Board Communique: January 17, 2022
Good news: 2020 valuation results
Healthy and strong: Your Teachers’ Pension Plan is prepped for the future
The Teachers’ Pension Plan’s most recent valuation, measured as at December 31, 2020, shows the money available for current and future pensions is more than the projected costs of paying for those pensions.
The plan’s actuarial surplus is $1.58 billion, based on assets of $31.54 billion and liabilities of $29.96 billion. The plan has a funding ratio of 105.3 per cent.
What is the plan going to do with the surplus?
The provincial Pension Benefits Standards Act requires we set aside a large portion of the surplus to act as a buffer to protect the plan in the case of an economic downturn.
For the remainder of the surplus, we use the Teachers’ Pension Plan Joint Trust Agreement (JTA) to help us weigh our options. The JTA, established by the plan partners (BC Teachers’ Federation and the Government of BC), serves as a governance framework, giving us guidelines on how to manage the plan.
After carefully exploring our options, we have decided to leave the surplus in the plan’s basic account (the account from which basic pensions are paid). This means more assets will be available to help the plan’s financial position when future valuations are undertaken.
There will be no change to member or employer contribution rates.
Why is there a surplus?
The surplus is mainly the result of investment returns being higher than expected.
What is a valuation and why is it important?
Valuations help us assess the financial position of the plan and its funding requirements. This allows us to ensure there are enough funds available for the current and future pensions of all members, whether active, inactive or retired.
Getting a regular valuation checkup is just one of the steps we take to ensure the plan maintains its value and remains healthy and financially sustainable.
An independent actuary performs a valuation every three years. (An actuary is a professional with specialized knowledge in finance, statistics and risk theory.)
The next valuation will be measured as at December 31, 2023.
To read the full valuation report, visit the Reports page under About us on the plan website.
Reminder of contribution rates
Member and employer contribution rates were reduced on January 1, 2019. Previous and current rates are as follows:
|Up to and including December 31, 2018 (percentage of salary)||As of January 1, 2019 (percentage of salary)|
|Member contribution rates||12.92%||11.17%|
|Employer contribution rates||13.23%||11.30%|