What is YMPE?
YMPE, or Year’s Maximum Pensionable Earnings, is the limit set by the federal government each year to determine the maximum Canada Pension Plan contributions and benefits.
The YMPE is also used to determine your contributions to the Plan and pension benefits. Your pension benefit is calculated using a defined benefit formula, which includes the average of your best five years of earnings (“Best Average Earnings”), multiplied by the number of years or partial years you have contributed to the Plan (referred to as “Credited Service”), as follows:
2.0% of your Best Average Earnings
Your years of Credited Service
0.6% of the average YMPE (for the same five years of earnings)
Your years of Credited Service
Why is the YMPE calculation method changing?
The Pension Committee recommended changing the YMPE average calculation in order to provide a simpler, streamlined, and easier to understand approach versus the previous formula which is complex. The old calculation methodology is not wrong and had been consistently applied by the Civil Service Superannuation Board (CSSB) for the MTS Pension Plan as well as the predecessor plan.
I retired before December 31, 2006. Why am I not eligible?
Changes in YMPE methodology were originally reviewed by the Pension Committee in 2006, to be effective for new retirements or terminations starting in 2007. While the decision to implement the change was finalized years later, the Pension Committee recommended the new YMPE methodology be implemented for members who commenced receiving a monthly pension after December 31, 2006, to align with the timing of the initial proposal.
I have retired/am retiring after January 1, 2015. Do I need to wait for the changes to be implemented to receive my pension?
No, if you retire in 2015 before the programming changes are implemented, your monthly pension benefit will be calculated using the old YMPE methodology, based on the pension benefit option you choose. When the programming changes are completed, your pension benefit will be recalculated using the new methodology. Any applicable increase resulting from the new calculation will be processed retroactive to your retirement date.
If you retire after the programming changes have been implemented, your pension benefit will be calculated using the new YMPE methodology.
I retired after January 1, 2015 and am electing to take the lump sum commuted value. Will the change significantly affect my payment?
The difference in YMPE methodologies results in a relatively immaterial difference to pension benefits – from no change to a small improvement.
You do not need to delay making a decision regarding your pension benefit option. If you take a commuted value and request a transfer of your pension benefits to a financial institution, any subsequent top-up improvement resulting from the new YMPE calculation will be processed the same way as the original pension estimate.
I retired after December 31, 2006 but before January 1, 2015. Do I need to submit a request to have my pension benefits reviewed?
No, your monthly pension benefit will be recalculated using the new YMPE methodology when the programming changes are completed. If you are eligible for an increase, any applicable adjustments resulting from the new calculation will be processed automatically, retroactive to January 1, 2015. As noted above, the incremental change in pension benefits as a result of the application of the new YMPE methodology will be further increased by the cost of living adjustment percentages received by the retiree or beneficiary.
It is anticipated the programming changes and recalculation of pension benefits will be implemented by the end of 2015.
My pension is deferred. Am I eligible for any potential adjustment?
If you are a deferred member and commence receiving a monthly pension benefit at a later date, your pension benefit will be calculated using the new YMPE methodology. No action is required on your part.
Is the agreement regarding the new YMPE methodology related to the pension surplus distribution settlement?
No. The pension plan surplus settlement and implementation agreement is separate from the YPME methodology change.