Media Watch # 38, April 24, 2009
This is a summary of the pension committee report. Read the full report here.
1. Today’s edition will be a bit of a departure from the usual.
2. In Media Watch #22, April 4th, we said that the Teachers’ Retirement Allowances Fund (TRAF) announced the new rate of 0.37% of the CPI of 1.2%, resulting in a 30.8% COLA. That hasn’t changed. However, to put the new numbers into a perspective, we are adding some more detail.
3. The maximum COLA that could have been granted this year, under the new Bill 45 formula of a 2/3 maximum, was 0.8% CPI.
4. However, the granting of a 0.8% COLA would have resulted in an unfunded liability in the PAA because sufficient funds have not been put into the PAA by the MTS and the government.
5. RTAM proposed the “greater of” method of calculating the COLA and it was accepted by the MTS and the government. Without that new method, according to TRAF, there would have been a zero COLA.
6. TRAF has introduced new Mortality tables. It reflects that retired teachers are living longer and thus drawing more on the retirement funds. Had the former mortality tables been used, a 0.8% CPI COLA could have been granted. Therefore, the end result was a loss of 0.43% COLA because of the new tables.
7. Base pension inflation
$10,000 1.2% /$120
COLA @ 0.8% $80 This is the max under Bill 45.
Loss #1 $40
COLA @ 0.37 $37 This is what we are receiving.
Loss #2 $83
At $20,000 you are receiving $74, and losing $166 to inflation.
At $30,000 you receive $111, and lose $249.
At $40,000 you get $ 148, and lose $332.
8. With COLA payments dependent on investments in the market, Media Watch acknowledges that we are in difficult times. Media Watch continues to watch that market for glimmers of a return to stable conditions. In the meantime, let’s not misplace out anger and disappointment. Let’s remember who created Bill 45.