Indexing (Cost of Living Adjustment)
Public Service Superannuation Plan
Effective April 6, 2010, indexing rules for the Public Service Superannuation Plan will change to a new method. These changes apply to ALL pensioners, present and future; including those retirees already receiving a pension, active members near to retirement, and any and all future retirees.
January 1, 2011 to December 31, 2015
Indexing has been set at 1.25% per year, for the 5-year cycle starting January 1, 2011 to December 31, 2015.
January 1, 2016 to December 31, 2020
Indexing for the 5-year cycle starting January 1, 2016 to December 31, 2020 is dependent on the funded ratio of the pension plan as of December 31, 2014.
If the funded ratio of the plan is 100% - 110%, the Trustee may provide Indexing so long as the plan’s funded ratio is not projected to fall below 100% at the end of the 5-year cycle.
If the funded ratio of the Plan is above 110%, Indexing will be paid. A contribution rate decrease and other changes to the Plan may be implemented so long as the Plan’s funded ratio is not projected to fall below 100% at the end of the 5-year cycle.
If the funded ratio of the plan is less than 100%, indexing cannot be paid. Also the Trustee must implement a contribution rate increase and must consider any other necessary changes to the plan in order to bring the funded ratio of the plan to at least 100% (on a projected basis) within 10 years.
January 1, 2021 and thereafter
This process will be replicated on a five year cycle.
Indexing on Deferred Pensions
Indexing rules are also changing with regards to members who have terminated their employment, kept their accrued pension contributions in the Plan, and deferred their pension benefit to some future point in time. Currently, indexing is considered to be ‘earned’ while the Deferred Pension awaits activation or actual retirement, at some later date. This indexing is accrued and credited to the pension benefit, for the years the Pension ‘waited’ in the deferral period. Effective January 1, 2011, indexing will no longer be earned in the deferral period.
If you currently have a Deferred Public Service Pension or have terminated employment but not yet elected an option:
- You will retain any and all Indexing earned in the deferral period, up to January 1, 2011. This Indexing will be included in your pension benefit when you ultimately retire.
- Effective January 1, 2011, your Deferred Pension will not earn or accrue any further Indexing.
- If you terminate employment any time on or after January 1, 2011 and defer your Public Service Pension, your Deferred Pension will not earn or accrue any Indexing.
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