Pension Plan

1
Pension Plan

• Overview

2
Contributions
3
Contributions
4
Hybrid Retirement Benefit

• There are two ways the actuary will calculate the
  pension
• Based on money purchase account This is
  calculated based on the amount of contributions
  you and the university have made as well as
  interest accrued on this account.
• Based on Specific formula in pension
• You receive the one that will give you the
  highest pension

5
Pension formula

• Years of pensionable income x 1.3 x YMPE over
  best 5 years (up to 42100) years of
  pensionable income x 2 x earnings above 42100.
• Note that if you chose to retire before the age
  of 62 then this would be reduced by 6 per year.
• The money purchase plan is not reduced.

6
Pension formula examples

• Sally starts working at 18 and joins the pension
  plan at 25. She works until the age of 62. She
  earns 29500 in her best 5 years.
• Formula
• Years of pensionable income 62 25 37 years.
• 37 x 1.3 x 29500 14190
• Retiring at 60
• 35 x 1.3 x 29500 - 12 11812
• (therefore there is a reduction of 1610)
• (monthly payments would be reduced by 134)

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Money purchase example

• Her money plan as accrued 217 x 12 X 37
  96348
• Lets assume it earned 10 interest, her plan
  would hold 105983.
• Actuaries will calculate a pension which might be
  higher than the formula calculated at retirement
  of 60. These amounts are published and
  distributed to members on a yearly basis

8
Pension formula example

• Barb starts work at 20 and enters the pension
  plan immediately. She retires at 62. She earns
  59500 in her best 5 years.
• Years of pensionable service 62 20 42
• (42 X 1.3 X 42100) (17400 x 2 x 42)
  37603
• Barb wishes to retire at 60 instead
• (40 X 1.3 x 42100) (17400 x 2 x 42) 12
  31515
• (therefore there is a reduction of 4287)
• (monthly payments would be reduced by 357)

9
Money purchase example

• Her money plan as accrued 479 x 12 X 40
  229920
• Lets assume it earned 10 interest, her plan
  would hold 252912.
• Actuaries will calculate a pension which might be
  higher than the formula calculated at retirement
  of 60. These amounts are published and
  distributed to members on a yearly basis

10
Retirees Health Benefit Program

• Cost to LUSU employees
• Assuming employee retires at 62 and has been in
  the plan for 15 years (minimum amount of years
  you must be in the plan to receive the benefit)
• Single 2.32 x 12 months X 15 years 417
• Family 6.09 x 12 months x 15 years 1096.20
• Cost to LUFA employees
• Assuming employee retires at 62 and has been in
  the plan for 15 years
• Single and Family 10 x 12 months x 15 years
  1800

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Retirees Health Benefit Program

• LUSU
• Benefits received by retiree assuming male lives
  to 78 and female lives to 81
• Single
• Male 428.16 x 16 years 6850.56
• Female 428.16 x 19 years 8135.04
• Family
• Male 856.44 x 16 years 13703
• Female 856.44 x 19 years 16272.36

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Retirees Health Benefit Program

• LUFA
• Benefits received by retiree assuming male lives
  to 78 and female lives to 81
• Single
• Male 628.20 x 16 years 10051.20
• Female 1056.48 x 19 years 11935.80
• Family
• Male 856.44 x 16 years 16903.68
• Female 1056.48 x 19 years 20073.12

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Retirees Health Benefit Program

• Eligibility
• As long as a member pays into the plan for 15
  years and is 55.
• Exceptions for those who joined in 1998 and have
  less than 15 years.
• Length of benefit
• As long as you live.
• Dependent will continue to receive the benefit
  for two years after the members death.

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Retirees Health Benefit Program

• Payment of benefit
• The employer will reimburse the retirees annually
  at a date that is convenient to the retiree.
• Yearly payment of private coverage
• Yearly or monthly payments of receipts.