NOTICE TO ACTIVE MEMBERS Public Service Shared Risk Plan

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1 NOTICE TO ACTIVE MEMBERS Please be advised that the New Brunswick Public Service Superannuation Act (the PSSA ) pension plan was converted to the shared risk pension model (the ) effective January 1, As part of this new shared risk pension plan, a number of changes apply to service earned on or after January 1, An At-a-Glance document providing a summary of the pension plan provisions is included for your information. Please note that this document is being provided in the interim until the Employee Booklet becomes available in the coming months. Pension Contributions Members of the currently contribute 5.8% on eligible earnings* up to the Year s Maximum Pensionable Earnings (the YMPE ) and 7.5% on eligible earnings* above the YMPE (the YMPE for 2014 is $52,500). Effective April 1, 2014, your contributions will increase to 7.5% of your eligible earnings* up to the YMPE and 10.7% of your eligible earnings* above the YMPE. Effective April 1, 2014, your employer s contribution rate will increase to 12.5% (for the first five years) on all eligible earnings (currently 8.932% up to the YMPE and 11.55% above the YMPE). * Eligible earnings are earnings for regular hours worked, including earnings for any hours worked which exceed your regularly scheduled hours. The total hours that you make contributions on cannot exceed those of a full-time equivalent employee, and do not include overtime hours or premiums (i.e. standby, meal period, etc.). Designation of a Beneficiary A new feature to members resulting from the introduction of the involves the designation of a beneficiary provision. This will allow members to complete a Designation/Change of Beneficiary form and designate a beneficiary for the purposes of pre and post retirement death benefits. The designated beneficiary may also be changed at any time by the member by completing this form. Please note that if a member has a spouse/common-law partner, and the member designates a person other than her/his spouse/common-law partner as a beneficiary, the entitlement to the spouse/commonlaw partner shall supersede the entitlement of the designated beneficiary to a death benefit (i.e. the spouse/common-law partner will be entitled to the death benefit). Please also note that if you have dependant children and your intent is that such dependant children would receive any death benefit if your spouse does not survive you, you must name such dependant children as your beneficiary. The Designation/Change of Beneficiary form is available through your human resources/payroll office, or at the following website: Pensions and Employee Benefits Division Department of Human Resources February

2 Online Pension Estimate Calculator NOTICE TO ACTIVE MEMBERS Members who would like a pension estimate may use the online Pension Estimate Calculator to calculate their pension estimate. This calculator has been updated with the new provisions of the Public Service Shared Risk Plan and is located at the following website: Members who are within twelve months of retirement should request an official estimate from the plan administrator by contacting their human resources/payroll office. Purchase of Service Members may purchase eligible periods of pensionable service under the terms of the former PSSA pension plan until December 31, 2014 if: they were active PSSA members immediately prior to January 1, 2014; and the periods of eligible service occurred prior to January 1, The cost would be based on the salary and the contribution rate in effect as of the date of application. It is important to note that as a result of the contribution rate increasing on April 1, 2014, the cost of purchasing service will increase accordingly for applications dated after April 1, Future rules regarding eligibility and the cost to purchase service will be determined and communicated to members at a later date. If you are interested in obtaining a purchase of service estimate, please contact your human resources/payroll office in order to complete a purchase of service application form. Please note that as a result of the expected increase in volume of applications, there may be a delay in processing members applications. However, any delay will not have an impact on the cost of a member s purchase. Reciprocal Transfer Agreement Pension Plan for Part-Time and Seasonal Employees of the Province of New Brunswick Members who have assets in the Pension Plan for Part-Time and Seasonal Employees of the Province of New Brunswick (the Part-Time and Seasonal Plan ) will still be able to transfer these funds to the under a new reciprocal transfer agreement. The details surrounding how the transfer will take place have not been finalized and will be determined in the coming months. A communiqué will be sent to members once more information becomes available. Questions If you have any questions, please contact a Benefits Counselor with the Pensions and Employees Benefits office at (Fredericton) or toll-free at Pensions and Employee Benefits Division Department of Human Resources February

