MPP Retirement Presentation

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(No Transcript)
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Agenda

• Administration
• Basics of the Municipal Pension Plan
• Pension formula
• Pension options
• Other factors that affect your pension
• Increasing pensionable service
• Retirement process
• After retirement

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Municipal Pension Plan

• Governed by
• Municipal Pension Plan Joint Trust Agreement
• Municipal Pension Plan Rules
• Municipal Pension Board of Trustees, composed of
  employer and employee representatives
• Administered by
• The BC Pension Corporation

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Web Services

• Visit our website for plan information
• mpp.pensionsbc.ca
• Access My Account for
• a copy of your Members Benefit Statement
• online pension estimator
• online purchase cost estimator
• view your account information

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Basics

• The Municipal Pension Plan is a defined benefit
  plan
• Your personal contributions do not affect your
  final benefit
• A formula determines your pension benefit
• Age
• Salary
• Pensionable service

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Basics

• Age
• Normal retirement age 65
• Earliest retirement age 55
• Ages 60 and 50 for public safety occupations
• Salary
• Highest Average Salary (HAS)
• Service
• Contributory service determines eligibility and
  reductions
• Pensionable service determines benefits ()

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Reduced Pension
Unreduced Pension

• Age 55 to 60 and your age plus contributory
  service totals 90 or more
• Age 60 or older with two years or more of
  contributory service

• Pension is subject to a reduction if either of
  the above tests are not met

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Example of Rule of 90

• Age 56 years 2 months
• Contributory
• Service 33 years 10 months
• Total 89 years 12 months
• 90
• Unreduced pension

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3 Reduction Factor

• Terminate at age 50 to 55, with 10 years or more
  of contributory service
• Terminate at age 55 to 60 and vested
• Calculated from lesser of 90 or age 60
• Maximum reduction is 15

Otherwise, the reduction is 5 to a maximum of 25
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Example of a Reduced Pension

• Terminated employment May 31, 2007 at age 58with
  28 years of contributory service
• Immediate pension
• Reduction in pension

28 58 86 90 - 86 4 60 - 58 2
Lesser is 2 Reduction is 3 x 2 6
A 2,000 pension is reduced to 1,880
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Age and Service Affect Your Pension
?

• 90

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Pension Formula
A. Pension Formula to age 65




B. Minus Bridge Benefit at age 65
Your monthly unreduced lifetime pension (A - B)
from age 65


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Pension Formula
Your basic monthly pension is calculated in two
steps
A. The Pension Formula
5-year Highest Average Salary (monthly)
Years of Pensionable Service
2(0.02)
x
x


Minus ...
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Pension Formula
B. The Bridge Benefit
Lesser of 5-year Highest Average Salary or
YMPE (monthly)
Years of Pensionable Service
0.7(0.007)
x
x


YMPE Years Maximum Pensionable Earnings. Used
in the determination of your Canada Pension Plan,
and is updated annually to reflect the national
average industrial wage. The YMPE for 2007 is
43,700 (3,642 monthly).
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Calculating Highest Average Salary
Pensionable Service 6.80 12.00 12.00 12.00 1
2.00 5.20 60.00 months
Avg. Salary 4,801 3,921 3,917 3,723 3,605
3,461 3,877

• Year
• 2008
• 2007
• 2006
• 2005
• 2004
• 2003

Salary 32,650 47,050 47,000 44,675 43,255 17
,999 232,629
HAS 232,629 / 60 3,877 per month
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Pension Formula Example

• Plan member and spouse are both 58
• Retirement date July 31
• Pension effective date August 1
• Pensionable service 20 years
• Contributory service 20 years
• HAS 3,877

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Pension Formula Example
Basic monthly pension to age 65
2 x 3,877 x 20 1,551 per month Minus
the bridge benefit 0.7 x 3,642 (YMPE) x
20 510 per month Lifetime pension after age
65 1,041 per month Age 58
Age Contributory Service 78 Reduction 6
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Pension Options

• Single life no guarantee
• Single life guaranteed 5, 10 or 15 years
• 100 joint life
• 60 joint life guaranteed 10 years
• Temporary annuity can only be taken as part of
  one of the above options seek financial advice
  before electing

