Pension Seminar for non-teaching pension plan members

1. Pension Seminarfor non-teaching pension plan members April 20, 2013 Presented by Betty Bolton Retiree Representative for Retirement Committee

2. Agenda

3. Disclaimer • This presentation highlights important features of the Non-teaching Pension Plan. It does not, however, replace the official Plan documents which legally govern the Plan. • In the event of inconsistencies between the Pension Seminar Notes and the Plan documents, the Plan documents govern Pension application. • If you require additional information in terms of retirement planning, we suggest you seek advice from a professional financial advisor.

5. Introduction • About 1/3 of Canada’s 33 million people are born between 1946 and 1962. Canadians approaching retirement represent the fastest growing demographic in the country (Vancouver Sun). • Only 1/3 of the older workers are worried about whether they’ll have adequate income when they leave the workforce (Stats Canada). • The remaining 2/3 are under the delusion they’ll be “air-tight” upon retirement. • Demographics raise some concern: more seniors than ever (1 in 7 a senior in 2006; 50 years ago, 1 in 14 was a senior).

6. Introduction contd. • Committee Members:For the Board: For the Union:Michelle Daycock Tom MacDonaldGail Dowler Stan MarshallChris Nicolls Bruce RichardsonKimberleyWakil Irene SchoemakerFor the RetireesBetty Bolton

7. Introduction contd. • Professional Organizations- Aon Hewitt- RBC Dexia- Barkman and Tanaka- Lawson Lundell and Lawson- Investment Companies Aberdeen – global equities Fidelity Investments Pyramis Trusts – Canadian equities and bonds

8. What do I need to know?

10. General Pension plan background • Our Pension Plan is a defined benefit Pension Plan • Written contract by which the employer and employees are required to make monetary contributions with a view to provide employees with retirement income. • The amount of your pension is set in advance according to a precise formula. • The amount of the contributions is determined by the actuary who carries out the Plan’s actuarial valuation. • You know in advance the amount of your retirement pension • In general, the amount corresponds to a percentage times the years of pensionable service times the average of the highest three consecutive years’ earnings.

11. General pension plan background • The Plan began in May, 1955 and has been amended from time to time since then. The Plan Text was re-written, almost in its entirety, in 1996 to conform to the Pension Benefits Standards Act (British Columbia) and the Income Tax Act (Canada). As a result, you will find references to post December 31, 1996 and pre January 1, 1997 throughout the Plan Text. The last amendment occurred in January, 2011. • A summary of the Plan Text is contained in the pamphlet found on the Pension website entitled “The Retirement Plan for Non-teaching Employees”.

12. General pension plan background • Effective January 1, 1987, participation in the Plan became compulsory for all new employees: • You are eligible to join the Plan if you are employed by the school board as a non-teaching employee and meet Plan criteria. • You must join the plan on your date of appointment if you are appointed on a permanent basis to a permanent position and work at least 20 appointed hours per week. • As of January 1, 1998, as a casual worker or part time employee, you became eligible to join if you have completed two consecutive calendar years of employment and have received salary of 35% or more of the YMPE ($16,905 in 2011) in each of the two calendar years. If you choose not to join when you are first eligible, you can still join at the beginning of any subsequent period.

13. What contributions can I make to the Plan?

14. How much do I contribute to the plan? • Employee required contributions to the Plan are:- 4.9% of annual earnings up to the YMPE- 6.6% of annual earnings over the YMPE • In 2013 the YMPE (years’ maximum pensionable earnings under Canada Pension) is $51,100

15. How much does the board contribute to the plan? The most recent complete valuation is as of December 31, 2011. This valuation requires that the Board contributes at a rate of 9.13% of covered payroll which includes: • 7.93% for benefits earned in the year by members • 1.2% administration allowance • The Board also pays 50% of the cost of retiree health benefits

16. May I make additional voluntary contributions?

17. Contributions during a leave of absence

18. May I discontinue contributions?

19. Definitions you need to know

20. PENSIONABLESERVICE & EARNINGS • Pensionable service is a measure of the time you have been contributing to the Plan and does not necessarily have a direct relationship to your length of service with the Board nor with your seniority. • Pensionable earnings are the earnings on which your contributions and pension are based.

21. Pensionable service & earnings – contd. • Pre-January 1, 1997Each calendar year of participation in the Plan was considered as a year of pensionable service. This generally included leaves of absence.Your pensionable earnings for this period are your T4 earnings, excluding taxable benefits and allowances.

