Employee Frequently Asked Questions - Pension Plan
After I stop working for my employer can I make personal contributions and stay active on the Plan?
No, you must be working for a participating employer to remain active on the Plan, and only employer contributions are allowed in this Plan.
Can I add to what my employer is contributing on my behalf?
No, as mentioned, only employer contributions are allowed in this Plan.
Can I continue to work after I take my pension from the Plan?
Yes, you can continue to work, but once you have retired from the Plan you cannot have any further contributions made on your behalf. This is different from a person leaving the Plan before retirement age and coming back on the Plan. In that case contributions would again be made on their behalf.
How does my ILPP pension affect CPP?
It doesn't, they are independent of each other. No matter what pension you draw from the ILPP it will not have any effect on the amount of CPP you are able to collect.
Can a person who is already 65 join the Plan?
Yes, an individual can start accruing pension at age 65. Their membership is limited by the Canada Revenue Agency ruling that a person must start drawing their pension by the end of the calendar year in which they turn 71.
Why does my wife's name always appear on my annual statement?
A spouse has an iron clad right under the BC Pension Act to be the beneficiary of your pension. The only exception to this rule is if your spouse agrees in writing to waive this right.
I have left my employer. Can I transfer my money out of the Plan?
There are two conditions to transferring your money out of the Plan. The first is that your pension must be vested. And the second condition is that there is a waiting period (known as “breaking service”). Before your funds can be transferred you have to have 12 consecutive months with no contributions made on your behalf.
I would like to leave 50% of my pension to my wife and 50% to my kids. Can I?
No, as mentioned above the only one who can give away your wife's right to be 100% beneficiary of your pension is your wife.
Employer Frequently Asked Questions - Pension Plan
What is the current contribution rate for the Sawmill Division
The current contribution rates are as follows:
o Employer = 11.25%
o Employee = 2%
What is the current contribution rate for the Logging Division
o Employer = $5.12/hour
What is the waiting period to enroll an employee in the pension plan?
An employee must work for the participating employer for 6 calendar months prior to being enrolled in the pension plan. However, if in the 12 month period before an employee commences employment with a participating employer the employee was employed by another participating employer who made contributions to the pension plan on that employee’s behalf, the six month waiting period does not apply. In this case, the employee must be enrolled on their employment start date. Once an employee has met the 6 month waiting period (if applicable) contributions must be made on behalf of the employee from the date the waiting period ends, regardless of the number of hours the employee works for the employer.
Does the waiting period commence again if an employee is laid off?
No. Waiting periods can only start again if the employee has broken service under the plan. Breaking Service means that the employee has not worked for a participating employer under the plan for more than 12 months.
Do all employees have to be on the pension plan?
Yes. As per the participation agreement all employers have signed, if you are a participating employer, all employees employed by you must be enrolled in the pension plan and contributions must be submitted.
When are contributions required to be submitted?
Contributions are required to be submitted by the 10th of the following month in which the hours were worked.
Do I need to report hours every month?
Yes. Hours must be reported every month. There are instances where companies may not be working in a particular month (e.g. Break-up); hours still must be reported even if they are 0. If no hours are reported you will be considered to be in arrears.
In the logging division, how do banked hours work?
If an employee works more than 1600 hours in a year, the excess hours get put into a bank to supplement the years in which 1600 hours are not reached. This is only available to those in the logging division of the plan. These banked hours are utilized to top up years in which 1600 hours are not met.
For example:
In 2017 John Doe worked 2000 hours. He was credited for 1600 hours in 2017 and his bank was credited with 400 hours.
In 2018 John Doe worked 2080 hours. He was credited for 1600 hours in 2018 and his bank was credited with 480 hours, bringing his total bank hours bank to 880 hours.
In 2019 John Doe worked 800 hours. He was credited 1600 hours for 2019 as he was credited for the 800 hours in which he worked and 800 hours from his bank to top him up to 1600 hours. The balance remaining in his bank is 80 hours.
Can an employee remove their spouse from their pension plan?
The Pension Benefits Standards Act (PBSA) requires that if on the day a member’s pension commences the member has a “spouse” (as defined in the PBSA) the pension must be paid as a joint lives pension that provides a pension to the member’s spouse if the spouse survives the member. This spousal entitlement can be waived by the spouse during the 90 day period before pension commencement. PBSA spouses also have special rights if a member dies before pension commencement.
While you must keep us up to date on who your current PBSA spouse is, we will need to verify your PBSA spousal status when your pension commences, or if a pre-retirement death benefit becomes payable.
Spouses may also have rights under the Family Law Act (FLA). A pension is a family asset, and it must be dealt with in any division of property on marriage breakdown. However, until a spouse advances a claim to a member’s pension, and notifies the plan office of such a claim in accordance with the Family Law Act, we will deal with every member’s pension on the basis that no former spouse has an FLA claim to that member’s pension.
How do I terminate my company from the pension plan?