3 Dear Plan Member: On January 1, 2014 a board of trustees was appointed to govern the affairs of your pension plan, the (PSSRP). An equal number of trustees were selected by government and three participating unions to serve on the initial joint trust board. The individuals appointed by government include non bargaining representatives and a retired plan member. It is anticipated that by July 1, 2014 the full 10 member board of trustees will be in place. The governance and oversight of the PSSRP is quite different from the previous Public Service Superannuation Act (PSSA) plan. Under the PSSA plan, government was responsible for the overall governance and operation of the plan. The New Brunswick Investment Management Corporation s (NBIMC) Board of Directors were responsible for trusteeship of the funds, including investment policy and management. Government is no longer responsible for the governance or operation of your plan and NBIMC s Board is no longer responsible for trusteeship. All responsibility now rests with the PSSRP board of trustees and the agents they employ to administer the plan, including NBIMC and the Pensions and Employee Benefits Division of the Department of Human Resources. As trustees, we are cognizant of the fiduciary responsibility and governance our board must uphold. We will always act in the best interest of plan beneficiaries. Your board of trustees is committed to acting in an efficient, cost effective manner in accordance with the Pension Benefits Act and the various documents that govern the pension plan. Following these guidelines will enhance our ability to effectively manage the operation of the pension plan, including the investment of the funds, while keeping overall costs contained. This model will help to ensure that the maximum resources are available to pay member benefits. In the coming months, you will notice an increase in communications as our commitment to keeping you informed about your pension plan continues. Under the terms of the plan, information that is to be provided to plan members is much more extensive. Key plan documents, including the plan text and funding policy, have been translated and are available on the following website: We encourage those who wish to know more about the governance of the plan and its operations to access these documents. The website will provide members with the pertinent information they require. The Pension Board of Trustees welcome questions. Please direct any correspondence to: PSSRP Board of Trustees c/o Pensions and Employee Benefits PO Box 6000 Fredericton, NB E3B 5H1

4 WHAT IS THE PUBLIC SERVICE SHARED RISK PLAN? The primary purpose of the (the PSSRP ) is to provide secure pensions to plan members upon retirement and until death (including subsequent benefits to their spouse and eligible dependents as applicable) in respect of their service as employees. The PSSRP provides a high degree of certainty (as a result of the risk focused management approach of the shared risk pension model) that accrued base benefits can be provided in the vast majority of potential future economic scenarios (i.e., there is a higher than 97.5% probability that accrued base benefits will not be reduced at any point in the 20 years following January 1, 2014). While the PSSRP does not provide an absolute guarantee that all base benefits will never be reduced, legislation has been passed by the province providing a guarantee that base benefits earned by plan members up to December 31, 2013 will never be reduced. All future cost of living adjustments and other ancillary benefits (e.g., early retirement reduction factors) for members of the PSSRP shall be provided only to the extent that funds are available for such benefits, as determined by the Board of Trustees in accordance with applicable laws and the plan s funding policy. By design, the PSSRP is expected to be in a position to provide average cost of living adjustments (i.e., indexing) in excess of 75% of the Consumer Price Index (CPI) to active members, deferred members, and retirees over the 20-year period following January 1, Base Benefit means the amount of pension paid or payable to a member at any given time. Ancillary Benefits means benefits that are in addition to the Base Benefit, such as cost of living adjustments and early retirement subsidies. WHEN MUST I JOIN THE PENSION PLAN? Effective January 1, 2014, the following employee groups are required to contribute to the PSSRP: Full-Time Regular Employees; Term Employees; Part-Time Employees who were previously contributing to the Public Service Superannuation Act pension plan (the PSSA ); All active employees (part-time and seasonal) who were participating in the Pension Plan for Part- Time and Seasonal Employees of the Province of NB (the Part-Time and Seasonal Plan ) on December 31, 2013; and All other employees (e.g., part-time, casual, or seasonal employees) who: o have a minimum of 24 months of continuous employment; and o have earned at least 35% of the YMPE in each of the prior two consecutive calendar years. Effective February 1, 2014, the following employee group is required to contribute to the PSSRP: Employees under Personal Service Contracts signed on or after February 1, * If you are unsure as to whether or not you meet the requirements to join the Public Service Shared Risk Plan, please contact your human resources or payroll office. YMPE = Year s Maximum Pensionable Earnings used to calculate the Canada Pension Plan (CPP) contributions YMPE: 2012 = $50,100; 2013 = $51,100 1

