STF Executive Approves Pension Upgrade
In April, the STF Executive approved a 2.7% (100% of inflation) pre-retirement conditional upgrade to Saskatchewan Teachers’ Retirement Plan pension accrued between July 1, 2015, and June 30, 2021. For the average teacher, this works out to about $240 added to their annual pension when they retire.
A conditional upgrade is an increase to lifetime pensions that may be granted depending on the funded status of the Plan. They are not a guaranteed benefit. Unlike cost-of-living adjustments that are applied to pensions that are already in pay (e.g., for retired members), conditional upgrades are applied to the earned pension benefits of members that are still working.
The increase applies to teachers who provided service under contract in the 2020-21 and/or 2021-22 school years and have not retired or received a termination benefit. That includes those who were receiving the Teachers’ Long-Term Disability Plan benefits during that time (LTD benefits are deemed to be contract service) but does not include substitute teachers. The increase will be applied on June 30, 2022, and will be shown on members' June 30, 2022, annual statement. Members receive their annual statements in December.
In 2015, significant changes were made to the STRP to address a funding deficit brought on largely by the recession in 2008. The changes reduced core guaranteed benefits to a level that could be managed more easily during the bad times with the expectation that conditional upgrades could help increase benefits during the good times. This gives the Plan more flexibility to manage and stabilize member contribution rates, which is especially important given government’s contributions are determined at the bargaining table.
Two smaller upgrades were granted in 2016 and 2017 as part of the Plan changes. However, since that date, no conditional upgrades have been granted until now. The main reason for that is pension regulations were prohibiting the Plan from offering benefit improvements. However, after working with the pension regulator and lobbying government, those regulations were amended in spring 2021, paving the way for this and future increases.
“The regulation amendments were key for us,” said Senior Managing Director of Corporate Fund Services Troy Milnthorp. “It’s really enabled us to manage the Plan the way it was designed to work.”
No increase to pre-2015 accrued pensions has been approved at this time as the Executive seeks to improve equity between the pre- and post-2015 benefits. Retired members are not included in this upgrade as any cost-of-living adjustments – either guaranteed or conditional (when deemed affordable) – are granted on January 1 each year. The Pension and Benefit Board of Directors continue to monitor the Plan’s financial health and will begin evaluating the viability of further increases over the summer. Going forward, decisions on possible future upgrades will be made in the year before the increase is to be granted and will be communicated to members if an upgrade is deemed affordable.