16 things to know about the Canada Post Defined Benefit Pension Plan
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Monday October 31 2022
The Canada Post Defined Benefit Pension plan covers all permanent full and part time letter carriers, MSCs,
clerks, RSMCs (who have routes over 12 hours a week), clerks, mail handlers, dispatchers, technical services, and
RSMC Permanent Relief.In a limited number of situations, it covers temporary Urban Operations workers who are
covering a single known in advance assignment of six months or more.
CUPW has successfully resisted
rollback demands from Canada Post that would have made new hires part of a Defined Contribution Pension Plan. New
hires, in both the CUPW Urban Operations and RSMC bargaining Units (who meet the criteria outlined in point one)
are covered by the Canada Post Defined Benefit Pension Plan. New hires in some other Canada Post bargaining units
are part of a less secure pension plan –a Defined Contribution Pension Plan.
A Defined Benefit Pension Plan is the most secure type of pension plan.Under a Defined Benefit Pension Plan
the monthly pension you receive is predetermined by a formula based on the amount of time you have contributed
to the pension plan, your highest average earnings, and is some cases your age.It is not based on investment
returns, or the state of the economy.
Our Pension Plan is our deferred wages. We take home less money
because we make contributions to the Canada Post Defined Benefit Pension Plan. And Canada Post also
contributes to the Pension Plan on our behalf.
Our Canada Post Defined Benefit Pension Plan:
Provides a monthly retirement pension
for the worker who makes contributions to the pension plan.
Provides for a survivors’
pension to the spouse and eligible children of the pension contributor in the event of the death
of the pension contributor. This is both before and after the pension contributor retires.
Provides
for early retirement on medical / disability grounds.A person must apply
for and medically qualify
for this and there are certain age restrictions. & nbsp;
Our Canada Post Defined Benefit Pension Plan is indexed to keep up with the cost of
living. Generally, in January, retirees receive an increase in their monthly
pension to keep up with the cost of living. For example, between 2012 and 2022, retirees’
pensions increased by approximately 18% due to indexing.
CUPW members are not the only people in the Canada Post Defined Benefit Pension Plan.
& nbsp; & nbsp;
Workers in other bargaining units at Canada Post and supervisors and managers are all part
of this pension plan.Different rules may apply
for them.
If you started contributing to the Canada Post Defined Benefit
Pension Plan before December 21, 2012, you can retire from Canada Post without a penalty
(having your pension reduced because you are retiring early) if you have:
Reached 55 years of age and contributed to the pension plan, whether as a full
timer, part timer or RSMC for 30 or more years OR
Reached 60 years of age and contributed to the pension plan, whether as a full
timer, part timer or RSMC
for two or more years & nbsp;
If you started contributing to the Canada Post Defined Benefit Pension
Plan after December 21, 2012, you can retire from Canada Post without a
penalty (having your pension reduced because you are retiring early) if you
have:
Reached 60 years of age and contributed to the pension plan, whether
as a full timer, part timer or RSMC for 30 or more years OR
Reached 65 years of age and contributed to the pension plan, whether
as a full timer, part timer or RSMC
for two & nbsp;
or more years & nbsp;
Our Canada Post Defined Pension plan is a service purchase plan.
This means the longer you work and contribute to the pension plan
(up to a maximum of 35 years), the higher the amount of your
monthly pension will be. Someone who retires from Canada Post
after contributing to the pension for 35 years will have a higher
pension than someone who retires after contributing to the pension
for 30 years.
As of the last valuation, our Canada Post Defined Benefit
Pension had a going concern surplus of $4 .8 billion dollars.In
this type of valuation, the auditors base their assessment on the
assumption that the pension plan will
continue and determine
if there is enough money in the plan to pay the pensions of all
retirees and current workers.Our pension plan has enough money.In
fact, according to the last valuation, as per the going concern
valuation, the plan was over 119 % funded.
Canada Post
has historically tried to scare us by talking about the Canada
Post Defined Benefit Pension Plan solvency deficit. A solvency
deficit is a valuation where the auditors base their assessment
on the very unlikely assumption that the pension plan will wind
up and that the plan must somehow cover the pensions of all
retirees and current workers. In the 2021 valuation, the plan
had a $4.9 billion dollar deficit based on a three-year average.
The valuation also said that an increase of 1% in the discount
rate (essentially the long-term interest rate) would decrease
the solvency deficit by $5.9 billion dollars.
When Canada Post tries to scare us by talking about the
solvency deficit, we need to respond that the going concern
valuation shows we have a surplus.
Even though the
number of retirees receiving a monthly Canada Post Defined
Benefit Pension has continued to increase, the assets of our
pension plan have also increased. In 2020, the plan had
assets of $29.6 billion. In 202,1 the plan had assets of
$32.3 billion.
CUPW has some concerns about some of the investments
in the Canada Post Defined Pension Plan.For instance, the
plan has invested in some private
for -profit - long - term care facilities.CUPW does not
want our pension fund making profit off vulnerable
seniors.