5 WHAT ARE THE CONTRIBUTION RATES? You are required to contribute Effective April 1, 2014: 7.5% of your eligible earnings up to the YMPE* 10.7% of your eligible earnings above the YMPE Your employer is required to contribute From April 1, 2014 to December 31, 2018: 12.5% of your eligible earnings From January 1, 2019 to December 31, 2023: 12.0% of your eligible earnings From January 1, 2024 to December 31, 2028: 11.25% of your eligible earnings Effective January 1, 2029: employer and employee contribution rates will be redetermined and will become equal The employee and employer contribution rates listed above may temporarily increase or decrease as outlined in the PSSRP s Funding Policy. * YMPE for 2014 = $52,500 WHEN DO I BECOME ELIGIBLE TO RECEIVE A BENEFIT UNDER THE PLAN? You are eligible to receive a benefit under the PSSRP upon the completion of the earlier of: Five years of continuous employment; or Two years of membership in the PSSRP, including membership in any Predecessor Plan. Predecessor Plan = the New Brunswick Public Service Superannuation Act Pension Plan and the Pension Plan for Part-Time and Seasonal Employees of the Province of New Brunswick. AT WHAT AGE CAN I RETIRE? Your Normal Retirement Date is: Your Early Retirement Date is: The first day of the month following your 65 th birthday The first day of any month between the month following your 55 th birthday and the month of your 65 th birthday HOW IS MY PENSION CALCULATED? (pension payable prior to age 65) Once you become eligible to receive a benefit under the plan as detailed above, you may elect an early retirement benefit payable as early as age 55 (payable until age 65). An early retirement pension under the PSSRP (payable up to age 65) is the sum of the following: For each year (or part year) of pensionable service on or after January 1, 2014: 2.0% of Annualized Pensionable Earnings for the year # of hours worked in the year (and contributed) / Full-time Equivalent hours Permanent Early Retirement Reduction Factor of 5% per year (5/12% for each month) that your pension starts prior to age 65. No reduction applies if your pension starts in the month after you turn age 65. 2

6 HOW IS MY PENSION CALCULATED? (pension payable prior to age 65) Continued For all pensionable service before January 1, 2014: For all pensionable service: 2.0% of the Best 5-year average salary up to December 31, 2013 Pensionable service up to December 31, 2013 Permanent Early Retirement Reduction Factor of 3% per year (3/12% for each month) that your pension starts prior to age 60. No reduction applies if your pension starts in the month after you turn age 60. Any cost of living increases granted in accordance with the PSSRP s Funding Policy HOW IS MY PENSION CALCULATED? (pension payable after age 65) At age 65, your PSSRP pension is integrated with the Canada Pension Plan (CPP). A pension under the PSSRP (payable after age 65*) is the sum of the following: For each year (or part year) of pensionable service on or after January 1, 2014: For all pensionable service before January 1, 2014: For all pensionable service: 1.4% of Annualized Pensionable Earnings up to the YMPE for the year PLUS 2.0% of Annualized Pensionable Earnings in excess of YMPE for the year, if any # of hours worked in the year (and contributed) / Full-time Equivalent hours Permanent Early Retirement Reduction Factor of 5% per year (5/12% for each month) that your pension starts prior to age 65. No reduction applies if your pension starts in the month after you turn age % of the Best 5-year average salary up to the average YMPE PLUS 2.0% of the Best 5-year average salary in excess of the average YMPE, if any (all calculated up to December 31, 2013) Pensionable service up to December 31, 2013 Permanent Early Retirement Reduction Factor of 3% per year (3/12% for each month) that your pension starts prior to age 60. No reduction applies if your pension starts in the month after you turn age 60. Any cost of living increases granted in accordance with the pension plan s Funding Policy YMPE for 2014 = $52,500 Average YMPE = 3 year average YMPE (2013 = $49,833) * As per the Income Tax Act, a member must commence receipt of their pension by the end of the year in which they turn age 71 3

