Removing the Rule of 90 on Future Service.
The rule of 90 means being eligible for an unreduced pension if a person’s age, plus years of contributory service equals 90.
For example, if you started working at the age of 20, and worked for 35 years, you would be 55 years old, have 35 years of service and this would equal 90. Less than a quarter of members qualify for full or partial use of the Rule of 90 before age 60 (at which point one only needs two years of contributory service to receive an unreduced pension). Generally, it requires that someone start working at a young age and remains in the same plan or transfers service from another public sector plan for the duration of their career. Of those members, only about 7% retire with an unreduced pension. When a member benefits from the rule of 90, this represents a cost to the plan, as they will receive a higher pension for a longer period of time.
This cost is paid by all members and their employers through contributions to the plan, despite the majority of members not benefiting from the Rule of 90. One of the primary objectives of the plan redesign is to improve equity among members. By eliminating the Rule of 90 on future benefit accruals (on service after January 2022) and transferring the value of this benefit to a higher accrual rate, the benefits become more equitable for all plan members.
Those members that use the Rule of 90 after January 1, 2022 would only have a reduction applied on the service accrued after January 1, 2022 (the date when the plan redesign would take effect).
The Rule of 90 will still be available for historical benefit accruals. For example, G1 members, who would have qualified for full or partial use of the Rule of 90 except for the proposed changes, will still be able to use the rule with respect to service accrued prior to 2022.