During Nurses' Bargaining Association 2019-2022 contract negotiations, BCNU negotiated a mechanism to study important options on the future of members' pensions.
Nurses are counting on retirement security. A review is now ongoing to study pension governance options that would put nurses in control. A desire for greater control over decisions about nurses' pensions and their retirement future will guide the work of the NBA Pension Review Committee.
Answers to the questions below provide more details about the governance review process.
Changes are occurring within public sector pension plans that are negatively affecting BC's nurses.
This first became apparent in 2018, when the Public Service Pension Plan (PSPP) made substantial plan design changes by increasing the number of years that some 3,000 registered psychiatric and community nurses who are members of this plan must work to get an unreduced pension.
Later in 2018, changes within the Municipal Pension Plan (MPP), to which the vast majority of BCNU members belong, saw this plan providing less than full inflation protection to its members in 2019. This meant their pension income did not keep up with the cost of living. BCNU approached the MPP board of trustees to propose that nurses receive full inflation protection by accessing the Nurses' Bargaining Association Retiree Benefit Fund that was set up in 2008 for the very purpose of providing improved inflation protection and post-retirement group benefits. However, the MPP did not and will not allow nurses to receive this additional inflation protection, and nurses today receive less protection than they would have previously.
Unfortunately, despite having about one-quarter of the assets in the MPP, nurses are currently unable to prevent such changes because they only have one vote on the MPP's 16-member board.
The MPP board has now announced substantial plan design changes similar to those made by the PSPP in 2018, all without the support of BCNU. These changes are scheduled to take effect in 2022.
This is unacceptable. We believe it's time that nurses were given a say about how their pensions are managed. This process begins with the negotiated nurses' pension governance review that will give all nurses in the Nurses' Bargaining Association, both working and retired, an opportunity to provide meaningful input on the future of their pension. The process will conclude with a province-wide vote where nurses will have the opportunity to consider a recommendation that may allow them to avoid being affected by the MPP's proposed changes.
In April 2018, the Public Service Pension Plan (PSPP) dramatically changed its rules. Some 3,000 BCNU members are in the PSPP, and many of them saw their ability to retire in their 50s without a penalty disappear. People retiring at 55 could see their pension cut by as much as 31 percent compared to what they expected. The PSPP Board only approved the change in March of 2018 and as such, no nurse knew about the risk to their pension.
This announcement was made only after Nurses' Bargaining Association (NBA) pre-bargaining consultations concluded in January 2018. After the risk became known, and because there are over 38,000 nurses in the Municipal Pension Plan, a governance review became a priority for the NBA bargaining team, who believed it would have been irresponsible to ignore this new information.
The negotiated six-member Nurses' Bargaining Association (NBA) Pension Review Committee, which is made up of three NBA reps and three Health Employers Association of BC reps, is assessing several options that could better serve nurses' interests.
The committee will consider 3 options:
1) remain as is in the Municipal Pension Plan (MPP);2) form a separate nurses' group within the MPP; and 3) form a separate Nurses' Pension Plan.
1) remain as is in the Municipal Pension Plan (MPP);
2) form a separate nurses' group within the MPP; and
3) form a separate Nurses' Pension Plan.
An independent actuarial analysis has concluded that all options are viable. Unfortunately, public health measures related to the COVID-19 pandemic have delayed the work of the committee and made it difficult to meet with members.
BCNU expects to conduct information sessions for both active and retired nurses before conducting a vote that will allow all NBA members to assess the options in detail. This vote will happen in early 2021, before the MPP implements its plan design changes.
The Municipal Pension Plan (MPP) is one of four major public sector defined benefit plans in BC that is governed by its own board. The MPP is the largest and most diverse, with over 360,000 active, inactive and retired members. Members come from a variety of sectors across the province, including health care, municipalities, colleges and universities, and school districts.
Some 3,000 BCNU members also belong to the multi-sector Public Service Pension Plan (PSPP) that is dominated by provincial government employees.
Unlike teachers and college instructors who dominate their respective plans' membership and as a result have control over the governance of their own plans, nurses are one group within multi-sector plans that serve a range of workers and retirees with varying income levels and needs. This has meant that majority group members within the MPP and PSPP, and the unions that represent them, are able to shape the plans' direction and control decisions on issues such as inflation protection and retiree benefits.
