Municipal Pension Plan Changes Impact Benefits in 2015

Municipal Pension Plan Changes Impact Benefits in 2015

Changes to the Municipal Pension Plan (MPP) pension option factors effective January 1, 2015 may result in improved benefits for members who wait until the New Year to retire.  The MPP covers FSA members in the Technical Staff and Systems Analyst categories, including Research Associates, Analysts, and Assistants.  The upshot is that, due to changes in actuarial assumptions (mathematical bets on how long retirees in the plan will live) choosing to retire in the new year rather than in 2014 may result in a bigger a pension.

Upon retirement, members have the option of receiving their pension either for the remainder of their life (which will continue to be paid to the member’s estate for up to ten years from the time of retirement if the member dies before that time) or for the remainder of their own or their spouse’s life, whichever is longer.  These options are known as the single life, 10 year guarantee option and the joint life option.  Given that the joint life option is more likely to require payment of the pension for a longer period of time, the monthly benefit is reduced.

New assumptions based on the actuarial tables have resulted in significant increases in pension calculations for members choosing the joint life option.  Depending on the ages of the retiring member and their spouse, the monthly pension payment may increase from between $20 and $50 a month if the member waits to retire in 2015 rather than in 2014.  Members choosing the single life, 10 year guarantee option will see very small increases in the pension payments as of January 1, 2015.

A variety of scenarios are described on the MPP web site. 

FSA members under the MPP who are considering retiring now are urged to review these scenarios and contact the Pension Corporation to understand how the timing of their retirement might impact their pension benefit.