|
SPECIAL PENSION SECTION |
(Fifth in a series, from a GUIDE being prepared by Norm Shklov,
explaining our Pension Plan, in principle and practice)
HOW MUCH WERE MY PENSION CONTRIBUTIONS?
HOW MUCH DID THE UNIVERSITY CONTRIBUTE?
The previous articles in this series dealt mostly with the calculation of pension benefits of retirees. This essay summarizes the premiums, i.e. the contributions made by the members during their working years and by University in order to sustain these benefits. We discuss two main topics. First of all, we look at the contributions by members and by the University to the University of Windsor Pension Plan. Then we examine the contributions to and the pension benefits arising from the Canada Pension Plan.
The contribution formula for the University of Windsor Pension Plan has changed over the years, as a result of negotiation. The formula we quote is the one in current use. It can best be shown by the graph on the left. The vertical axis represents $, the horizontal axis, percentages. The shaded area is what you contribute.The two points on the vertical axis, currently $ 3,500 and $ 36,900, are defined by Canada Pension Plan. The lower one, now $ 3,500 is called the "Year's Basic Exemption (Y.B.E)". The upper one, now $36,900, is called the "Year's Maximum Pensionable Earnings (Y.M.P.E.)". (Graph not available in electronic edition)
One does not pay premiums to the C.P.P. On the firt $ 3,500 of earnings, but does pay premiums to the C.P.P. on the
amount above $ 3,500 to a maximum of $ 36,900. The University Pension Plan's basic premium requirement from each
working member is defined so that it reflects the fact that the member pays some money to the C.P.P. as premium for the
C.P.P. pension. Thus, the contributions to the University Plan are shown, shaded, in the diagram, namely:
a) 6% of earnings up to the Year's Basic Exemption (Y.B.E.) Plus
b) 4.5% of earnings above the Y.B.E. but only up to the Year's maximum Pensionable Earnings (Y.M.P.E.)
Plus c) 6% of earnings above the Year's Maximum Pensionable Earnings (Y.M.P.E.).
This is the amount currently deducted annually from the salary from each active member of the University Pension Plan and
placed in the fund.
The University contributes to the fund an amount equal to the above contribution by each member.
The amounts contributed by the member and by the University are both credited to the member's money purchase account. The money purchase account of the member is also credited each year with interest at the rate earned by the fund. In this way it grows until, at the member's retirement, it determines the size of the member's Money Purchase Pension.
The Canada Pension was referred to in the above discussion. We go into more detail here. The contribution of each active member is best described in the diagram on the left. Each member must make an annual contribution (shaded area) of the portion of his her salary between $3,500 (Y.B.E.) and $ 36,900 (Y.M.P.E.). The University must also make an equal contribution. (Diagram not available in electronic edition)
Upon retirement of the member gets a monthly pension benefit based on contributions during his or her working life. Currently, the monthly pension is 1/4 of the person's average monthly pensionable earnings during the 5 year period of highest earnings before retirement. The maximum pension (i.e. Canada Pension) receivable at age 65 is $ 744.79.
It should be noted that quantities or amounts stated in this article are those currently in force. Over the working life of
members there were changes and, no doubt, there will be changes in the future. The reader is asked to concentrate on format
rather than actual amounts.
Page one (Issue index)
Next page