For example, PSPP nurses were not consulted prior to that plan's 2018 decision to change rules that allowed members to retire with an unreduced pension at age 55. The vast majority of these members now have to wait longer to retire with an unreduced benefit. Any similar changes to the MPP can be approved by the plan's 16-member board, and only one member is appointed by BCNU. This means that the interests of lower-paid MPP members, represented by other unions, have the potential to trump nurses' interests, and, in fact, the proposed changes to the MPP do just that.
Recent decisions by the MPP board have also shown that this governance arrangement is putting MPP nurses' pensions at risk. In 2016 the MPP capped members' inflation protection. That cap is reviewed every three years and is currently set at 2.1 percent. The MPP would not allow nurses to access revenue from the Nurses' Bargaining Association (NBA) one-percent fund (also known as the Retire Benefit Fund) to provide full inflation protection. This meant that in 2019 retired nurses did not receive the full inflation protection they should have and saw the value of their pensions decline as a result.
BCNU had negotiated this fund, which diverted one percent of the 2008 NBA market adjustment wage increase, to provide members with better inflation protection and post-retirement benefits – entitlements public pension plans are not obligated to provide.
The impact of this cap on inflation protection cannot be overstated. If the 2.1 percent cap had been in place for the last 21 years, a nurse retiring in 1999 with a $2,000 per month pension would now have a pension that is $1,470 less per year than it would have been had their pension been fully adjusted for inflation.
Finally, nurses are not getting the service they deserve in the MPP, and they have continually reported errors that see them being credited with less than their full pensionable service.
It's for reasons like these that the NBA Bargaining Committee put pension plan governance on the bargaining table.
BCNU decided that we needed to have a review of the governance of nurses' pensions because nurses should have a meaningful say in any decisions that affect their pensions and their future.
No. Regardless of any governance changes, nurses' pensions would continue to be administered by the BC Pension Corporation and investments managed by the BC Investment Management Corporation.
Current retirees who are MPP members would also enjoy legal protections ensuring there are no reductions to their pension as a result of this process.
The pension governance review isn't about changing pension plan design. Rather, it's about changing the governance of nurses' pensions so that any future changes to plan design – including changes currently being proposed by the MPP – would be changes that work for nurses, and which ensure better inflation protection for nurses once they retire.
A Nurses' Pension Plan (NPP) would be for nurses and jointly governed by nurses and their employers. Its membership would be homogeneous – like the BC Teachers' Pension Plan – and its board would understand the complexities of nurses' careers.
And unlike the case with the Municipal Pension Plan (MPP), no motion could be passed by a Nurses' Pension Board without support from some BCNU-appointed trustees.
An NPP board, where half of the members are nurse-appointed, would give nurses an effective say on plan rules that directly affect nurses, such as their ability to enhance retiree benefits and secure better inflation protection – the key goals in Appendix Y of the Nurses' Bargaining Association collective agreement first negotiated in 2006.
If nurses remain in the MPP, they would be subsidizing other members of the plan by an average of more than $10 per pay period. An NPP, in contrast, would cost active members less money and be managed solely with nurses' interests front and centre.
Finally, an NPP would allow for the effective use of the Retiree Benefit Fund to improve inflation protection and group health benefits for retired nurses.
Retired nurses would move to the Nurses' Pension Plan (NPP) but would notice no difference to their pension payments. A new pension plan logo is the only difference retired nurses would see.
The Pension Benefits Standards Act would obligate the NPP to continue paying out the pension and the NPP legally cannot reduce any pension entitlement.
Inflation protection in the Municipal Pension Plan is not guaranteed and neither would it be in an NPP. However, in an NPP, retirees would have unhindered access to the Retiree Benefit Fund that was designed to help protect retired nurses against the effects of inflation. As a result, retired nurses would get better inflation protection.
An NPP could also allow nurses to efficiently access the Retiree Benefit Fund to enhance retiree benefits.
All nurses would move into the Nurses' Pension Plan (NPP). There is some chance that the Retiree Benefit Fund (the one-percent fund) would be integrated into the NPP as it would be more efficient. LPNs are currently not contributing to the Retiree Benefit Fund. An analysis would determine how much LPNs should be contributing to the fund so that they, RNs and RPNs are all treated fairly. If LPNs do not want to contribute the necessary amount, they would not have access to the improved inflation protection and group health benefits the Retiree Benefit Fund provides.
