Changes to Worker Benefit Plans
description
Transcript of Changes to Worker Benefit Plans
Changes to Worker Benefit Plans2010 All Church Workers
Conference
AGENDA
Introduction Why are benefits changing? Consultation Process Details of Pension and PRB Financial
Challenges Overview of plan changes Questions
Consultation and Change Process
Process to date: Survey of employers and employees Strategic Planning session with
representative stakeholders Focus groups held with members and
employers across Canada Announcement of changes in July
Why are the benefits changing?
Employers’ concerns regarding increasing pension and benefit costs and costs for part- time members benefits
Increasing post-retirement benefit plan costs Substantial increases in Pension costs because
of: Lower investment returns than expected Historically low interest rates resulting in
pension plan liabilities being dramatically increased
DB Pension Plan Cost DetailsFinancial Position – (000’s)
Dec 31, 2009 Dec 31, 2006Going Concern Basis Assets $ 65,684 $ 63,530 Liability 78,995 65,418 Surplus (deficit) $ (13,311) $ ( 1,888) Funded Ratio 83% 97%
Solvency Basis Assets $ 65,255 $ 67,248 Liability 87,166 70,049 Surplus (deficit) $( 21,911) $ ( 2,891) Funded Ratio 75% 96%
Post-Retirement Benefits Plan Estimated Future Cash Costs
Estimated Future Costs - Current and Future Retirees
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Reasons for Post Retirement Benefits
Increases Medical and Dental increases above
inflation Increase in utilization Government cost shifting to private
plans Increasing number of retirees We are all living longer
Summary of Changes Employer Match on DC pension
suspended Post-retirement benefits discontinued Long Term Disability to be paid by
members Least Cost Alternative required on drugs Minimum hours increased for benefits
eligibility
9
Pension Plan ChangesDefined Contribution (DC)
Effective January 1, 2011 employer match to the DC Plan suspended
Member Contributions - % of earnings
LCC Contributions as a % of member contributions
0-1% 75%1-2% 25%2-3% 0%3-4% 0%
Pension Plan ChangesDefined Benefit (DB)
No immediate changes to the DB Pension Plan
Alternatives being reviewed (could be either DB or DC)
Will be contributory in the future
Changes to Post-Retirement Benefits (PRB)
PRB consist of Health, Dental and Death Benefit
No longer offered to future retirees except: Eligible members who retire before July 1,
2012 Anyone age 60 with 15 years at July 1, 2010
All retirees will be required to pay a premium for PRB (most will pay $11.70 - single; $24,03 - family)
Changes to Post-Retirement Benefits (PRB)
Extended Health Deductible added Least Cost Alternative Drugs added Dispensing fee cap of $ 7 per prescription Private Nursing coverage capped at $10,000
per year Dental
Check ups, x-rays, now once every nine months
Long-Term Disability (LTD) Effective January 1, 2011 members will be
required to pay the cost of LTD Costs increase for members but so do
benefits When members pay the premium, benefits
at the time of claim are non-taxable
Long-Term Disability (LTD) – 60% option
Monthly Salary
Non-Taxable Plan (Employee Paid)
Taxable Plan (Employer Plan)
Estimated Gross Benefits Paid
Estimated Net Benefits Paid
Estimated Gross Benefits Paid
Estimated Net Benefits Paid
$ 4,200 $ 2,520 $ 2,520 $ 2,520 $ 1,875
$ 6,300 $ 3,780 $ 3,780 $ 3,780 $ 2,560
Long-Term Disability (LTD Members will be able to elect coverage
under the following non-taxable LTD options: 50% non- taxable 60% non- taxable 60% non- taxable with a 2% per year cost of
living adjustment (COLA)
Long-Term Disability (LTD Costs
Monthly Salary
Cost
50% non-taxable option
60% non- taxable option
60% non-taxable option (with COLA)
$ 4,200 $ 54.22 $ 60.90 $ 65.77
$ 6,300 $ 81.33 $ 91.35 $ 98.65
Least Cost Alternative Drugs
Several provinces enacted legislation to lower the price of generic drugs
When a generic is available we will pay for the least cost alternative (brand name or generic)
Generic has same active ingredient but filler, binder or dye maybe different
Will pay for brand name if medically required
Least Cost Alternative DrugsExample : Lipitor
BrandLipitor
Generic Atorvastin
Cost Saving
3 month supply
$ 231.29 $ 114.95 $ 116.34
Information from Manulife Financial
Least Cost Alternative DrugsExample : 20% Coinsurance
Member buys brand name:
Brand Lipitor
Generic Atorvastin
Drug cost $ 231.29 $ 114.95
Plan member cost
$ 139.33 $ 22.99
Plan Cost $ 91.96 $ 91.96
Information from Manulife Financial
Eligibility for Permanent Part-time (PPT) Benefits
Employers concerned with providing full active benefits to PPT
Benefits significant part of compensation Pension legislation specifies pension eligibility;
no legislation for benefits except Saskatchewan
Eligibility generous compared to other Canadian employers.
Eligibility for Permanent Part-time (PPT) Benefits
Eligibility: 24 hours per week Current PPT employees will continue to be
covered under current benefits plan until January 1, 2011; thereafter coverage depends on hours worked.
Membership in pension continues regardless if hours are less than 24 hours per week.
Questions
Thank-you for listening!