Thursday, July 31, 2003

EDMONTON – The Public Service Pension Board has informed AUPE and employers that it intends to increase both employer and member contribution rates for the Public Service Pension Plan (PSPP).

The new contribution rates for members and employers will take effect Sept. 1, 2003.

As a percentage of payroll, contribution rates that are currently 10.12 per cent of payroll will rise to 13.22 per cent of payroll – an increase of 3.1 per cent.

Pension plan members will have to pay half of that amount – an increase in contributions of 1.6 per cent.

The PSP Board said the increase represents a current service cost increase of 0.34 per cent, plus an unfunded-liability cost increase of 2.76 per cent.

Contribution rates for members and employers will increase to 6.17 per cent from the current 4.675 per cent for earnings up to the year’s maximum pension earnings under the Canada Pension Plan (YMPE), which this year is $39,000. Contribution rates for members and employers will increase to 8.81 per cent from 6.55 per cent for earnings above the YMPE.

The PSP Board said the decision was based on the actuarial valuation of the PSPP that was completed as at Dec. 31, 2002, as well as on the advice of the plan actuary.

Many pension plans have been hit by the longest period of negative returns in the investment market since the Crash of 1929, leading to unfunded liabilities.

The PSP Board said that contributions to the PSPP have not increased since 1994. “During this period contribution rates have remained stable and it is the intention of the PSP Board to continue to focus its efforts to minimize the frequency of contribution rate changes,” the board said.

A copy of the actuarial valuation is available on the PSPP Web site - click here