TO: All Participants, Retirees and School Boards
FROM: Howard Van Mersbergen, Secretary-Treasurer
A recent actuarial valuation shows that the Plan continues to be fully funded. In fact, as of September 1, 1995, the Plan had a surplus of $1,353,100 generated by the actual adjusted asset value of $46,909,098 exceeding the accrued liability of $45,555,998.
Based on the results of this valuation, the following Plan improvements have been made:
The benefits payable as of September 1, 1995, to retirees are increased as follows:
Retirement Date Increase
Prior to Sept. 1, 1991 2.5%
Sept. 1, 1991 - Aug. 31, 1992 2.0%
Sept. 1, 1992 - Aug. 31, 1993 1.5%
Sept. 1, 1993 - Aug. 31, 1994 1.0%
Sept. 1, 1994 - Aug. 31, 1995 0.5%
Final Average Earning Calculation Date
The date up to which the Plan recognizes earnings for the calculation of an individual’s final average earnings was moved from September 1, 1997, to September 1, 1998. The goal is to always have this date be in the future so that all of an individual’s earnings are used in calculating the final average earnings.
Update on Redesigned Plan
The Plan was redesigned effective September 1, 1992. Since the Plan has now had several years to develop, the Trustees recently conducted an in-depth analysis of the funding requirements of the Plan and the benefits that are accruing.
The Trustees are pleased to note that based on the analysis, the assumptions used to structure the Plan continue to support the program into the long term. In the short term the assumption of an 8.5% return on investments may prove inadequate to continue moving the final average earnings calculation date (Sept. 1, 1998) into the future. As the new plan design matures, this disparity will lessen.
Comparison of the Pension Plan with RRSP
Recently one of the larger schools participating in the Plan considered switching from this Plan and going to an RRSP type of plan. To assist them in their analysis, we prepared an in-depth comparison of this Plan, (a defined-benefit pension plan) to an RRSP type plan. Following a review of the comparison, the school chose to remain in this Plan.
A basic difference between the two types of plans can be explained this way-a pension plan acts as a community whereas, RRSPs function on an individual basis. By functioning as a community a pension plan can be structured to meet the unique needs of the participating employees and participating schools. For instance, the Canadian Christian School Pension Plan assists with early retirement by providing an unreduced benefit at age 60. This feature alone has a value that is about 30% greater than what an RRSP would provide at age 60.
Others of you may be wondering why this Plan is structured as a pension plan and not an RRSP type of plan. To assist you, I will provide details about the comparison at the retirement workshop that I will be presenting at the teacher conventions this fall.