You can terminate your company by giving a notice in writing to the plan office specifying the date as of which your company will withdraw. The specified date can be no earlier than the date the notice is received by the plan office. In addition, if a participating employer fails to remit contributions for three or more months, ceases to employ any plan members, fails to comply with its enrolment obligations or otherwise does not comply with its obligations as a participating employer, the pension plan’s trustees can terminate that employer’s participation as of a specified date. Since every employer is responsible for funding the cost of the pension benefits earned by its employees and former employees, if an employer leaves the pension plan (whether because it wants to do so or the trustees have terminated its participation) the trustees must impose an exit levy equal to the difference between the actuarial value of the pension benefits earned by the employer’s employees and former employees and the portion of the plan’s assets then allocable to that employer. If this exit levy is not paid, the pension benefits of the affected employees and former employees will be reduced so as to equal the funds available to pay them. If the trustees did not do this, the plan’s continuing employers would have to make up that shortfall.
Note: the foregoing only applies to the benefits earned by an employer’s employees and employers for employment before 2017. All benefits earned under the pension plan for employment after December 31, 2016 are “target benefits”. This means employers have no further obligation in respect of post-2016 benefits once they make the required monthly contributions in respect of their employees’ post-2016 employment.
What is an exit levy?
As explained above, every employer must fund the pension benefits its employees and former employees earn under the pension plan. When an employer leaves the plan, the pension benefits its employees and former employees earned for pre-2017 employment are not considered fully funded, the employer must pay an exit levy equal to the shortfall in the funding of those benefits. Generally speaking, the exit levy equals the difference between the actuarial value of the pension benefits earned by the employer’s employees and former employees and the portion of the plan’s assets then allocable to that employer. The actuarial value is determined by the PBSA’s “solvency” funding rules. These rules are set out in the PBSA’s regulations and are administered by the BC Financial Services Authority. The actuarial value determined by the “solvency” rules is based on current market conditions, including long term interest rates, and the value of the benefits earned by your employees, former employees and any employees who worked for a company that you purchased.
What are the “solvency” rules?
Under pension plan legislation, the “solvency” rules require that a pension plan have enough money to fully fund the benefits owing to every member if the plan were to close at a specific date in time. Generally speaking, an employer’s “solvency” liability equals the amount that would be needed as of the specified date to buy an annuity from an insurance company for each plan member for which an employer is responsible. Each plan member’s annuity would be payable on the same terms and conditions as the member’s pension from the pension plan. The “solvency” rules apply to the benefits earned under the plan before 2017.
Who is responsible for enforcing the rules around the pension plan?
The BC Financial Services Authority (BC FSA) is the provincial regulator of all provincial pension plans. For further information about BC FSA you can visit its website at www.bcfsa.ca
What is driving the recent increases in contribution rates?
The solvency deficiency and the “solvency” rules under the Pension Plan Act (PBSA) have forced the trustees to increase rates. The increases have been exacerbated by low interest rates which make a significant difference in the solvency position.
I hear the plan is in financial trouble. Is this true?
Due to the all-time low interest rates, if the plan were required to wind-up/close today, there would not be enough assets to cover the liabilities. However, as long as the plan continues to have participating employers and those participating employers continue to pay for their members, the plan would be in a position to continue on providing benefits to our pensioners.
What hours are pensionable?
Any hours that are paid to an employee in completion of their job in which would include, but not limited to: regular, overtime, holiday and vacation pay.
What is the difference between a Defined Benefit pension and a Target Benefit pension?
A Defined Benefit pension provides a lifetime pension to the participating employee that is determined by a specific formula. Further, the employer that promises a Defined Benefit pension (whether directly or through a multi-employer arrangement like the pension plan) is responsible for fully funding the Defined Benefit pensions promised to their employees. The amount of the Defined Benefit pension earned by an employee must be paid regardless of the performance of the investments set aside to fund the promised pensions. Determining how much be set aside to fund the promised Defined Benefit pensions requires complex actuarial projections which must be reviewed and approved by the pension regulator. All benefits earned under the pension plan for service before 2017 are Defined Benefit pensions.
A Target Benefit pension is also a pension determined by a formula. However, the employer that promises a Target Benefit pension (whether directly or through a multi-employer arrangement like the pension plan) has no funding responsibilities in respect of that pension other than making the monthly contributions specified by the trustees. The amount of a Target Benefit pension earned by an employee may fluctuate up or down based on the performance of the assets set aside to fund the promised pensions. A target benefit pension plan looks a lot like a defined benefit pension plan, the main difference being that in a target benefit plan accrued benefits are subject to reduction if the funding level falls below a given threshold. All benefits earned under the pension plan for service after 2016 (including benefits credited after 2016 in respect of pre-2017 banked hours carried forward into a year after 2016) are Target Benefit pensions.
Since all new benefits being earned under the pension plan are Target Benefits pensions, the pension plan is gradually turning into a Target Benefit pension plan. As that process unfolds, the solvency funding challenges associated with the plan’s pre-2017 benefits will gradually be resolved.