Message from VPA to Academic Pension Plan Members (June 2021)
This email is sent on behalf of Catherine Dauvergne, vice-president academic and provost.
Dear SFUFA Academic Pension Plan Member,
Thanks again for attending the pension plan information sessions held last week (on June 14 and 17). We hope you found these events valuable and helpful as we move forward with the transition from the Academic Pension Plan (APP) to the BC College Pension Plan (BCCPP) to take effect on July 1, 2021. If you weren’t able to attend a session, view the recorded sessions.
Now that it’s full steam ahead with the transition to the BCCPP, we wanted to share some changes worth noting, what happens next and what information is coming your way, as well as resources available to you.
First, we want to remind you of some of the key differences between the APP and the BCCPP. The BCCPP is a multi-employer defined benefit plan, which is administered by the Pension Corporation of British Columbia. Once SFU joins the BCCPP, your pension benefits will be subject to the rules of the BCCPP, which include the following:
· Employees must contribute to the plan at a rate that is determined by the BCCPP Board. That rate is currently 10.24% of pensionable earnings.
· There are differences in the way that contributions are collected and remitted when on leave or during periods of reduced pay. In general, during those periods, contributions to the BCCPP would be based on actual salary rather than nominal salary (i.e. annualized salary), and pensionable service may be reduced. However, the BCCPP does allow its members to purchase the uncredited pensionable service (i.e. so that total pensionable service reflects your nominal salary). SFU would contribute towards your purchase of pensionable service, provided you purchase the uncredited portion in full. More information on leaves can be found through the BCCPP’s Guide for Plan Members.
As a condition of joining, the BCCPP stipulated that a transition cost must be collected and remitted to ensure that existing members of BCCPP were not disadvantaged. This includes an Incremental Contribution Rate (ICR) of 1.68% of pensionable earnings, over and above the regular employee and employer contributions. According to the agreement, this ICR is to be split in two, with 0.84% being reported as paid by employees and 0.84% being reported as paid by SFU. The reporting of these contributions is subject to BCCPP rules, but the method of collecting and remitting these amounts from SFUFA members is governed by the Collective Agreement.
While the transition will be effective July 1, 2021, it will take a few weeks for the full impact of the changes to appear in your paycheque and on your paystub. Watch for the following over the next few pay periods:
· On your first paystub after July 1 (on July 2), you will see SFU’s last contribution to the APP reported.
· On the following paycheque (on July 16) you will see the employee contribution to the BCCPP deducted from your pay retroactively for the period from July 1st. As noted above, the employee contribution rate is 10.24% and SFU’s contribution rate is 10.34%, which will also be reported in your paystub.
· You will also see a deduction of 0.84% reflecting your share of the ICR indicated above. However, to offset this deduction, you will also see incremental earnings in the same amount. Your total contributions of 11.08% (10.24% regular contributions plus 0.84% ICR) of pensionable earnings will be tax deductible.
· SFU’s total reported contribution will be 11.18% of pensionable earnings, being the regular contributions of 10.34% and the ICR of 0.84%.
As mentioned above, your contributions to the BCCPP will be tax deductible. Each year, the BCCPP will prepare a Pension Adjustment representing the total value of benefits you accumulated in the BCCPP. You will receive a separate slip from BCCPP at year end for your tax filing purposes. Your RRSP room for the following year will reflect that Pension Adjustment and will be lower by such Pension Adjustment. Be sure to confirm your RRSP room each year before contributing to your RRSP.
If you are currently on leave, contact [email protected] for specific details on the transition. If you are currently making voluntary contributions to the APP, note that those contributions will stop on July 1. However, you will be allowed to make voluntary contributions to other Sun Life products including RRSPs. If you decide to start contributing to an RRSP or increase your contributions to an RRSP, please monitor your RRSP room to ensure that you do not exceed the limits. You can enroll in Sun Life products or change your contributions by visiting the Sun Life website at: www.mysunlife.ca or contacting Sun Life’s Customer Care Centre at 1-866-733-8612.
Lastly, an update on the purchase of past service. Once the transition is completed and the BCCPP’s actuaries have assessed the impact of the SFU employees on the BCCPP overall, they will be able to turn their attention to past service calculations. We anticipate that the initial opportunity to purchase past service will open up some time in early 2022. Each situation is unique and the actuaries will need to compute the cost of past service applicable to you, but in the meantime, they have provided a schedule that will give you an indication of the anticipated cost to assist in your financial planning. Other things you can do or look for in the meantime:
Visit the SFU Pension Plan website at https://www.sfu.ca/human-resources/faculty/sfu-pension-plan-for-members-of-the-academic-staff-transition-up/Academic-Pension-Transition.html
for more information and transition resources (you will need to login with your SFU credentials).
· Consult the Guide for Plan Members that contains valuable information to help you learn more about BCCPP plan membership and your pension.
· You will receive information from Sun Life by September to describe your options to either leave your funds in the APP, at least until you can elect to purchase past service, or to transfer your funds out of the APP.
· We recommend that you seek advice from a trusted financial advisor for guidance on your specific situation.
We recognize that even after attending/viewing the information sessions, reviewing the Guide and information packages as well as other resources, you may still have questions. If that’s the case, please feel free to email [email protected]. They will contact the most appropriate partner to get back to you.
Thank you again for your continued patience as we do our utmost to ensure as smooth a transition as possible for you.