The Alberta Teachers’ Association

Take heed when turning to contract work

Retired teachers who return to teaching on a contract basis may encounter a reduction in life insurance and accidental death and dismemberment (AD&D) coverage under new rules that took effect Jan. 1, 2015.

As of that date, a retired teacher who signs an employment contract with an Alberta school board that participates in the Alberta School Employee Benefit Plan can be re-enrolled in the regular suite of benefits provided by ASEBP (except for extended disability benefits, which aren’t available to those drawing a pension).

While this change is welcome and will be seamless for most members, it could also result in reduced coverage for life insurance and (AD&D) because these benefits are based on the member’s most recent salary.

For example, a teacher with a salary of $95,000 who retired in June of 2013 would receive two times that amount for both her life insurance and AD&D coverage during her retirement. If that same teacher signs a contract at 0.5 FTE, her life insurance and AD&D coverage will be half of what they used to be (because they’re based on her new salary).

Teachers who are considering returning to work on contract after retirement and who are concerned about the reduction in life insurance and AD&D may wish to purchase additional insurance. Day-to-day substitute work does not qualify teachers for re-enrolment in benefit plans so does not affect coverage.  ❚

Example:

A teacher who retired in June 2013 and earned $95,000 in her last year of employment is in receipt of pension and receiving the same benefits as she had during her employment (except for extended disability benefits, which cease when pension payments begin).

Life insurance        $95,000 x 2 = $190,000
AD&D                      $95,000 x 2 = $190,000

The retired teacher signs a 0.5 FTE contract and is then re-enrolled in the Alberta School Employee Benefit Plan, thereby receiving all benefits that are part of that plan (except for extended disability benefits).

Life insurance        $47,500 x 2 = $95,000
AD&D                      $47,500 x 2 = $95,000