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Teachers’ Pension Plan Update: Sustainability in These Times

By December 9, 2020No Comments

Here are some highlights of the recently released 2019 Annual Report of the Teachers’ Pension Plan:

Some comments are included in italics:

  • Net assets: $31.5 billion
    • This is an increase from $28.4 billion at the end of 2018.
  • Annual rate of investment return: 13%
    • Five-year annualized return: 8.4%
    • Ten-year annualized return: 9.1%
  • There will be an actuarial report at the end of 2020. The fund needs a five-year annualized return of at least 6% to pay the pension promise. The returns for 2020 are likely to be lower than 6% because of the economic downturn caused by COVID-19. However, it appears unlikely that the 2020 returns will drag down the 5-year annualized return below the required 6%.
  • The plan was 102.5% funded at the last valuation which means that there is money in reserve to carry the plan through some difficult times. These factors indicate that our pension is secure and sustainable.
  • Total plan membership: 100,400
  • This includes active, deferred and retired members.
  • Growth of active members in the past year: 1.4%
  • Growth of retired members in the past year: 1.8%.  This is a reversal from last year where there was a higher increase in the number of actives than the number of retirees.
  • Total pensions in pay: 39,146
  • Pension benefits paid in 2019: $1.2 billion. This money returns to the BC economy where it supports businesses and services in our communities where we also pay taxes.

Cost of Living Increase January 2021

Each year our pensions receive a cost-of-living increase based on the Canada-wide Consumer Price Index that compares September over the previous September. This year the increase was .5% and following the approval of the Pension Board of Trustees, our pension payments will increase by 0.5% beginning in January 2021.

Once awarded, the cost-of-living increases become part of our guaranteed pension.

Cost-of-living increases are not guaranteed. They are paid out of a separate account – the Inflation Adjustment Account – which currently is also in a sustainable, surplus position.

Gerry Tiede
Chair, Pensions and Benefits Committee