The UBC Staff Pension Plan continues to be well-funded and sustainable.
Every three years, the UBC Staff Pension Plan (the “SPP” or “the Plan”) is required by pension regulation to undergo a financial check-up called an actuarial valuation, which is conducted by the Plan’s actuary.
The actuarial valuation is one of the ways that the SPP Board proactively manages risks by monitoring the Plan’s financial position. The information from the actuarial valuation helps the SPP Board keep your pension plan sustainable for the long term.
The SPP’s Target Benefit Plan design and Funding Policy are key
The SPP is a Target Benefit Plan. In a Target Benefit Plan, benefits may be adjusted up or down, before or after retirement, depending on the Plan’s ability to pay, as measured by the Plan’s Benefits/Funding Test. The Benefits/Funding Test, determined by the SPP Board, is a key component of the actuarial valuation, and is used to measure and evaluate the ability of the Plan’s funding levels to support the target pension benefit and inflation adjustments (also known as cost-of-living adjustments, or COLA) before and after retirement.
If the Benefits/Funding Test indicates that plan funding is insufficient or more than sufficient, the SPP Board must follow certain steps to restore the balance, the details of which are outlined in the Plan’s Funding Policy. The SPP Board’s first priority is to provide stable lifetime retirement pensions, followed by the second priority of providing cost-of-living adjustments. Cost-of-living adjustments are the first lever to be used to restore balance and to keep the Plan sustainable.
What is a cost-of-living adjustment?
The SPP pays you a lifetime pension when you retire. When plan funding allows, cost-of-living adjustments are provided to all pensioners to help your basic pension benefit keep pace with increases to costs of living. Although future cost-of-living adjustments are not guaranteed, every adjustment you receive becomes part of your basic pension benefit going forward. Learn more about cost-of-living adjustments.
Key Results at Glance
The actuarial valuation as at December 31, 2022 showed that the SPP, at present, is in a healthy, well-funded position and sustainable for the long term.
The Benefits/Funding test indicated that when cost-of-living adjustments are provided at 70% of inflation, or the Consumer Price Index (CPI), the SPP is well-funded with a healthy safety margin. The safety margin allows the Plan to not only support the basic pension benefit (both current and future benefits earned), but also provide indexing of all benefits at 70% of inflation for the next three years (2024 to 2026).
The actuarial valuation also confirmed that the SPP is in compliance with regulatory requirements for target benefit plans. Our valuation report was filed with the B.C. Financial Services Authority and the Canada Revenue Agency at the end of September 2023.
How do the actuarial valuation results affect you?
Based on where you are on your journey with the SPP, below is the key information you can take away about the actuarial valuation results.
For specific examples to help you understand how the results affect cost-of-living adjustments for the next three years, refer to the ““SPP Actuarial Valuation as at December 31, 2022: How will the results affect SPP Members?” document.
Active MembersYou are an active member if you are currently making contributions to the SPP. At present, the basic pension benefit you have earned, and will continue to earn, can be paid by the SPP. You can be assured that the money you contribute to SPP is creating financial security and going towards giving you a stable lifetime pension at retirement. You may also have the opportunity to benefit from cost-of-living adjustments before and after you retire, subject to the Plan’s ability to pay in the future. |
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PensionersYou are a pensioner if you are currently receiving a pension payment from the SPP. Your monthly SPP pension, also known as the basic pension benefit, continues to be stable and will be paid for your lifetime. You will not outlive your pension. On January 1st for the next three years, you will receive a cost-of-living adjustment of 70% of inflation (CPI) that will become part of your basic pension benefit each year. |
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Deferred MembersYou are a deferred member if you are no longer employed at UBC and/or no longer make contributions to the SPP. You still have your pension benefit in the SPP and are not yet receiving a pension. The basic pension benefit you have earned in the SPP is creating financial security and will be available for you when you need it, before or at retirement. In the meantime, your basic pension benefit will have a cost-of-living adjustment applied of 70% of inflation (CPI) on January 1st for the next three years. |
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Next Actuarial Valuation planned for 2026
Regularly scheduled actuarial valuations are important for keeping an eye on the financial health of the Plan. The data used for this actuarial valuation is based on a snapshot of the SPP from December 31, 2022. The next valuation for the SPP will occur in 2026, and data at December 31, 2025 will be used to make projections for that valuation. At that time, there will be new results available.
This also means that the level of cost-of-living adjustment will be evaluated again in 2026. Depending on the Plan’s financial situation at that time, the level of cost-of-living adjustments that the Plan can afford to pay may stay the same, decrease or increase.
In summary, the SPP is currently well-funded and sustainable for the long term. The SPP Board is proactively managing risk in the Plan through regular monitoring of the Plan’s financial position. In addition to the actuarial valuation, the SPP Board also receives quarterly funding reports from the Plan’s actuary to stay on top of the Plan’s funding status in between actuarial valuations. You can have peace of mind knowing that the basic pension benefit you have earned in the SPP is in good hands.
Learn more about the Actuarial Valuation
The following resources are available to help you learn more about this important financial check-up for the SPP:
- Register for the SPP Lunch & Learn: Actuarial Valuation Results 101
- Listen to the Pension Airwaves Podcast episode, “What is an Actuarial Valuation?”
- Read the About the Plan page to learn more about how the Plan works as a Target Benefit Plan and the Plan’s Funding Policy.
- Visit the Actuarial Valuation page to learn more.