Pension Life - Summer 2022
2021 valuation leads to better inflation protection
A message from the trustees
We’re proud to announce that despite global economic challenges over the last few years, the results of the College Pension Plan’s latest actuarial valuation are positive.
The valuation, measured as at August 31, 2021, shows the plan’s basic account (the account from which member pensions are paid) has actuarial assets of about $6.4 billion and actuarial liabilities of about $6.2 billion. The plan has a surplus of slightly more than $200 million and has more money than is needed to pay the pensions of current and future retired plan members.
The valuation also shows that the plan’s inflation adjustment account (IAA) is healthy and sustainable. The IAA is the account from which non-guaranteed cost-of-living adjustments (COLAs) for retired members such as you are paid. The good news is that in an environment of high inflation, we can continue to grant COLAs that match the full annual increase in the Canadian consumer price index. We will reassess the IAA’s financial position at the next valuation.
The results demonstrate the strength of the plan’s investment principles and policies as well as its governance structure, all of which help the plan meet its objective of providing retirement security for post-secondary workers throughout the province.
What is the plan doing with the surplus?
We use the College Pension Plan Joint Trust Agreement (JTA) to guide our decision on the use of the surplus. The JTA was established by the plan partners (BC General Employees’ Union, Federation of Post-Secondary Educators of BC, Post-Secondary Employers’ Association and the Province of BC) as the governance framework for the plan. It gives us direction on how to manage the plan.
The JTA directs us to move half of the surplus to the IAA.
The other half of the surplus will be moved to the plan’s rate stabilization account (RSA). Funds in the RSA can be used to offset contribution rate increases in the future, in the event of unfavourable conditions. There will be no change to member or employer contribution rates.
What is a valuation?
A valuation is the most important measurement of plan health. Using a series of economic and demographic assumptions, the valuation determines how much money the plan needs to pay current and future pensions.
An independent actuary—a professional with specialized training in financial modelling, probability theory and risk management—performs a valuation at least every three years.
The next valuation will be measured as at August 31, 2024.
For more information, please read the valuation report.