IMPORTANT: Message from President Parker re: 2.33 Pension
Posted On: Oct 03, 2013
As you are all aware, as of the signing of the last contract, we negotiated the move to the new 2.33 pension. This pension accrues at 2.33% per year instead of the 2% Group 2 pension. These portions are both "defined benefit" pensions. The Group 5 pension also came with a Special Agreement portion that was a "defined contribution pension" (2 ½ / 2 ½)
With moving to the 2.33% there was a saving of .56% on both the employer's side and the employee’s side. Although, we believed the entire savings should have returned to our members, we were able to negotiate the realization of .28% (employer's side) + .56% (employee's side). As part of our agreement, these funds (.84% total) will be invested with Manulife Financial to offset your retirement benefit costs in the future.
To facilitate this switch, we had to make an application to the Municipal Pension Board to allow the move to the 2.33 Pension and cease the Group 2 + SA Pension. The application was sent in December 2012, and was given final Board approval in June of 2013.
This switch was made retroactively to January 1st, 2013, although the new pension contributions only recently began coming off of your cheques (Pay Period 17, August 15, 2013).
As mentioned, we agreed (with City/MPP-BC) to start the 2.33 pension retroactively back to January 1, 2013. Thus, the City owes us .28% savings on Gross Pensionable earnings since January 1st, and we owe .56% on the same amount to our Manulife fund. These amounts will be transferred to Manulife Financial for you.
So how are we going to pay for it retroactively?
Next paycheque, October 10th, you'll notice that your cheque will be short this amount (.56% of your gross pensionable earnings). As an example, a 10 year firefighter will be short between $285-$325 on their next cheque ($284.95 + $30-$40 tax). This is a one-time deduction to make your owed contribution to Manulife.
Special Agreement Monies:
At the same time, you will receive a second cheque that represents your Special Agreement Over Contribution monies. This was won in arbitration in 1994. That said, any extra money above the maximum pensionable earnings was to return to our members. The city has kept this money in trust for each and every member since the arbitration, and it is presented to members upon retirement. This amount will be paid out in the form of an actual cheque that you will need to pick up. Stay tuned for exact details on where to pick up.
Example- a 10-year firefighter will get reimbursed approximately $1600. Thus, this firefighter will be short upwards of $325 on their direct deposit paycheque, but will receive a check for around $1600.
There are 13 members (newest) that have not been in an special agreement over contribution state long enough to cover the .56% retroactive payments. Those people will owe from $216-$250. The city has agreed to spread this amount over the next 3 paycheques. This would be the equivalent to all of those members who had to buyback their first 6 months of pensionable time.
If you have any questions, please don't hesitate to call one of your executives.