22. PENSIONABLE SERVICE & EARNINGS – CONTD. • Post December 31, 19961500 or more hours in a calendar year counts as one year of pensionable service and your pensionable earnings are your T4 earnings, excluding taxable benefits and allowances, and lump sum payouts when leaving the Board.Less than 1500 hoursPensionable service is calculated as a percentage of 1500 hours, but your pensionable earnings are grossed up by that same percentage, so your pensionable earnings would be as if you worked 1500 hours.

23. WHEN CAN I RETIRE ????

25. When can I retire on pension?

26. What $ would I receive (unreduced pension)?

27. What $ would I receive (reduced pension)?

28. What $ would I receive (reduced pension)?

29. Pension payment options: what are they and what do they mean?

30. Pension payment options…cont’d

31. Do pension payment amounts change after pension commencement?

32. HEALTH BENEFITS • Currently a retiree may elect coverage under the basic Medical Services Plan of B.C., as well as extended health and dental plans in B.C. Half the premiums are paid by deduction from the retiree’s monthly pension cheque; the other half is paid by the Board. • Effective July 1, 2002, Plan members retiring can elect to take benefit coverage only at time of retirement or upon involuntary loss of coverage at a later time. • Current premium rates are on page 8 of your worksheets.

33. Reciprocal service Effects of Reciprocal Agreements • The Plan is party to reciprocal arrangements with Public Sector Plans of B.C. (Municipal, Teaching, College, Public Service) • Importance of April 1, 2004 date to participants.

34. BEFORE YOU WRITE THAT LETTER! • Monthly Expenses – be realistic • Projected monthly income – pension (calculator @ SD43/Resources/Pension/Links), CPP, OAS, other • Reduction in pension benefit? • Long term service payouts – seniority?

35. It’s a go!!! • Write the letter to Human Resources!Make sure you give adequate notice!Generally, it is recommended that your retirement date is close to the end of the month because:- pensions are only paid for complete months|- pensions are deposited in your bank account on the 1st of the month

36. WHAT HAPPENS NEXT – PENSION? • Aon Hewitt completes all calculations • You will receive an information package from Aon Hewitt showing:Option A – spousal benefit with 60% to survivorOption B – spousal benefit with 75% to survivorOption C – spousal benefit with 100% to survivorOption D – single lifeAll with no guarantee, 5 year guarantee or 10 year guaranteeAll options are further broken down into pre-January 1, 1997 and post-December 31, 1996Choose wisely – there is no going back!

37. FORMS TO BE SIGNED RE PENSION • Pension Option form • Bank deposit form • TD1 Income Tax forms • Acceptance or declining of health benefits form • Medical Services Plan application • Extended Health and Dental Benefits formReturn completed forms either directly to Aon Hewitt or via the Board Office.

38. BENEFITS ON LEAVING SERVICE OF THE BOARD If you meet eligibility rules, payroll will contact you regarding the following: • Long term service • Sick Leave Gratuity • Vacation Pay • Banked Overtime • Pension Plan Voluntary Contributions

40. Termination of employment Options available if non-vested: • Option A: Lump Sum Payment • Option B: Delayed Payment • Option C: Transfer to New Employer’s Plan • Option D: Deposit into an RRSP Options available if vested: • Option A: Deferred Pension • Option B: Deposit Transfer Amount into RRSP • Option C: Use Transfer Amount to purchase Annuity • Option D: Transfer to New Employer’s Plan

41. Disability pension You are entitled to a disability pension if: • You are under age 60 and have 10 years of retirement service • You have become totally and permanently disabled as determined by the Committee and eligibility for Canada Pension Plan disability • You are unable to perform any suitable job AND • You have been disabled for at least four months

42. DISABILITY BENEFIT If you qualify, you receive an immediate pension for life. The calculation is similar to that of an unreduced pension with following adjustments: • An addition of 50% of pensionable service you expected to accrue between pension commencement date and age 60; • No bridge pension to age 65; • No reduction for early retirement

43. What happens to my pension if I die before retirement?

44. potential adjustments to pension benefit payments

45. Potential adjustments to pension plan payments…cont’d

46. Other pension-related items • Family Relations Act • www.qp.gov.bc.ca • Pension “vesting” • Vesting means you are eligible for pension and occurs after 2 years of Plan membership, or, if you were a plan member before 1998, after 5 years continuous employment • Deferred Pension • Beneficiary designation

47. Where can I go for more information?

49. Information sources • Through your home computer: • Go to the Pension website • Access your SD43 website • Click on Resources>>Pension>>Links • Go to the Pension Calculator website • www.aoncanada.com/SD43 • To login, ensure you know your personal SD43 number and PIN provided on your last Annual Pension Statement • Access other websites • www.cra-arc.gc.ca • www.servicecanada.gc.ca • www.qp.gov.bc.ca • www.pensionsbc.ca