Pension Contribution Increase, One-Time Base Salary Adjustment & New Supplemental Plan and Additional Changes to the U of T Pension Plan

Date: May 28, 2019
To: RA/SRA, Confidential, PM, and AP employees
From: Kelly Hannah-Moffat, Vice-President, Human Resources & Equity

Pension Contribution Increase

To ensure the long-term sustainability of our pension plan and align the University with the Ontario Government’s expectations for public sector defined benefit pension plans to have employee and employer contributions matched at a 50 / 50 balance, on November 26, 2018, Governing Council’s Business Board approved employee pension contribution increases for for Confidential, Professional & Managerial Staff, Advancement Professionals, Research Associates and Senior Research Associates.

The following chart outlines the approved pension contribution increases for Confidential, PM, and AP employee groups.

Contribution Rate on Eligible Salary/Wages:
Up to CPP Maximum Salary In Excess of CPP Maximum Salary up to the Pensionable Salary Cap
Current 7.7% 9.5%
Effective July 1, 2019 9.2% 11.5%

 
The following chart outlines the approved pension contribution increases for RA/SRAs.

Contribution Rate on Eligible Salary/Wages:
Up to CPP Maximum Salary In Excess of CPP Maximum Salary up to the Pensionable Salary Cap
Current 7.15% 9.5%
Effective July 1, 2019 8.2% 10.5%
Effective July 1, 2020 9.2% 11.5%

 

The Pensionable Salary Cap for contribution purposes starting July 1, 2019 is $169,500.

One-Time Base Salary Adjustment and New Supplemental Plan

In addition, Business Board approved a one-time, special base salary adjustment for eligible staff, effective July 1, 2019. The adjustment for PM and AP employee groups is 1.6%. The adjustment for Confidential Staff is 1.5%. It will be applied up to the Pensionable Salary Cap for 2019 of $169,500 and will not compound with any other salary changes that might be provided on or after July 1, 2019.

For RA/SRA employees, the adjustment rates, up to the Pensionable Salary Cap, are as follows:

  • 0.9% effective July 1, 2019
  • 0.9% effective July 1, 2020

Business Board also approved a new defined contribution supplementary account plan (DC SAP) conditional upon the conversion to the University Pension Plan, effective on the conversion date (anticipated to be July 1, 2021). The DC SAP will provide retirement savings for employees whose pensionable earnings exceed the Threshold Salary cap up to a maximum salary. Additional information regarding the DC SAP will be shared separately.

Processing instructions for Business Officers regarding this special base salary adjustment will be forthcoming.  Information regarding the defined contribution supplemental account plan, annual across-the-board (ATB) and merit increases will also be circulated separately at a later date.

Additional Changes to the U of T Pension Plan

There are also two changes to the benefit provisions of the U of T Pension Plan effective July 1, 2019.  For those who were participants in the U of T Pension Plan on September 30, 2018, these changes were noted in Schedule 2 of the Jointly Sponsored Pension Plan Notice Package:

  1. For retirements or terminations after July 1, 2019, indexation to the pension benefits on each July 1st will be prorated for the period from date of pension commencement to that July 1st.  Currently, there is no proration in the first year after pension commencement.
  2. For terminations after July 1, 2019, the lump-sum termination option under the pension plan will be the greater of the commuted value of the deferred pension or two times members contributions made prior to July 1, 2019 with interest. The two times member contributions with interest provision is being phased out because it can no longer be included with the increased contribution rates effective July 1, 2019. It also rarely applies any longer because of the size of the commuted values given the interest rates that are now used for the calculation of commuted values.

NOTE: If you would like to submit any comments regarding the amendments to the contribution rates or benefit provisions of the U of T Pension Plan, you may submit them to the University of Toronto and the Superintendent of Financial Services at the following addresses:

University of Toronto
Human Resources
215 Huron Street, 8th floor
Toronto, ON M5S 1A2
Superintendent of Financial Services
Financial Services Commission of Ontario, Pension Division
5160 Yonge Street, 16th Floor
Toronto, ON M2N 6L9
Re: University of Toronto Pension Plan (Registration No.: 0312827)