Pension Awareness

Bob Murphy, Chair, Pension Committee, (905) 451-8056

Changes to Teachers' Pension Plan

The Ontario Teachers' Federation (OTF) and the Ontario government have announced changes to the plan's re-employment provisions.

The first change will occur on Sepember 1, 2010, and others will follow in 2012.

Effective September 1, 2010, there will be a clearer definition of a "re-employed pensioner" that will make it clear and eliminate uncertainty as to what is considered re-employment.

If you provide any services for compensation after retirement for an employer who participates in the Ontario Teachers Pension Plan (OTPP), you will be considered a re-employed pensioner and subject to re-employment rules and regulations.

This applies whether you are employed, self-employed, or hired through a third party.

Also note that you can't forgo compensation to circumvent the rules; for example, as a volunteer in a school.

Beginning September 1, 2012, you will be able to work in education, without affecting your OTPP pension, for up to 50 days in each school year following retirement.

The 95 days of teaching, allowed for September 1, 2010 - August 31, 2011 and September 1, 2011 - August 31, 2012, are still in effect.

Pension Plan's Assets and Returns

At the end of 2009, the Ontario Teachers' Pension Plan had regained total assets to $96.4 Billion, up from $87.4 Billion a year earlier - an increase of $10.9 billion.

The OTPP earned a 13.0% investment return in 2009.

Funding Shortfall

Despite solid investment results, the pension plan has another preliminary funding shortfall because the plan's liabilities (the projected cost of future pensions) continued to grow faster than the plan's assets.

A preliminary funding valuation shows a projected $17.1 billion shortfall as at January 1, 2010.

A funding valuation assesses the plan's long-term financial health by looking ahead more than 70 years.

The OTF and the government must file a balanced funding valuation with the provincial pension regulator by 2012.

This underfunding could be balanced by a 1% increase in the true interest rates (1% increase = $25 billion).

Member services

Member services still ranked high, with plan members rating service quality 9.1 out of ten.

No Reductions

Remember, the value of pension benefits already earned by working and retired members cannot be reduced under current pension legislation (Ontario Pension Benefits Act).

Size

With $96.4 billion in net assets, the Ontario Teachers' Pension Plan is the largest, single-profession pension plan in Canada.

An independent organization, it invests the pension funds assets and administers the pensions of 289,00 active and retired teachers in Ontario.

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