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Teacher pension contributions will increase September 1
On September 1, 2009, the Alberta Teachers’ Pension Plan fund was split. The government took all responsibility for pre-1992 pensions while post-1992 pensions continue to be funded by teachers and the government through monthly contributions. These contributions must be enough to guarantee the pensions of all teachers earning service in the Plan.
As of September 1, 2010, teachers will contribute 7.12 per cent of salary to fund future benefits, and the government will match these contributions. These future benefits include a cost-of-living allowance (COLA) of 60 per cent of the Alberta rate of inflation added to pensions every January 1. Teachers also pay an additional 0.42 per cent for another 10 per cent COLA, which makes COLA for service after September 1992 70 per cent.
Increases taking effect September 1, 2010
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September 1, 2009
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September 1, 2010
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Teachers
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Government
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Teachers
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Government
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Current service cost—50/50 split
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7.02
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7.02
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7.12
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7.12
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Additional 10 per cent COLA—teachers only
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0.46
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0.42
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Post-1992 deficiency—50/50 split
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1.91
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1.91
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2.98
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2.98
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Post-1992 additional COLA—teachers
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0.12
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0.19
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Total
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9.51
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8.93
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10.71
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10.10
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Below the YMPE*
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8.05
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9.04
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Above the YMPE
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11.5
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12.91
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*Year’s maximum pensionable earning (YMPE) in 2010 is $47,200
Currently, teachers pay 2.03 per cent of their salary to fund a deficiency in the post-1992 Plan. That deficiency grew during the 2008/09 school year. As of September 1, 2010, teachers will pay 3.17 per cent of salary to fund the deficiency. This payment is made up of 2.98 per cent on the regular benefit and 0.19 per cent on the additional COLA. The government will contribute 2.98 per cent of each teacher’s salary to the deficiency, which, by law, must be paid off within 15 years. The increase to the deficiency was caused by changes to the funding structure of the Plan and by poor market returns during 2008 and 2009.
The good news for teachers is that the pre-1992 pensions are funded solely by the government. The post-1992 pensions are funded by teachers and the government and are secure and sustainable. The total increase for teachers is 1.2 per cent of salary, which, given the market losses of 2008/09, is less than expected.
The 10.71 per cent average contribution rate is broken up for teachers at 9.04 per cent of salary up to the YMPE ($47,200) and 12.91 per cent on salary earned over the YMPE. For a teacher earning $60,000, the increase of 1.2 per cent will mean an additional contribution of $57 per month; for a teacher earning $85,000 it will mean an additional contribution of $81 per month.
Information is available on the Alberta Teachers Retirement Fund website (www.atrf.com) or by contacting Sharon Vogrinetz (sharon.vogrinetz@ata.ab.ca) in Teacher Welfare, Barnett House at 780-447-9400 (Edmonton and area) or -800-232-7208 (toll free).
