WINNIPEG, Manitoba, Oct. 17, 2017 (GLOBE NEWSWIRE) -- HEB Manitoba and the Board of the Healthcare Employees’ Pension Plan (HEPP) today announced changes designed to enhance the long-term sustainability of the Plan’s defined benefit promise.
There are many factors that influence the sustainability of all defined benefit plans. Although HEPP has experienced strong investment performance over its history, the economic challenges of the last decade, combined with the continued increase in the lifespan of members, are two key risks affecting the Plan’s financial stability.
The Plan changes will have a limited impact and will affect a relatively small percentage of members while enabling HEPP to continue to meet members’ retirement needs and expectations. Current retirees will not be affected.
KEEPING THE DEFINED BENEFIT PROMISE FOR ALL MEMBERS
“We believe the defined benefit promise is essential to our stakeholders and we intend to keep it,” said Kerry Poole, CEO HEB Manitoba.
“The changes the HEPP board has approved will help ensure we can continue to honour the defined benefit commitment to all current and future retirees, and to provide them with stable and secure pensions for their retirement years.”
SUMMARY OF CHANGES FOR CURRENT PLAN MEMBERS
Retiring before age 55: Current members who reach Rule of 80 (where their age plus employment service totals 80) after Dec. 31, 2019 will receive an actuarially reduced pension if they retire before age 55.
This change will not affect current retirees or active members who reach Rule of 80 before Jan. 1, 2020 or who retire after reaching age 55.
Termination benefits: Effective Jan. 1, 2018, termination benefits for all current and future members who leave the Plan before they are eligible to retire will be reduced to the minimum standard set by The Pension Benefits Act of Manitoba.
SUMMARY OF CHANGES FOR FUTURE PLAN MEMBERS
Minimum retirement age: Future members who begin employment after Dec. 31, 2019 will not be eligible to retire before age 55.
Supplementary and bridge benefits: Future members who begin employment after Dec. 31, 2019 will not be eligible for supplementary and bridge benefits.
Termination benefits: Future members will be subject to the same termination benefits outlined above.
The most important point to note is that the core of the Plan is unchanged. The benefit formula used to calculate pensions remains the same, as does the commitment to provide pensions for the lifetime of all current and future retirees.
HEB Manitoba has created a range of communication resources to help members understand how the Plan works and how the changes might affect their eventual retirement plans:
- All members will soon receive a letter explaining how the changes will affect them and a HEPP Change Guide containing details of what is changing and why.
- Members who have not yet received their letters in the mail can visit hebmanitoba.ca to learn more about the changes and see how or if the changes will affect their retirement options.
- HEB Manitoba’s Online Pension Estimator has been updated to reflect the pending changes. Members can log in to the estimator to explore how different scenarios would affect their retirement income.
The HEPP Board - Accountable and Responsible for the Plan
Established on Jan. 1, 1997, HEPP is a multi-employer defined benefit pension plan that is governed by an independent, 12-member Board of Trustees with equal representation from healthcare-related unions in Manitoba and participating employers. Because HEPP is jointly trusteed, any risks in the plan are shared between employees and employers.
With over 79,000 members and $7 billion in assets as at December 31, 2016, HEPP is one of the largest pension funds in Manitoba and among the top 50 in Canada.