7 ARE MY PENSION BENEFITS ADJUSTED FOR COST OF LIVING INCREASES? The pension benefits for: active contributors (including benefits earned up to December 31, 2013); deferred members; and retirees (including survivor pension benefits); may be adjusted each year by a cost of living adjustment (COLA) up to the increase in the Consumer Price Index (CPI) if the funding status of the Plan provides for it. If the funding status of the Plan does not allow for cost of living increases to be granted in a given year, the increases are carried forward to future years and may be paid if the funding status of the Plan allows for it at that time. The PSSRP is expected to be in a position to provide average cost of living adjustments (i.e., indexing) in excess of 75% of CPI over the 20-year period following January 1, ARE THERE DIFFERENT FORMS OF PENSION THAT I CAN CHOOSE FROM? There are various forms of pension that you can select at retirement, depending on your personal circumstances. Each optional form of pension available provides a monthly pension benefit amount that is slightly different. The various forms of pension are described below: Joint and Survivor Pension 50% Benefit Payable (normal form of pension) Joint and Survivor Pension 60% Benefit Payable Joint and Survivor Pension 100% Benefit Payable Life Pension with 5 Year Minimum Payment Period Life Pension with 10 Year Minimum Payment Period Payments are made to you for your lifetime. If you predecease your spouse, payments will continue to your spouse at death for your spouse's lifetime at a level equal to 50% of your pension payable at age 65 (before application of any early retirement reductions). If you have a spouse at retirement, this option is only available if a spousal waiver form is completed. Payments are made to you for your lifetime. If you predecease your spouse, payments will continue to your spouse (being the same spouse you had at retirement) for your spouse's lifetime at a level equal to 60% of your pension payable at age 65 (after application of any early retirement reductions). This option is only available if you have a spouse at your date of retirement. Payments are made to you for your lifetime. If you predecease your spouse, payments will continue to your spouse (being the same spouse you had at retirement) for your spouse's lifetime at a level equal to 100% of your pension payable at age 65 (after application of any early retirement reductions). This option is only available if you have a spouse at your date of retirement. Payments are made to you for your lifetime. If you die before receiving sixty (60) monthly installments, payments are continued (being your pension payable at age 65 after application of any early retirement reductions) to your designated beneficiary or to your estate (payable as a lump sum payment), until in total sixty (60) monthly installments have been paid. This option is only available if you do not have a spouse at the date of retirement, or if a spousal waiver form is completed. Payments are made to you for your lifetime. If you die before receiving one hundred twenty (120) monthly installments, payments are continued (being your pension payable at age 65 after application of any early retirement reductions) to your designated beneficiary or to your estate (payable as a lump sum payment), until in total one hundred twenty (120) monthly installments have been paid. This option is only available if you do not have a spouse at the date of retirement, or if a spousal waiver form is completed. 4

8 ARE THERE DIFFERENT FORMS OF PENSION THAT I CAN CHOOSE FROM? (Continued) Life Pension with 15 Year Minimum Payment Period Payments are made to you for your lifetime. If you die before receiving one hundred eighty (180) monthly installments, payments are continued (being your pension payable at age 65 after application of any early retirement reductions ) to your designated beneficiary or to your estate (payable as a lump sum payment), until in total one hundred eighty (180) monthly installments have been paid. This option is only available if you do not have a spouse at the date of retirement, or if a spousal waiver form is completed. Each option above also provides that, as a minimum, payments from the plan equivalent to at least your contributions with interest at the time of your retirement will be paid. Furthermore, Joint and Survivor options above will also include payments to your dependent children (as defined in the Plan documents) in cases where you do not or no longer have a spouse at the time of your death, or following the death of both you and your spouse. The use of the word Spouse throughout also includes common-law partner, each as defined in the Plan documents. Please note that a Declaration of Marital Status form will need to be completed when selecting the desired form of pension. WHAT HAPPENS IN CASE OF termination of employment (prior to age 55)? With less than five years of continuous employment and less than two years of membership in the PSSRP (including membership in any Predecessor Plan): o You will receive a refund of your contributions with accumulated interest With five or more years of continuous employment or two or more years of membership in the PSSRP (including membership in any Predecessor Plan), you have the choice to: o Defer commencement of your pension benefit until age 65 and receive an unreduced pension (this is the default option if no election made); or o Defer commencement of your pension benefit until a date between your 55 th and 65 th birthday and receive a reduced pension benefit; or o Transfer your Termination Value (as defined under the Pension Benefits Act) in a lump sum to: o a locked-in retirement account (LIRA); o a life income fund; or o your new employer s pension plan (if such plan allows it) termination of employment (after age 55)? With less than five years of continuous employment and less than two years of membership in the PSSRP (including membership in any Predecessor Plan): o You will receive a refund of your contributions with accumulated interest With five or more years of continuous employment or two or more years of membership in the PSSRP (including membership in any Predecessor Plan), you have the choice to: o Defer commencement of your pension benefit until age 65 and receive an unreduced pension (this is the default option if no election made); or o Defer commencement of your pension benefit until a date between your termination date and your 65 th birthday and receive a reduced pension benefit. 5