BCNU members have been and will continue to be engaged and consulted throughout this process.
The agreement between BCNU and health employers acknowledging that nurses should have control over decisions about their money and their pensions resulted from the last round of negotiations between the Nurses' Bargaining Association (NBA) and health employers. Details of the proposed pension governance review were shared with members at worksite and regional meetings prior to the January 2019 ratification of the NBA contact.
Details of the governance review and information about the issues that led to its negotiation were also published on the BCNU website and in Update Magazine. Following successful ratification of the NBA contract, members have been provided with updates and information as the union leadership received it at a series of regional education meetings held in the fall of 2019 and in subsequent articles in Update Magazine.
In addition, the pension information workshops that BCNU regularly provides to members have also provided information about the MPP governance review process.
Retired members also received information on the review process by letter mail in December 2019.
The Nurses' Bargaining Association Pension Review Committee would make a recommendation on the best option for the governance of nurses' pensions. After the recommendation is made, BCNU will make presentations for both active and retired members at information sessions around the province on the relative merits of the various options for the future of their pension plan. These sessions will be held online if public health restrictions related to the COVID-19 pandemic continue to prevent in-person gatherings.
The committee could only recommend a Nurses' Pension Plan if:
Earlier this year, an independent actuary contracted by the MPP confirmed these four conditions have been met.
Information sessions were planned to begin in 2020 that all nurses in the NBA, both retired and active, could attend. Unfortunately, public health measures have delayed the confirmation of dates and times.
If there is a recommendation to change from the status quo, nurses, both active and retired, would have the opportunity to a vote on the recommendation and the vote would be conducted electronically.
The Municipal Pension Plan (MPP) currently has a Rule of 90, which means that if a member's age and years of service add up to at least 90, they can retire without any penalty. For example, a nurse starting in the MPP at age 22 could retire at age 56 without being penalized.
Unfortunately, the MPP is planning to eliminate the Rule of 90. As a result, if nurses stay in the MPP, the nurse in the example above would lose approximately 25 percent of their expected pension income.
Nurses who retire before 65 will see a reduction in their pension income. The amount of the reduction depends on the age the member retires. After the age of 65, a member's pension income may be higher depending on the age they retire. BCNU members planning on retiring at 65 or older will see a higher pension income.
The individual pension contributions necessary to fund the planned Municipal Pension Plan (MPP) design changes are, on average, over $500 per year more than they need to be if the exact same changes were made in a plan made up of nurses alone. This means an average nurse and their employer would each pay over $10 more per pay period within the MPP than they would need to in a Nurses' Pension Plan in order to receive exactly the same benefit. This is money that could go toward increasing nurses' take-home pay.
Under the planned MPP rules, nurses and health employers will be subsidizing other members of the MPP.
Yes, it is better to be part of a larger investment pool. That is why the Municipal Pension Plan (MPP) pools its assets with the other public sector pension plans and invests through British Columbia Investment Management Corporation (BCI) – one of the largest institutional investors in the world. A Nurses' Pension Plan, like all the other public sector plans, could continue to have BCI manage its assets so there would be no disadvantage resulting from nurses leaving the MPP.
If a plan is small, there are risks, but a Nurses' Pension Plan (NPP) would likely be one of the 20 largest pension plans in Canada and would be far larger than the BC College Pension Plan which, unlike the Municipal Pension Plan (MPP), has been fully funded for the last five years, pays a higher pension for the same level of earnings and now offers full inflation protection. There is no more risk to being in an NPP than there is to being in the MPP.
The Municipal Pension Plan (MPP) does not have enough money to offer full inflation protection on a sustainable basis like the other three BC public sector pension plans do. However, the Nurses' Bargaining Association Retiree Benefit Fund was set up in 2008 for the very purpose of securing better inflation protection. If nurses formed their own pension plan, they would have enough money to pay full inflation protection to plan members on a sustainable basis. It is expected that arrangements would be made to ensure that LPN members also pay toward better inflation protection.
No. A Nurses' Pension Plan (NPP) would be a homogeneous group. As a result, communication with plan members would be easier and the administration of the plan would not be as complex. More homogeneous plans like the BC Teachers' Pension Plan and the College Pension Plan pay a much smaller percent of their assets to cover all costs associated with managing their plans. As a result, an NPP could expect to save more than $6 million per year on administration costs.
