Glossary of Terms
A legally enforceable, but incomplete agreement between parties that identifies the basic fundamental terms that are expected to be or have been agreed to.
A temporary monthly amount paid in addition to the lifetime pension. It is payable from your retirement date until you turn 65 or die, whichever comes first.
If a member has always worked full-time, their contributory service will be the same as their pensionable service. A member earns one month of contributory service for each month they contribute even if they work less than full-time during that month. Contributory service will be a factor if a member decides to retire early under the current pension rules.
An increase to your monthly pension payment. COLA is based on the Canadian consumer price index and is applied to your pension in January each year if there are sufficient funds in the plan’s inflation adjustment account (IAA). COLA is granted at the discretion of the board after considering all relevant factors including the sustainability cap. Granting a COLA for a particular year is not guaranteed but, once granted, becomes part of your lifetime pension.
Make plan changes that will not require additional funding to the plan (though specific groups within the plan may see slight adjustments to their required contributions).
Make plan design changes that focus on improving equity amongst members.
A formula where accrual rates (the percentage of earnings that a member earns as a lifetime pension benefit for each year of service) are based on the members’ overall pensionable salary, and not components of that salary that are above or below the year’s maximum pensionable earnings (YMPE).
The members that are not in Group 2 or 5. Most (97%) Municipal Pension Plan members are in Group 1. This is also referred to on this site as general members or membership.
Group 2 is for police officers and firefighters not in Group 5. Members in Group 2 have an earlier normal retirement age because they work in public safety. There are approximately 340 members in this group.
Group 5 is for police officers and firefighters. Members in Group 5 have an earlier normal retirement age because they work in public safety. Members and employers pay higher contributions than Group 2 in order to have a higher accrual rate. They make up 3% of total membership and are referred to (with Group 2) as public safety members or membership.
Rebalancing reflects the true cost versus the previously estimated cost of providing basic pension benefits for each member group. Over time, imbalances may occur between member groups, which may require adjustments to each group’s contribution rates. The GCRRA will “smooth” the impact of these imbalances, as they arise, to decrease the frequency at which rate adjustments need to occur and mitigate the magnitude of adjustments when they do occur.
A guarantee period is how long a member’s pension will be paid to a beneficiary. If a member dies within the guarantee period, the remaining benefit will be paid to the member’s named beneficiary(ies).
The average of your highest years of pensionable salary. To calculate this average, the plan currently uses the best five years of full-time- equivalent earnings from your entire time with the plan. When you retire, your pension is based on a formula that uses your highest average salary.
An account that holds a portion of member and employer contributions and earns investment income. It funds cost-of-living adjustments that may be granted on top of retired members’ monthly pension income to help offset the effects of inflation.
The legal and legislative framework of the Municipal Pension Plan, agreed to by the plan partners.
One of the proposed plan design changes. The proposed change is to establish a new health benefit trust. The trust would be used to support funding for post-retirement group benefits. It would be seeded by an initial transfer of funds and sustained by ongoing funding.
Pensionable service is the member’s actual working time as a member of the plan. A member earns one month of pensionable service for one full month of full-time work. If a member works half-time, they receive half a month of pensionable service per month worked.
The plan partners are the plan employer and plan member representatives that share the responsibility of managing the Municipal Pension Plan. Together, the plan employer partner is the government of BC and the Union of BC Municipalities. The plan member partner is the Municipal Employees’ Pension Committee. Decisions regarding plan redesign require an agreement of the plan partners.
The working group comprised of designated partner representatives who have been working on elements of the Municipal Pension Plan. The PPWG, with the support of the project team (including the executive director, project manager, pension corporation staff and expert actuarial and legal advisors), has been assessing plan design options.
Refers to changes that do not affect any vested entitlements, or benefits that have already been nominally earned.
To make changes on a go-forward basis only and without affecting benefits on service earned.
An account set up to help protect active members and employers from future contribution rate increases. The RSA reduces future contribution rate volatility for members and employers by mitigating future contribution rate increases.
If you apply for a pension on or after your earliest retirement age, but do not meet the age and contributory service requirements for an unreduced pension, your pension (and bridge benefit, if applicable) will be reduced.
Once an employee’s age and years of contributory service total 90, the employee is eligible to retire with a full pension. The rule of 90 allows a member who meets this criteria to retire without a reduction to their pension even though by retiring early they will receive their pension for a longer period of time. Note: Members in Groups 2 and 5 (firefighters and police) can retire with a full pension if their age and years of service total 80 (“Rule of 80”).
An additional monthly payment you may purchase to increase your monthly pension payments until you turn 65 or die, whichever comes first. The annuity cost lowers the amount of a member’s lifetime pension.
Once you have made a contribution to the pension plan, you are vested. This means you will be entitled to receive a pension based on the defined benefit formula.
A salary limit set by the federal government each year for the purposes of determining the maximum annual contributions workers make to the Canada Pension Plan. It is presently used as part of the pension formula to calculate your contributions and pension benefits. In 2020, it is $58,700.