Our plan document stipulates that pensions in payment cannot be reduced; and governing legislation does not permit the accrued benefits of current employees to be adjusted downward (or reduced) as part of any pension reforms.
Younger employees will benefit from a lengthy investment return horizon, and will have a higher probability of receiving a money purchase pension greater than the minimum guarantee because of the higher monthly contributions.
These employees would still contribute less over the course of their careers at Queen’s than similarly-aged employees elsewhere who are members of jointly sponsored plans, which are plans that require the funding responsibility to be shared equally between the employer and pension plan members. For example, the Ontario teachers plan requires employee contributions at 10.2 per cent up to a Year’s Maximum Pensionable Earnings (YMPE) and 12 per cent above YMPE. (Queen’s recommended targets are seven per cent up to YMPE, nine per cent in excess).
Posted in: The Pension Puzzle: Ask Bob! Part 2