The Nurses' Pension Plan (NPP) would be overseen by a board made up of an equal number of members appointed by the employer and BCNU. That board would be in charge of high-level policy and pension plan rules. Professional managers would be responsible for the day-to-day administration of the plan and the plan's investments – as is the case with the Municipal Pension Plan (MPP) and other public sector plans.
By law, the members of NPP Board must ensure that the plan's money is invested in the best financial interest of plan members. This means the Board would ensure the plan's funds are professionally invested.
No. As is the case with the Municipal Pension Plan (MPP), a joint trust agreement would be in place stipulating who sits on the Nurses' Pension Plan (NPP) Board. BCNU would appoint half of the board members and employers would appoint the other half. By law, those appointees owe a fiduciary duty to the members of an NPP. A board member's failure to comply with the terms of the joint trust agreement and their fiduciary duty to plan members could cost them everything they own.
And subject to the joint trust agreement that would create an NPP, all board members must put the interests of plan members ahead of the interests of the entity that appointed them – as is the case with the MPP and other public sector pension plans
As is the case with all other public sector pension boards, a Nurses' Pension Plan (NPP) Board would determine contribution rates. However, pension boards can only raise contribution rates to address an unfunded liability, when the actuary evaluating the financial health of the pension plan says a rate increase is needed to ensure the promised pensions will be paid.
If an NPP were to adopt a similar investment policy as the Municipal Pension Plan (MPP) – which would be very likely – NPP members would have the same or lower contribution rates than MPP members.
If the proposed MPP design changes are implemented, the pension contributions of nurses in the MPP would be higher than they would be in an NPP. The current career path of a typical nurse compared to other MPP members also indicates that NPP contributions rates would be lower than MPP contribution rates.
Yes. BCNU is committed to ensuring that the nurses' pensions remain a defined benefit, which is the best form of pension. A defined benefit plan guarantees a specific monthly pension payment for life, in contrast with a defined contribution plan, where retirement assets can quickly decline in value and be depleted before you die. The very reason for the negotiation of a pension governance review was to ensure nurses could have the best pension possible – one that would meet their needs in retirement.
If a Nurses' Pension Plan (NPP) is formed, the Nurses' Bargaining Association collective agreement would be amended to indicate that members would participate in the NPP rather than the Municipal Pension Plan.
The Municipal Pension Plan (MPP) has a policy governing the process that an employer must follow when changing the terms and conditions of its participation in the plan. If nurses were to leave the MPP, this policy would be followed, along with the terms of the negotiated Nurses' Bargaining Association pension governance review process.
An independent actuarial analysis must also confirm that remaining MPP members would not see their contribution rates increase as a result of nurses leaving the plan and that the remaining MPP members would still be able to receive the same level of inflation protection. The MPP actuary has already confirmed that this is the case.
If the majority of Nurses' Bargaining Association members – both active and retired – vote to support forming a Nurses' Pension Plan (NPP), then we would proceed with the creation of an NPP.
Retired nurses would experience absolutely no risk if they moved from the Municipal Pension Plan to a Nurses' Pension Plan. The BC Pension Benefits Standards Act protects the pension of the retired nurses. Retired nurses would also see an improvement in ancillary benefits like inflation protection and group health benefits.
If members choose to form a Nurses Pension Plan (NPP), the assets and the liabilities associated with the nurses in the Municipal Pension Plan (MPP) would be transferred from the MPP to the NPP. Assets are expected to be over $15 billion. In addition, if the Retiree Benefit Program Committee decides, some Retire Benefit Fund assets may also be transferred to the NPP in order to provide existing retired members with better inflation protection and group benefits.
The provincial government does not have to enact or change any legislation to allow for the creation of a Nurses' Pension Plan.
Because retirees currently receive benefits from the Municipal Pension Plan (MPP), to date, the Retiree Benefit Program has not been offering extended health benefits and has only paid an MSP premium subsidy. This choice was made because of the prohibitive costs associated with administering a parallel benefit plan next to the MPP's benefit plan. If a Nurses' Pension Plan is formed, it would assume the administration of the MPP's extended health plan for the retired nurses and could efficiently enhance a new NPP retiree benefit plan.
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