Effective January 1, 2015, pension benefits for the Plan will be calculated under a new methodology. The new methodology will use the YMPE for each partial year included in the pension benefit calculation based on a proration of credited service for that same year. The new YMPE methodology will be applied on a prospective (go-forward) basis for all retirement, termination or death benefits starting January 1, 2015.
The new YMPE methodology will also apply on a prospective basis, effective January 1, 2015, to all retirees currently in receipt of a monthly pension and who commenced receiving a monthly pension after December 31, 2006. Similarly, beneficiaries who are in receipt of a monthly pension on January 1, 2015 will also have the new methodology applied to their monthly pension as of January 1, 2015 if the original plan member retired after December 31, 2006 or if the original plan member was an employee who died after December 31, 2006. Any incremental change in pension benefits that may occur 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.
There will be no retroactive payments made for any period of time prior to January 1, 2015 and the new YMPE methodology will only apply to those who commenced receiving a monthly pension after December 31, 2006.
1. Retirements, terminations or death effective January 1, 2015, or later
Pension benefits will be estimated and processed based on the old YMPE methodology for retirements, terminations or death with an effective date of January 1, 2015 or later. Once the new YMPE methodology is programmed, pension benefits will be recalculated and adjusted as required. It is expected that programming changes and any corresponding pension benefit changes will be made in summer 2015.
For members who have elected a monthly pension, pension benefits will be recalculated on the basis of the new YMPE methodology and any corresponding increase will be paid accordingly, with any retroactive payments being made as necessary, to the date of retirement in 2015.
Members electing to take the commuted value lump sum payment option will receive an adjustment to their lump sum payments, if applicable, once the commuted value under the new methodology has been calculated.
The difference in YMPE methodologies results in a relatively small difference to pension benefits, and in many cases there is no change to the pension benefit.
2. Calculations and adjustments for retirees and beneficiaries
You may be eligible to receive revised pension benefits resulting from the implementation of the YMPE calculation change if you are a Plan member currently in receipt of monthly pension benefits and began receiving your monthly pension after December 31, 2006.
It is currently anticipated that these programming changes will be implemented by the end of 2015. Corresponding pension benefit changes will be processed at that time and will be paid retroactive to January 1, 2015.
As implementation timelines are finalized, additional information will be communicated.
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
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.
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.
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.
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.
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.
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.
Customers who are transferring will be notified in advance. Bell is committed to providing a seamless transition. Until the transfer takes place, your service and rate plan will remain the same (unless you decide to change your plan or phone in the interim).