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Sample Pension Options
Bridge Benefit
Basic Pension
Option
Survivors Pension
Temp. Annuity
Pension after 65
Pension to age 65
Monthly Pension Option
Single life pension no guarantee
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1,457
479
978
978
2
Single life pension guaranteed 10 years
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965
1,444
479
965
Single life pension guaranteed 15 years
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1,425
479
946
946
100 joint life pension
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1,313
479
834
834
834
100 joint life temporary annuity
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1,646
490
479
677
677
677
60 joint life guaranteed 10 years
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1,360
479
528
881
881
Single life guaranteed 5 yrs. temp. annuity
1,760
490
479
791
791
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Gross Retirement Income by Age
60
Retirement
65
Canada Pension Plan
Canada Pension Plan
Bridge Benefit
Old Age Security
Lifetime Pension
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What should I think about when selecting my
Pension Option?
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Life Tables
MPP Life
BC Life
Canadian Life
Age 55 60 65
Male 82.50 83.18 84.07
Female 86.66 87.05 87.60
Male 79.89 80.75 81.88
Female 84.14 84.77 85.54
Male 78.91 79.81 81.04
Female 83.40 84.06 84.90
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Other Factors That Affect Your Pension

• Whether you have a spouse or former spouse with
  an entitlement to part of your pension
• When you elect to commence your pension
• Increasing pensionable service by purchasing
  service

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Definition of Spouse

• The person you are legally married to and, for
  the two-year period immediately before the
  relevant time (e.g., retirement or death), were
  not living separate from or, if this does not
  apply,
• The person, of the same or opposite sex, who has
  lived with you in a marriage-like relationship
  for the two-year period immediately before the
  relevant time.

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Marital Breakdown

• We are required to administer a pension in
  accordance with any separation agreement, court
  order or application for division of pension
• We can split the pension benefits at the source

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Deferred Pension

• Vested plan members can leave work before age 55
  and defer their pensions to age 55 or older
• Seek professional advice if you plan to defer
  your pension beyond earliest eligibility
• Your highest average salary is indexed at the
  same rate as the indexing granted to pensioners
  each January

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Your Pension Take it at 55 or defer it to 60?
If you terminate employment at age 55 Monthly
pension income at 55 2,040 Total payments from
age 55 to 60 122,400 Unreduced pension deferred
to 60 2,400 Increase to pension 360 Make-up
time (122,400 360) 340 months, or
28.33 years Age at break-even point 88
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Disability Pension Provisions

• If you are not eligible for LTD benefits, you may
  be eligible for a disability pension provided
  you
• terminate employment
• are under age 60
• have at least two years of contributory
  service, and
• are unable to fill any position your employer
  can reasonably offer
• There is a two-year limit from the date of last
  contribution or service credit to apply

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Death Before Retirement

• Vested with no spouse commuted value (CV)
  payment to nominated beneficiary or estate
• Vested with spouse
• If member dies before 55, immediate pension or CV
  
• If member dies at 55 or older, immediate pension
  paid
• Not vested contributions plus interest paid to
  spouse, nominated beneficiary or estate

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Purchasing Service

• Rules for calculating most purchase types have
  been simplified
• Online purchase estimator available at
  mpp.pensionsbc.ca
• Your employer must complete your purchase
  application

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Purchasing Service

• Increases your pension benefit and may reduce any
  early retirement reduction
• May increase the subsidy for health benefits
• You can pay by cheque or RRSP transfer, as
  determined by CRA
• Purchases must be made within applicable timelines

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Purchasing Service Types

• Arrears should have contributed, but did not
• Leave of absence partial or unpaid leave
• Non-contributory did not contribute
• Reinstate a refund repay funds withdrawn from
  the plan, plus interest

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Purchasing Service Cost

• For most purchases, the costing method is the
  same (arrears, leaves, non-contributory)

CurrentMonthly Full-time Salary
Current Employer and Employee Contribution Rates
Number of Months to be Purchased
x
x
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Purchasing Service Deadlines

• You must be an active Municipal Pension
  Plan member to purchase service.
• There is a five year window of opportunity to
  purchase service.

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Is It Worth Purchasing Service?

