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Pension Plan Update

A message from the Pension and Benefits Board

The nautical term “steady as she goes” is the command to the helmsman to observe the compass direction on the present heading, and maintain that course. That term best describes the direction taken by your Pension and Benefits Board following the instructions given by the 140th General Assembly.

The investments of the pension plan provided a steady return in the range of 9% for the nine months ending March 31, 2014, as equity markets have been strong. It is a tough balance because about one third of the plan is held in fixed income and the rates there are low. The Trustee Board of the Presbyterian Church in Canada is responsible for these balancing decisions and is bound by “prudent person” rules in making investment decisions. (What would a prudent person do?)

As an active member of the pension plan, you already know that contribution levels for both you and the employer (the congregation) are high. Yes, the 9% contribution by clergy is as close to the biblical “tithing” as we can expect.  We acknowledge that these levels of contributions are difficult for everyone. (pop-out box)

The provincial regulators of the pension plan require that we have five years to bring the plan assets to a level which would cover the long term liability, should that ever be required. We can only reach that point by making the tough decisions, which have been approved by the General Assembly.

These increases in contributions to the pension plan together with other sources of capital (such as 25% of any windup revenue coming from the dissolution of a congregation and subsequent sale of an asset) are taking us in the right direction. We were also fortunate in the past few months to have received a bequest from an estate adding $500,000 to the plan assets.

We do recommend that everyone read the July, October and November 2014 online issues of the Pensions and Benefits Bulletin for treasurers. While these may be addressed to congregations, they show how we are looking to build the plan assets steadily to provide a stable base for the future. We can’t control the equity returns, but we can build the asset base and then hopefully reduce risk over time.

Health and Dental Plan

The Pension and Benefits Board is also monitoring the Health and Dental Plan and looking carefully at costs. “What is “fair and reasonable” and in the best interest of all members is a guiding principle which the board considers in making these decisions.

Financial Education

At the General Assembly, the Pension and Benefits Board was asked to develop a series of modules to assist with the financial education of our members. This came about because we continue to be asked questions like “Do I really need a will?” or “How do I decide what kinds of insurance we need?”

So let us know what additional topics you would like to see, and we will roll these out over the next number of months. The idea is to have paper and electronic versions and make them available to the colleges, presbytery clerks and perhaps via presentations to synods.

We end this letter with a regulatory matter, which we are required to place before you.

stop - iconNotice to Members of the Pension Plan

A Change to the Method for Crediting Interest to Member Contributions

The General Assembly adopted the board’s recommendation to change the method used for crediting interest to member contributions (see A&P 2014 p.462-3). Pension plan legislation now requires that we follow a specific procedure of providing information about this change to all active members of the pension plan. The notice is as follows:

Starting from January 1, 2015, a new method will be used to calculate the rate of interest credited to your required contributions to the pension plan.Until now, the interest rate was based on the rate of investment return earned by the pension fund, adjusted for expenses. Under the new method, the interest rate will be based on published 5-year bank GIC rates, as reported by Statistics Canada. Your accumulated contribution balance as of December 31, 2014 will not be affected – only interest credited after January 1, 2015 will change to the new method.The change will not apply to plan members in Quebec, where the law requires interest to be based on the fund’s investment return. Also, if you made additional voluntary contributions to the plan before July 1, 2003, those contributions will continue to be credited with interest based on the fund’s investment return after January 1, 2015.

It is important to note that this change will not affect the lifetime pension you have earned under the pension plan. The change may affect you only if you receive a partial refund of your contributions under pension law. This may happen when you end your active participation in the plan, if your accumulated contributions with interest are more than 50% of the present value of your lifetime pension.

The bank GIC method will be much less volatile than the current method, resulting in more stable growth in your contribution balance and more predictable funding costs for the church, thereby enhancing the sustainability of the plan. The bank GIC method is also more commonly used among most defined benefit pension plans in Canada.

If you have any questions about the new method for crediting interest, please contact the pension administrator, at pension [at] presbyterian [dot] ca. If you would like to register your concerns or comments formally, please send them in writing to the pension plan’s administrator or to the Superintendent of Financial Services of Ontario, c/o the Financial Services Commission of Ontario, Pension Plans Branch, 5160 Yonge Street, P.O. Box 85, Toronto, ON M2N 6L9. Please refer to pension plan registration number 0368902 in any correspondence with the Commission.



light bulb - iconNew Annual Limit for Physiotherapy Coverage

Starting January 1, 2015 – new annual limit is $500 per person

As we reported to the General Assembly, the Pension and Benefits Board is committed to controlling further increases to health and dental premiums paid by the congregations and retirees and carefully looked at areas of cost savings within the paramedical specialties.

