Retirement Plan Comparison: University of St. Michael's College vs. UPP
A comparison of retirement plan provisions and benefits between the University of St. Michael's College and UPP reveals that UPP offers top value for contributions among Canadian DB plans. The plan provision details include contribution percentages, benefit formulas, employee and employer contribution rates, funding valuation, average earnings calculations, and pensionable service considerations. Understand the differences in pensionable earnings, contribution rates, and pension formulas for both retirement plans to make an informed decision.
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The Retirement Plan of the University of St Michael s College and UPP - Comparison of Plan Provisions and Benefits September 9, 2022
UPP delivers top value for contributions among leading Canadian DB plans LOW HIGH Earnings HOOPP** OMERS UPP OPTrust OTPP CAAT (DBprime) Annual member contribution matched by Employer Up to YMPE* 6.9% 9.0% 9.2% 9.4% 10.4% 11.2% Consideration #2 Above YMPE 9.2% 14.6% 11.5% 11.0% 12.0% 14.8% WHAT YOU PAY LOW HIGH Earnings CAAT (DBprime) OMERS OPTrust HOOPP* OTPP UPP Up to YMPE 1.3% 1.325% 1.345% 1.5% 1.55% 1.6% Benefit Formula Above YMPE 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% * Up to an average of the federal YMPE threshold in the last 48 months before you retire, transitioning to YAMPE in 2025. ** HOOPP Employer contributions are equal to 1.26 x member contributions (8.7%/11.6%) WHAT YOU GET (Best-in-class) 2 2 University Pension Plan Ontario Private and Confidential
Plan provision comparison University of St. Michaels College & UPP Provisions UPP University of St. Michael s College Plan 9.2% of pensionable earnings up to YMPE2,3 + 11.5% of pensionable earnings above YMPE2,3 Note: Effective Jan 1 2025, employee contributions will co-ordinate around the YAMPE automatically. Also, for most members this averages to be about 10% of earnings, for lower salary members under the YMPE2,3, it remains at 9.2% For members of a religious order1: 7.4% of pensionable earnings. Otherwise: 5.9% of pensionable earnings up to YMPE2 + 7.4% of pensionable earnings above YMPE2 Employee Contribution Rates 14.05% of pensionable earnings as of the January 1, 2020 Funding Valuation Employer Contribution Rates 100%Match of Employee rates Based on the average of your highest 36 months of pensionable earnings during plan membership Based on the average of your highest 48 months of pensionable earnings with your employer during your plan membership4 Average Earnings Calculation Months can be non-consecutive and are usually closer to your retirement date Months can be non-consecutive and are usually closer to your retirement date Average YMPE2(Years) Last 36-months of plan membership Last consecutive 48-months of service 1 This contribution rate applies to members of religious orders who do not contribute to the Canada/Quebec Pension Plan 2Year s Maximum Pensionable Earnings under the Canada Pension Plan which is $64,900 in 2022 3Breakpoint in 2025 will be based on the new Year s Additional Maximum Pensionable Earnings (YAMPE). In 2025, the 2025 YAMPE will be 114% of the 2025 YMPE. 4 Limited in each year to the pensionable earnings maximum. The maximum for 2022 is $191,400. 3 University Pension Plan Ontario Private and Confidential
Plan provision comparison University of St. Michaels College & UPP Provisions UPP University of St. Michael s College Plan Pension formula of 1.6% and 2% This means: Pension formula of 1.6% and 2% This means: 1.6% of the average of your highest 36 months of earnings up to the average YMPE (36 months)1,2 plus 1.6% of the average of your best 48 months of earnings up to the average YMPE (48 months)1,2 2% of the average of your highest 36 months of earnings above the average YMPE (36 months)1,2 plus multiplied by 2% of the average of your best 48 months of earnings above the average YMPE (48 months)1,2 DB Benefit Rate your years of pensionable service multiplied by equals your years of pensionable service Your annual USMC pension. There is no contractual indexing under the USMC plan. equals Note: Members of a religious order1 receive 2% of the average of their best 36 months of earnings for each year of pensionable service. Your annual UPP pension (before applicable UPP conditional indexation) A minimum pension applies for pensionable service to June 30, 1991. 1 This pension accrual applies to members of religious orders who do not contribute to the Canada/Quebec Pension Plan 2Year s Maximum Pensionable Earnings under the Canada Pension Plan which is $64,900 in 2022 3Breakpoint in 2025 will be based on the new Year s Additional Maximum Pensionable Earnings (YAMPE). In 2025, the 2025 YAMPE will be 114% of the 2025 YMPE. 4 University Pension Plan Ontario Private and Confidential
Plan provision comparison University of St. Michaels College & UPP Provisions UPP University of St. Michaels College Plan Funded conditional indexation at 75% of Consumer Price Index (CPI) No indexation is contractually provided for. Ad-hoc indexation is granted in a particular year at the University s discretion. Indexation After Pension Commencement Indexation at 75% of CPI on the pension earned for UPP service that is paid up to 2028 Conditional for benefits paid after 2028 based on plan s funded status Indexation in Deferral Period None None July 1st coincident with or following age 65 for academic staff and the first day of the month coincident or next following age 65 for other staff. Unless noted otherwise in the plan, it is the last day of the month in which age 65 is attained. Normal Retirement Age Unreduced pension is available as early as age 60 if your age plus your eligibility service equals at least 80 points. This is known as the 80 factor . For example, at age 60 and 20 years of service, or at age 61 and 19 years of service, or at age 62 and 18 years of service, etc. Eligibility For Unreduced Early Retirement Early retirement before age 65 with an unreduced pension is not available Note: If the Retirement Plan of the University of St. Michael s transfers into UPP, your past service in the University of St. Michael s College Plan will be included in your eligibility calculation for unreduced early retirement on pension earned for UPP service. 5 University Pension Plan Ontario Private and Confidential