• Cost-benefit analysis
• Divide cost by the increase to pension to get
  number of months to break even
• Tools
• Purchase estimator
• Pension estimator

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Purchase Cost/Benefit Example

• Estimated cost to purchase three months of
  service is 1,500 (based on current monthly
  salary of 3,500)
• Approximate increase to pension 15 per month to
  age 65, reducing to 10 per month at age 65
• 1,500 15 100 months, or 8.33 years to
  regain the cost
• Plan member and spouse both age 58

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Child-rearing time Contributory Service credit

• You may be able to count time at home raising a
  child as contributory service for eligibility for
  an unreduced pension
• You can apply for a maximum of five years in
  total
• Pensionable service must be credited before and
  after the child-rearing period
• There is no cost for child-rearing credit

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Portability

• Portability means carrying certain pension rights
  from one pension plan to another. May include
• Public Sector Transfer Agreement
• Reciprocal agreements with some pension plans in
  Canada
• You must have left your contributions on deposit
  with the prior plan, or reinstated service. Some
  agreements have application deadlines. Shortfalls
  in service are common with many reciprocal
  agreements.

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Planning For Retirement

• About a year before you plan to retire, estimate
  your pension online at mpp.pensionsbc.ca, or
• Request a Retirement Planning Package from us
  (also available online at mpp.pensionsbc.ca)

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Preparing To Retire

• Complete an Estimate Request form (available
  online) and return it to us
• Request a Pension Estimate by telephone
• We will send you a Retirement Application Package

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Applying To Retire

• When actually retiring
• Complete and return the Retirement Application
  Package
• Enclose clear copies of proof of age documents

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Pension Effective Date

• Your pension is effective the latest of
• first day of the month following eligibility
• first day of the month following your final paid
  day
• first day of the month of application

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Finalize Your Pension

• You will receive a letter stating the exact
  amount of your monthly pension
• You have 60 days to change your pension option
  (you must notify us in writing) otherwise, it
  cannot be changed
• We will notify you when your pension amount
  changes (income tax changes, indexing, etc.)
• Notify Municipal Pension Services in writing if
  you move

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After Retirement

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Indexing

• Effective January 1 following start of the
  pension
• Pro-rated for pensions in effect less than one
  year
• Indexing is not guaranteed

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Medical, Extended Health and Dental Benefits

• BC Medical Services Plan (MSP)
• Basic medical insurance
• Pacific Blue Cross
• Extended health benefits (EHB) plan
• Dental benefits plan

Group benefit coverage is not guaranteed
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Medical, Extended Health and Dental Benefits

• You must be a Canadian resident
• Coverage can include spouse and dependants
• BC residents may enrol in MSP at any time
• You may enrol in the EHB/dental plans at
  retirement or later, if you can prove continuous,
  comparable coverage
• Premiums are normally deducted from your pension

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Re-employment of a Retired Member
Contact us if you become re-employed with an MPP
employer. You can

• Continue to receive your pension, in which case
  you are not eligible to contribute, or
• Stop receiving your pension and begin accruing
  service, or
• Stop receiving your pension, repay your pension
  plus interest, and begin accruing service

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Federal Pension Plans

• Canada Pension Plan
• Old Age Security
• Apply six months before you want to start
  collecting either of these benefits by calling
• 1 800 277-9914
• or visit
• www.servicecanada.gc.ca

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Canada Pension Plan

• Contributions paid by employees and employers
• Normal age for retirement benefits is 65, even if
  you are still at work
• Reduced pension benefits available as early as
  age 60, subject to the criteria being met
• Reduction 6 a year to a maximum of 30

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Canada Pension Plan Take It or Leave It?
Age when CPP payments begin 60 years of CPP at
age 65 (863.75) 70 Monthly CPP
income 605 Reduction 259 Total payments
from age 60 to 65 36,300 Make-up time (36,300
259) 140 months, or 11.7 years Age at
break even point 77 years
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Old Age Security

• Residency requirements must be satisfied
• Payable at age 65
• Taxed back if income exceeds a certain amount

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Municipal Pension Retirees Association (MPRA)
An association for retired municipal, health and
education employees and their spouses to

• voice concerns to the Municipal Pension Board on
  behalf of retirees
• belong to a support group
• share your skills, knowledge and experience
• stay in touch with colleagues
• make new friends

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Municipal Pension Retirees Association (MPRA)

• Complete the application enclosed with the
  retirement confirmation letter
• Membership fees can be deducted from your pension
  payment

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• Thank you for attending
• Please complete the evaluation form because your
  feedback is important to us

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Contact Information
Municipal Pension PlanPO Box 9460Victoria BC
V8W 9V8 Victoria 250 953-3000 Lower Mainland
604 660-5366 Toll-free in BC 1 800 668-6335 Fax
250 953-0421 Website mpp.pensionsbc.ca E-mail
MPP_at_pensionsbc.ca

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