Board Communique: February 6, 2019

Contribution rates will increase April 1, 2019; potential for second increase later in year.

As of April 1, 2019, contribution amounts for members and employers are going up 90 cents for every $1,000 of salary to strengthen the inflation adjustment account (IAA). This is one of potentially two contribution increases in 2019.

Funded through member and employer contributions and investment income, the IAA is used to provide cost-of-living adjustments (COLAs) to retired members. In 2014, the plan partners¹ agreed to strengthen the long-term health of this account by requiring IAA contribution increases to be in step with negotiated salary increases in the college sector. For every annual pay increase of one per cent or more, an amount equivalent to one-twentieth (five per cent) of that increase will go to the IAA as employer contributions, with matching member contributions.

These contribution increases will come into effect April 1 of each year with negotiated salary increases in the college sector of one per cent or more, including any economic stability dividends, which are determined each November. Yearly increases will continue until it’s possible to pay full cost-of-living indexing on a sustainable basis. COLAs are not guaranteed; however, once granted, they become part of the lifetime pension.

The economic stability dividend of 0.75 per cent for 2018 and the previously negotiated wage increase of 1.00 per cent (for a total salary increase of 1.75 per cent) came into effect February 1, 2019. This means contribution rates (rounded up to the nearest hundredth of a per cent) for all members and employers will increase by 0.09 per cent—or 90 cents per $1,000 of salary—starting April 1, 2019.

Potential second increase later in 2019

Contract negotiations to replace agreements expiring in spring 2019 are not yet complete for the majority of bargaining units that participate in the College Pension Plan. If further salary increases are negotiated for 2019, additional increases may be required; this information will be announced as soon as it is available.

Contribution rates effective April 1, 2019, as percentage of salary

What you need to do

Active members

• No action is required.

Employers

• Please review your payroll and make the necessary changes to ensure contributions follow the plan rules.
• An article about the contribution rate change will be included in the March 2019 Employer Newsletter.

1 Trustees are nominated and appointed by the four plan partners: the British Columbia General Employees’ Union, the Federation of Post-Secondary Educators of BC, the Post-Secondary Employers’ Association and the provincial government