Participants in the Carpentry Workers Pension Plan of BC which manages the pension plan for the Construction Maintenance & Allied Workers (CMAW) have been informed that continuing significant reductions in the solvency level of their plan have forced a 30% reduction in pension benefits.
Retirees have been told that as of August, 2011, their pension payments will be reduced by 10%, and an additional 10% in each of the two following years until they reach the 30% reduction effective immediately for working members.
Solvency levels are a measure of what would happen if the plan were to be terminated today, and the assets were used to buy annuities to satisfy the plan's current liabilities to all of its participants. In 2007, the plan would only have been able to fund 88% of its then-current future liabilities. That figure has since fallen to only 72%.
In a letter to plan members, the plan's trustees say that to bring the plan to full solvency would require them to almost triple the current hourly contribution rate from around $4 to somewhere in the neighbourhood of $12.
Their only other option was to cut pension payments under the plan. This change will create a 100% fully funded plan.
To read the full trustees' letter (as a pdf), click here.