Pension Report September, 2020
This pension report will focus on the Defined Benefit pension plan and the upcoming changes with Ontario Regulation 420/19 which may impact the commuted value amount payable. I must stress that we do not have a concrete implementation date for when this regulation will take effect.
The proposed regulatory change may come into effect December 1st, 2020. There are two parameters to this regulation:
- Under this new standard the interest rate will continue to be based on the Government of Canada bond yields. Currently CV values are calculated on a fixed adjustment of 0.9%. The new adjustment will vary between 0% and 1.5% depending on relative yields of provincial and corporate bonds to Government of Canada bonds.
- Currently CV values are calculated based on the most valuable retirement date (ex; the date you decide to retire). The new regulation will require an assumed retirement age to be based on a 50/50 blend of the most valuable age and the earliest unreduced age a member could have retired contractually.
“The new commuted value standards are expected to slightly reduce the commuted value of defined benefit pension entitlements, while increasing the complexity of commuted value calculations.”
(Morneau Shepell, News and Views, Feb. 2020)
What does this mean?
Currently, we have no confirmation that this regulation will be enforced by General Motors December 1st, 2020. We also have no calculator to provide membership accurate commuted value estimates should this regulation come into effect. It is important that members review the following links in order to help them make an informed decision going forward and it is recommended that members speak with a trusted financial advisor or accountant before making any pension election:
I have been in regular communication with the Unifor National Pension Representative and my General Motors counterparts. Unfortunately, at this time we do not have concrete information regarding the implementation of Ontario Regulation 420/19 or how commuted value calculations will be altered. This means that we cannot accurately predict commuted value estimates after December 1st, 2020. If you are considering a CV or annuity this will impact you.
We will continue to pursue accurate information regarding this issue and release it to the membership as soon as we can. If you have any questions please call or stop by the Benefits Office.
Jordan Lennox, Pension Representative
In-plant : 905-641-6443
E Mail: Jordan.Lennox@GM.com
Ken Maclean, Alt. Pension Representative