MyOPS Announcment13 November 2008Long Term Funding Study Reveals Increasing Cost of PensionsThe Ontario Pension Board, the administrator of the Public Service Pension Plan (PSPP), recently conducted a long term funding study of the plan and found that current contributions (including both member and matching employer contributions) are not sufficient to cover the cost of providing pension benefits over the long term by about 1.4% of salary. The study revealed that the overall cost of providing your pension is increasing due to demographic shifts, such as people living longer and recent interest rates that are at historically low levels. Contribution Rate Increases Required for PSPP Members In order to deliver on its future pension promise, the government, as plan sponsor, has taken steps to strengthen the plan by increasing contribution rates for both employees and employers. The new contribution rate will be phased in over two years to help make the increase manageable to pension plan members. The Ontario Pension Board has calculated the impact of the increase on the average employee and determined that once the change is applied, on average, plan members will be paying approximately 7.8% of salary to the pension plan. This is an average increase of 0.7% of salary, up from 7.1%. The new contribution rate for 2009 is:
The new contribution rate for 2010 onward is:
Members of the Public Service Pension Plan Ontario Public Service employees who are not represented by OPSEU are members of the Public Service Pension Plan. Specifically, the following employee groups are members of the Public Service Pension Plan:
Strong Pension Plan, Good Value The Public Service Pension Plan has not raised its contribution rate since 1990 and it should be noted that while there is a change in contribution rate, pension benefits are being maintained. The PSPP continues to be a pension plan that provides good value to its members and is on solid ground financially. Even with this increase, the PSPP contribution rate remains lower than most Ontario public sector pension plans. Questions? The Ontario Pension Board has assembled a team of staff who are ready and waiting to answer any questions that you may have about your pension. Please take advantage of the information and assistance that the Ontario Pension Board can offer to help you understand what these contribution rate changes mean to you. The Ontario Pension Board can be reached by phone, fax, email or internet at: Phone: 416-356-5035 or 1-800-668-6203 |