NBPSPP Provisions www.vestcor.org/nbpspp

Work Time Flexibility ProgramOnly full‐time members of the NBPSPP who are withinfive years of retirement may apply.

• Reduce work schedule (as low as 50% of full‐time).

• Pay contributions on full‐time salary.

• Receive full‐time pension credit.

• Subject to Employer Approval and CRA limitations.

• Elected retirement date is irrevocable.

Other NBPSPP Provisions www.vestcor.org/nbpspp

Dental Benefits

Transfer from Active Plan to Retiree Plan. You are only eligible to continue the plan(s) you are participating in as an

active employee.

Insured Benefits

Group Insurance

Retiree Monthly PremiumsApril 2016 Rates

Coverage Single Family

Dental $20.15 $40.29


Other Key Points• You should inform your employer at least six months in advance of your

retirement date to ensure you receive your pension in the month following your termination date.

• The NBPSPP Employee Booklet is available on our website which provides detailed information on the provisions of the plan.

• Pension estimates can be calculated using the Pension Calculator Tool available on our website: www.vestcor.org/nbpspp.

• Alternatively, pension estimates can be requested and calculated by our office if you are within 12 months of your retirement date.

• If you have questions please contact one of our Benefits Counselors.


Contact Informationwww.vestcor.org/nbpspp




Additional Informationwww.vestcor.org/nbpspp

Questions?


retirement planning session - unb...this presentation is for information purposes only. no rights...

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