Report
to/Rapport au :
Submitted by/Soumis par: Greg Geddes, Chief Corporate Services Officer/Chef des
Services généraux
Contact Person/Personne ressource :
Lois Pearce, Director, Employee Services
/Services aux employés
SUBJECT: |
OC TRANSPO PENSION PLAN – PRE 1981 SERVICE
BENEFIT ENHANCEMENT |
|
|
OBJET : |
Régime de retraite d’OC
Transpo – Majoration des prestations pour services antérieurs à 1981 |
That Council approves the funding mechanism for the OC Transpo Pension Plan
pre 1981 service benefit enhancement as outlined in this report. The funding was previously approved during
the ATU 279 contract negotiations.
Que le Conseil approuve le mécanisme de
financement de la majoration des prestations pour services antérieurs à 1981 du
régime de retraite d’OC Transpo, tel qu’exposé dans le présent rapport. Ce
financement a déjà été approuvé lors des négociations contractuelles de la
section locale 279 du SUT.
The Ottawa-Carleton Regional Transit Commission
Employees’ Pension Plan (OC Transpo Pension Plan) was established on September
1, 1951 to cover all OC Transpo employees, regardless of their union
affiliation. Employees hired prior to
1999 accrued pension benefits under the OC Transpo Pension Plan. Effective January 1, 1999, OC Transpo
adopted the OMERS pension plan for all employees and new hires to accrue future
pension benefits. Today, members retiring with both pre 1999 and post 1999
service receive pension incomes under both plans.
During the ATU 279
collective agreement negotiations, tentative agreement was reached to provide a
pension benefit improvement to the average earnings formula for all OC Transpo
plan members. Before the amendment, the OC Transpo Pension Plan benefit for
service before 1981 was capped using the earnings from 1996-2000. This caused retirees earning higher incomes
after January 1, 2001 to be disadvantaged by not having their full
pre-retirement earnings used to calculate their entire pension benefit.
On December 6, 2005,
Council ratified the ATU 279 collective agreement, including the pension
benefit improvement to the average earnings formula for all OC Transpo Pension
Plan members.
Since then CUPE 5500 and ATU 1760 have also settled their collective agreements to include the pre 1981 pension service amendment as their members are also members of the OC Transpo Pension Plan.
Therefore, effective January 1, 2006, all retirees with pre 1981 service who retire after January 1, 2001 will have their pension benefit adjusted to reflect their best 60 consecutive monthly earnings for all years of service.
All
unrepresented members of the OC Transpo Pension Plan, consisting of MPE,
non-union/non MPE employees from the Supervisory & Administrative Support
(SAS) group, in addition to other OC Transpo plan members who have moved to
other City departments are also included under this enhancement.
During the final negotiations with ATU 279 in
December 2005, this issue went before Council at an in camera session and a
full discussion took place. Council agreed to the pension plan enhancement with
the ratification of the ATU 279 collective agreement.
This will result in a recalculation of pensions
paid from January 1, 2006 for individuals who retired after January 1, 2001.
This amendment will have an impact on the
liabilities of the plan and will require additional contributions by the City
to pay the enhanced incomes to retirees and the future pension benefit costs of
new retirees with pre 1981 service under the OC Transpo Pension Plan. These contributions will be funded from the
Transit Reserve Fund in the amount of
$2.0545 million per year for the next 5 years.
The pension plan text will need to be amended
and documents filed with the Office of the Superintendent of Financial
Institutions (OSFI) and the Canada Revenue Agency (CRA) by the end of 2006.
In addition, a by-law needs to be approved by
Council to amend the pension plan.
The Employee Services (ES) Branch worked with
the plan actuary (Watson Wyatt) to confirm with OSFI and CRA the requirements
to implement this change to the OC Transpo Pension Plan.
FINANCIAL IMPLICATIONS
The initial funding estimate for the ATU 279
negotiations included the cost for all plan members of the OC Transpo Pension
Plan. A cost certificate will be filed
with the amendment to amortize the funding cost of $8.89 million over 5 years,
equivalent to $2.0545 million per annum starting in 2006.
The funding for this amendment will come from
the Transit Reserve Fund.
Council approval is required for this report
and for a by-law on December 14, 2006.
Council confirms the delegation of authority to the Chair of the Pension Administration Committee (PAC) to complete the necessary documentation with the pension authorities and to make the required funding payments from the City to the OC Transpo Pension Plan.