You and your pension

Teachers’ contributions to increase

Sandra Marcellus, ATA Executive Staff Officer, Teacher Welfare

At present, a full-time ­teacher’s contribution to the Alberta Teachers’ Pension Plan (the Plan) is, on average, 8.93 per cent of salary.

This average rate reflects rates of 7.21 per cent on salary earned up to the Year’s Maximum ­Pensionable Earnings (YMPE) under the Canada Pension Plan of $46,300 and 11.63 per cent on salary above the YMPE.

As of September 1, 2009, contributions will increase based on the actuarial valuation carried out August 31, 2008. The new rate will be on average 9.51 per cent of salary (8.05 per cent up to the YMPE and 11.5 per cent over). For example, in the case of a teacher earning $60,000 per year, the new contribution rate will result in an increase of approximately $380 over the school year.

Why is an increase ­necessary? The cost of pensions currently earned has increased due to ­demographic changes in the overall plan membership. In addition, the actuarial valuation, as at August 31, 2008, showed that over the past two years, various unanticipated losses arose. This deficiency, by legislation, has to be made up within 15 years through increased contributions by ­teachers and the government.

All of teachers’ contributions reflect Plan experience for service after August 1992. Teachers no longer make contributions with respect to the pre–September 1992 unfunded liability. It is also important to note that the August 31, 2008, valuation occurred prior to the recent severe decline in the global investment markets. Any increase in contributions due to investment losses after August 31, 2008, will come into effect September 1, 2010.

More information on this issue can be obtained by visiting the Alberta Teachers’ Retirement Fund website (www.atrf.com). Under the heading News, click on Recent Events Affecting Your Pension Plan.

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