9 WHAT HAPPENS IN CASE OF (continued) death during retirement? The benefit paid will be determined based on the form of pension that you elect at the time of your retirement. (Refer to ARE THERE DIFFERENT FORMS OF PENSION THAT I CAN CHOOSE FROM? section above for additional information) death prior to retirement? With less than five years of continuous employment and less than two years of membership in the PSSRP (including membership in any Predecessor Plan): o Your surviving spouse (or your designated beneficiary/estate if there is no spouse) will receive a refund of your contributions with accumulated interest. With five or more years of continuous employment or two or more years of membership in the PSSRP (including membership in any Predecessor Plan): o If you have a surviving spouse, such spouse can either: begin receiving in the month following your death a monthly pension benefit of 50% of the pension payable at age 65 (before application of early retirement reductions) until his or her death (if, at the time of the death of your spouse, there are any remaining dependent children who are designated as your beneficiaries, they will be entitled to receive this monthly pension benefit until the time they no longer qualify as a dependent child); or the Termination Value in a lump sum payment. o If you do not have a surviving spouse, your designated beneficiary or estate will receive your Termination Value in a lump sum payment (if you designated your dependent children as beneficiaries, they will be entitled to a pension instead of the above Termination Value). 6

10 PUBLIC SERVICE SHARED RISK PENSION PLAN (PSSRP) DESIGNATION / CHANGE OF BENEFICIARY EMPLOYER INFORMATION EMPLOYER: EMPLOYEE INFORMATION NAME: SOCIAL INSURANCE NO. - - In accordance with the terms and conditions of the, I revoke all previous designations of beneficiaries made by me and I hereby appoint the individual(s) named in the Beneficiary Information section below as beneficiary (beneficiaries) entitled to receive the proceeds arising under the said Plan by reason of my death when they become due. Note: If you have a spouse or common-law partner as defined in the Pension Benefits Act, the entitlement of your spouse or common-law partner shall supersede the entitlement of your beneficiary to a death benefit under the Plan, except where your spouse or common-law partner has waived their rights by signing a Joint and Survivor Pension Waiver form (Form 5 of the Pension Benefits Act). The waiver form can only be signed within the 12 month period prior to retirement and does not apply to any pre-retirement death benefit. BENEFICIARY INFORMATION NAME ADDRESS DATE OF BIRTH SEX RELATIONSHIP Male Female Male Female Male Female Male Female If any beneficiary named above dies before me, the interest of such beneficiary (if any) shall, unless otherwise provided above, accrue to the surviving beneficiary (beneficiaries) or, if none, to my estate. I reserve the right to revoke the appointment of any beneficiary designated by me hereunder at any time. AUTHORIZATION SIGNATURE OF MEMBER: DATE MEMBER S ADDRESS: SIGNATURE OF WITNESS*: DATE Witness must have attained full age of majority and must not be a beneficiary. Please forward completed form to: Pensions and Employee Benefits Division 01/2014 Department of Human Resources P.O. Box 6000, Fredericton, NB E3B 5H1