The board reviewed the total amount of physiotherapy claims and the number of claimants in a given year and determined that the total amount of physiotherapy claims for a very large majority of claimants was under $500 per year. In keeping with the same limits as other paramedical coverage provided by our plan, the board decided that $500 per person; per year is also a ‘fair and reasonable’ annual limit for physiotherapy coverage.  The change to the annual limit will take effect January 1, 2015 for both active and retired members of the plan.

report - iconPension Plan Sustainability Study

The results of the pension plan sustainability study were both encouraging and concerning for the Pension and Benefits Board. The study indicated that The Presbyterian Church in Canada Pension Plan is sustainable over the 15 year window of the study; however, it will be very challenging for the church to meet the funding requirements for the next five years.

The study showed that because of  the minimum funding requirements needed to fund the solvency deficit, that is, to be 100% funded at a specific date in time, contributions from members, congregations and other employers are not sufficient for the next few years. The plan will need to seek out additional sources of funding each month starting July 2014, which is when the reserves of the plan used to fund the deficit are exhausted. In response to this need, the General Assembly provided two new sources of funding support – for the next five years, 15% of undesignated bequests made to The Presbyterian Church in Canada and 25% of assets realized from closed and dissolved congregations will be set aside to address the pension fund solvency.

The board was heartened to learn that because the church took the difficult steps in 2013 to substantially increase contributions rates, the plan will be receiving more contributions than are normally required to pay pensions over the long term. This means that these additional contributions are helping to bring the plan to a more favourable position and it is expected that contribution rates may be able to be relaxed in about five years. This is good news for the pension plan.

starburst - iconThis and That…


In Memory of…

We remember Mr. James Hutchison who served on the Pension and Benefits Board from 2010 until his death in early 2014. Gathered from his lifelong career as a Graduate Accountant, specializing in corporate and personal taxation, Jim brought his financial expertise to the Technical and Group Benefits committees of the board with passion and dedication. He will be fondly remembered.

Pension and Benefits Board Communication

An important part of the work of the Pension and Benefits Board is to help members understand their plans and the benefits they provide. Changes and news items are regularly communicated through this newsletter which is always available online.

The Board recently added an information bulletin for treasurers and is also developing a work plan to provide a series of modules to assist with the personal financial education of our members. Visit in the coming months for more details.

Pension and Benefits Bulletin for Treasurers Available Online

At the last General Assembly the Pension and Benefits Board invited a group of ruling elder commissioners to dinner and conversation for the purpose of listening to congregations’ expectations and concerns about the pension plan and the work of the board.

Representative elders told the board that Sessions and treasurers want to be better informed of the decisions approved by the General Assembly and they need to know how the decisions will be applied to congregations. As a result, treasurers are now receiving information bulletins in addition to the annual treasurer memos prepared by the Pension and Benefits Board office.

Visit the Pension and Benefits web page and go to the section on Info for Treasurers.

Retirement and Financial Planning

The Pension and Benefits Board has heard that you might like to know more about planning for your retirement and other financial planning topics. So, we are asking to please let us know what might help you. We are considering the following modules that we know are needed by most:

  • Wills and estate planning
  • Canada Pension Plan and Old Age Security
  • Life insurance decisions
  • Naming a beneficiary

 Email us at pension [at] presbyterian [dot] ca – we look forward to your suggestions.

thumbs up - icon2014 – 2015 Pension and Benefits Board Members

Mr. Thomas Fischer, Convener, Toronto, ON
The Rev. Cameron Bigelow, Orillia, ON
The Rev. Peter Bush, Winnipeg, MB
Mr. Woon Yong Chung, Toronto, ON
Mr. Eugene Craig, Woodstock, NB
Mr. Timothy Herron, Convener, Trustee Board, Thornhill, ON
Ms. Ann Hysert, Merrickville, ON
The Rev. Dr. Laurence Mawhinney, Lunenburg, NS
The Rev. Katharine Michie, Prince George, BC
Mr. Stephen Roche, Chief Financial Officer and Treasurer
Mr. Bruce Templeton, Outer Cove, NL

About This Newsletter

This bulletin provides summary information about The Presbyterian Church in Canada’s pension and benefits plans. It is not intended to be complete or comprehensive, or to provide legal or medical advice. If there are any discrepancies between this bulletin and the wording in the legal documents that govern the plans, the legal documents will apply in all cases.

For more information, contact Pension and Benefits by email or call 416-441-1111 or 1-800-619-7301 ext. 287.

Looking for more information about your pension and benefit plans?

Visit the Pension and Benefits web page for forms, newsletters, booklets, worksheets and latest news.

Download the PDF version

Image of arrow pointing downWindow Newsletter - Fall 2014