Member news: June 4, 2018
Your plan is financially healthy and strong
In December 2017, the WorkSafeBC Pension Plan Pension Committee received the most recent actuarial valuation report of the WorkSafeBC Pension Plan (plan), conducted as at March 31, 2017. As required by provincial legislation, the plan actuary assesses the plan from two perspectives: going concern and solvency.
What is a valuation?
A valuation measures money going out of (liabilities) and coming into (assets) the plan. Actuarial assets include plan funds, future contributions and anticipated investment returns. The actuary compares these assets against actuarial liabilities, which are paid out as pension benefits in the future.
The going-concern valuation, which assumes the plan will continue into the future at least as long as the lifetime of all current members, showed an actuarial surplus of $350 million in the basic account. This represents a funded ratio of 129 per cent—a strong position.
The solvency valuation, which measures the plan’s ability to pay out pensions if the plan had shut down March 31, 2017, showed an actuarial surplus of $41 million in the basic account. This valuation represents a funded ratio of 103 per cent. This means, in the unlikely event of the plan shutting down, it would have had enough funding to pay out all pension benefits.
Although it’s not required by legislation, the plan actuary also assesses the sustainability of providing future cost-of-living adjustments (COLAs) to retired members. COLAs are not guaranteed; however, the inflation adjustment account (from which COLAs are paid) remains in a strong position. Once granted, COLAs become part of a retired member’s lifetime pension.
Plan rule amendment
One plan rule amendment was approved by the WorkSafeBC Board of Directors (board) in January 2018. Previously, the plan rules required excess investment returns on the retired member share of assets to be automatically transferred from the plan’s basic account (the account from which lifetime pensions are paid) to the inflation adjustment account (the account from which COLAs are paid). With the amendment, these transfers are no longer automatic; however, the board can still transfer surplus funds from the basic account to the inflation adjustment account at its discretion. You can be assured future COLAs, although not guaranteed, are sustainable over the long term.
As your Pension Committee, we work professionally, responsibly and proactively to ensure the health of your plan. At least once every three years, an independent actuary (a specialist in financial modelling, statistics and risk management) assesses the plan’s financial position. This assessment includes a report on the adequacy of contribution rates for members and the employer, as well as assumptions about future plan demographics (such as how long plan members will live and when they will retire) and economic factors (such as salary increases and investment returns). This work helps ensure sufficient funds are available to pay the current and future lifetime pensions of all members.The next valuation is scheduled for March 31, 2020. To see the full 2017 valuation report, visit the reports page.