BENEFITS & PLANS
TRIO PENSION PLANS
AND OPTIONS
TRIO Pension Plans and Options
General Information
TRIO Pension Plan (the “Plan”) has been in place since October 1, 1978. As of January 2011, the assets of the Plan exceed $50 million.
There are three principal reasons why eligible municipatlities should enrol in a TRIO plan;
Expertise – our plans are administered by experts who have an intimate knowledge of the municipal environment
Flexibility – you can choose the plan that best suits your economic circumstances
Administrative Cost Savings - The centralized management of the Plan by TRIO means that individual municipalities do not need to budget for Plan administration or have their own staff spend valuable time managing the Plan. Each municipality does not have to set up administrative structures to run the plan, but benefits from the professional management of the Plan.
Eligibility
Any municipality in Newfoundland and Labrador who is a member of the Municipalities Newfoundland and Labrador is eligible to join. All full time employees and all permanent part-time employees (15 hours /week) must enrol in the plan.
Types of Plans
TRIO offers both defined benefit plans and a defined contribution plan.
A defined benefit plan guarantees that a specific monthly amount will be available to each employee upon retirement. If the investment returns are less than anticipated, the municipality is responsible to make up any shortfall to fulfil the guaranteed obligation.
A defined contribution plan contemplates that a separate account is maintained for each employee. Both the employee and the municipality make fixed contributions to the plan, and these contributions are invested over time. This type of arrangement acts in a similar way to an RRSP in that the amount of pension at retirement will depend on the employee’s account balance at that time and the cost of buying a pension from an insurance company which is closely tied to the interest rates in effect at the date of retirement. Of course, the amount of pension will also depend on other factors such as the employee’s age and form of pension chosen.
Benefit Options
Effective January 1, 2009, TRIO has streamlined the options available for its defined benefit plans, as illustrated in this table:
| Option | Employee Contribution (% of Salary) | Normal Retirement Age | Early Retirement Penalty | Condition for Optional Retirement at age 55 | Benefit Formula | Indexing |
|
1 |
5.75% |
65 |
4%/6% per year |
N/A |
2% Best 5 |
N/A |
|
3 |
8.75% |
60 |
6% per year |
N/A |
2% Best 5 |
CPI up to 6% |
|
7 |
6.75% |
65 |
6% per year |
80 points |
2% Career |
CPI up to 2% |
|
8 |
5.25% |
60 |
6% per year |
N/A |
1.3% Best 5 |
CPI up to 2%** |
** for service after January 1, 2000
Municipalities who are currently participating in options, 2, 4, 5 and 6 (not shown above) will still, however, be permitted to continue their participation in these options.
| Option | Employee Contribution (% of Salary) | Normal Retirement Age | Early Retirement Penalty | Condition for Optional Retirement at age 55 | Benefit Formula | Indexing |
|
9 |
3.00 – 9.00 %* |
60 |
N/A |
N/A |
Defined Contribution |
N/A |
* The annual contribution rate is chosen by the employer and can be any value between 3.00% to 9.00% of the employee’s annual salary.
Definitions
Contributions – Both the employee and the employer contribute to the plan. On the defined benefit plan, employer contribution rates are reviewed and if necessary, altered on an annual basis. The Plan administrator is committed to using any surplus which might develop in the Plan to improve benefits. Employers match employee contributions equally.
On the defined contribution plan, both the employer and the employee contribute 3% of salary.
Normal Retirement Age - Normal Retirement Age is the age at which employees would normally be expected to retire from employment with an unreduced pension.
Early Retirement - Pension benefits on early retirement for option 1 are reduced by 4% per year for the first five years that a member retires prior to the Normal Retirement Age and by 6% per year of early retirement in excess of 5 years. Early pensions for options 3 and 8 are reduced by 6% for each year that retirement precedes age 60. For Option 7 members, a reduction of 6% per year is applied for each year of retirement prior to the earlier of Normal Retirement Age and Optional Retirement Age (described below).
Optional Retirement Age – Under Option 7, a member may retire early with an unreduced pension as early as age 55 if the member has the required number of "points". A member's "points" are the total of his or her age plus years of service with the employer. For Option 7, 80 points are required.
Benefit Formula – Benefits for Options 1 and 3 are equal to 2% of the member's average salary in the best five years of earnings, multiplied by the member's service while in the Plan, (i.e. a final average formula). Benefits for option 8 are equal to 1.3% of the member’s average salary in the best five years of earnings. Benefits for Option 7 are equal to 2% of 1994 earnings for years of service prior to 1995 and 2% of earnings in each year beginning in 1995 (i.e. a career average formula).
Indexing – Benefits for Option 3 are indexed each January 1 after retirement by the increase in the Consumer Price Index (“CPI”), to a maximum of 6%. Benefits for Options 7 and 8 are indexed after retirement by the increase in the CPI, to a maximum of 2%. Indexing for Option 7 applies beginning at the end of the third year of retirement.
If you need more information, please contact us.