Plan provision comparison University of St. Michaels College & UPP Provisions UPP University of St. Michael s College Plan Earliest Retirement Age 55 55 If not eligible for an unreduced early retirement pension, the early retirement pension is calculated as the accrued normal retirement pension reduced as follows between an individual s early retirement date and normal retirement date: The early retirement pension is calculated as the accrued normal retirement pension reduced as follows between an individual s early retirement date and normal retirement date: Eligibility for Reduced Early Retirement 6% reduction per year prior to age 65. 5% reduction per year prior to age 65. No bridge pension is available. No bridge pension is available. UPP service funding risk shared equally between members and employers including current service and any going concern special payments. University responsible for funding any initial deficit transferred to UPP. University responsibility for losses or gains on pre- conversion assets and liabilities for 10 years with transition to 50/50 sharing over next 10 years The University is responsible for the employer portion of the current service cost and for all going concern and solvency special payments that may apply year to year. Plan Funding 6 University Pension Plan Ontario Private and Confidential
Plan provision comparison University of St. Michaels College & UPP Provisions UPP University of St. Michael s College Plan If the plan member has an eligible spouse, the normal form is a pension payable for your lifetime, with 50% of the UPP pension continuing to their spouse after their death (50% spousal pension) Not subsidized and actuarially equivalent to the Life 5 normal form of pension for a member without a spouse. Pension Benefits After Death of Plan Member with Spouse or Dependents Higher levels of survivor benefit available, subject to reduction Higher levels of survivor benefit available, subject to reduction Dependent children pension options available Guaranteed 10 years (120 months) of pension payments in pay to beneficiary or estate after death in retirement Pension Benefits After Death of Plan Member without Spouse or Dependents Guaranteed 5 years (60 months) of pension payments in pay to beneficiary or estate after death in retirement UPP is a jointly-sponsored pension plan under PBA (ON). Governance University is the Sponsor. 111% as at January 1, 2022 Funded Ratio 99% as at January 1, 2020 1 1 Funded Ratio is 106% excluding Provisions for Adverse Deviations (PfAD), and 99% including PfAD 7 University Pension Plan Ontario Private and Confidential
Comparison of Plan Benefits Long, Medium, and Short Service
Assumptions for Comparison of Plan Benefits Assumptions used in pension projections 2.75% ITA/YMPE Increase % Salary Increase % 4.0% Beginning Salary $65,000 Year Joining Plan 2022 9 University Pension Plan Ontario Private and Confidential
Comparison of Plan Benefits Long Service Example Annual Pension at Retirement for a 25-year-old member hired today at a salary of $65,000 and retiring with long service. Key takeaways At age 60, UPP pension is always higher than St. Michael s pension (UPP pension can be unreduced) Retirement at 65 Retirement at 65, pension at 75 Retirement at 60 $250,000 $225K $202K $202K $194K $200,000 After retirement, UPP pension is indexed conditionally with 75% of CPI. St. Michael s pension has no contractual indexation. $150,000 $138K St Michael's College UPP $101K 1 $100,000 This means for a member who has retired and is age 75, UPP s pension is expected to be higher than St. Michael s pension. $50,000 $0 Salary 65,000 age 25, retire at 60 Salary 65,000 age 25, retire at 65 Salary 65,000 pension at age 75 1St Michael s College plan reduced at 6% per year from age 65 (30% total) 10 University Pension Plan Ontario Private and Confidential
Comparison of Plan Benefits Medium Service Example Annual Pension at Retirement for a 40-year-old member hired today at a salary of $65,000 and retiring with medium service Key takeaways At age 60, UPP pension is always higher than St. Michael s pension (UPP pension can be unreduced) Retirement at 60 Retirement at 65 Retirement at 65, pension at 75 $80,000 $76K $68K $68K $70,000 $65K $60,000 After retirement, UPP pension is indexed conditionally with 75% of CPI. St. Michael s pension has no contractual indexation. $50,000 $42K St Michael's College $40,000 UPP $31K 1 $30,000 This means for a member who has retired and is age 75, UPP pension is expected to be higher than St. Michael s pension. $20,000 $10,000 $0 Salary 65,000 age 40, retire at 60 Salary 65,000 age 40, retire at 65 Salary 65,000 pension at age 75 1St Michael s College plan reduced at 6% per year from age 65 (30% total) 11 University Pension Plan Ontario Private and Confidential
Comparison of Plan Benefits Short Service Example Annual Pension at Retirement for a 55-year-old member hired today at a salary of $65,000 and retiring with short service Key takeaways At age 60, UPP pension is always higher than St. Michael s pension (UPP pension can be unreduced) Retirement at 65 Retirement at 60 Retirement at 65, pension at 75 $18,000 $16K $16,000 $15K $15K $14K $14,000 After retirement, UPP pension is indexed with 75% of CPI. St. Michael s pension has no contractual indexation. $12,000 $10,000 St Michael's College UPP $8,000 This means for a member who has retired and is age 75, UPP pension is expected to be higher than St. Michael s pension. $6K $6,000 $4K 1 $4,000 $2,000 $0 Salary 65,000 age 55, retire at 60 Salary 65,000 age 55, retire at 65 Salary 65,000 pension at age 75 1St Michael s College plan reduced at 6% per year from age 65 (30% total) 12 University Pension Plan Ontario Private and Confidential
