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December 19, 2002
Attention: Members of the Public Service Pension Plan
Public Service Pension Plan benefit improvements begin April 1, 2002
The Public Service Pension Plan has announced two benefit improvements for plan members effective April 1, 2002.
If you are an active member of the Public Service Pension Plan and retire on or after April 1, 2002, your pension could be improved by as much as 4.6%.
The first improvement changes the normal form of pension to a single life annuity guaranteed for ten years. The current normal form is single life with no guarantee. In order to guarantee the benefit for 10 or more years, you are required to take a deduction in your monthly benefit. Without a guarantee period or spousal benefit, your pension benefit would cease upon your death. Now you will automatically be provided with a minimum ten year guarantee period. Your benefit will be paid to a beneficiary or your estate for a period of up to ten years if you die during the ten year period. Other options, like the joint and last survivor annuity remain available to new retired members.
The second benefit improves your pension after age 65. The current benefit provides a 2% pension up until 65 years of age. After age 65 the benefit formula includes a calculation of 1.3% pension for earnings up to the Year’s Maximum Pensionable Earnings ($38,300 in 2001). The new formula will be calculated based on 1.35% after age 65.
If you are planning to retire soon, please consider these improvements before making your decision. These benefits only apply to ACTIVE members of the PSPP.
These improvements resulted from the negotiations for joint trusteeship. The BC Government Employees Union and the provincial government agreed that the surplus in the plan would be used for benefit improvements and lowering of employer contribution rates.
The change involving CPP does have some income tax implications Further information will be provided to members in 2002 in time to take any action.
FYI: This does not apply to the majority of nurses who are covered by the Provincial Collective Agreement and are members of the Municipal Pension Plan. It applies only to those nurses who are direct employees of the provincial government (Public Service) and to those former Public Service nurses who opted to remain in the Public Service Pension Plan when they transferred to the health sector.
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