The mortality table used to determine Money Purchase pensions available from the Queen's Pension Plan will be changing effective September 1, 2007.
After considerable study of this issue, and building on previous analysis performed by the plan's actuary, the Pension Committee of the Board of Trustees has decided to implement a more conservative mortality table designed specifically for the university's pension plan. This change is necessary because Queen's retirees, as a group, are living longer than expected. Since the amount of an individual's Money Purchase pension depends on life expectancy, assuming a longer payout period results in a slight reduction to pensions.
The new table will be effective September 1, 2007. It is likely that there will be further changes to the mortality table in the future. Such changes will be determined after additional review of Queen's retirees, mortality experience.
To illustrate the impact of this change, consider a plan member who starts drawing a $1,000 monthly pension as at August 31, 2007 - if this pensioner had decided to begin pension payments the following month after the introduction of the new mortality table, the net impact would be a reduction of slightly more than 1%, i.e. the monthly pension would have reduced to about $990 (assuming the pensioner is 65 and elects the normal form, i.e. a life pension with a ten-year guarantee).
The new mortality table will also have a variable impact depending on age and the pension option selected. Note, however, that if a pensioner's Minimum Guarantee value is greater than the Money Purchase pension, the change in mortality tables will have no impact (i.e. the mortality tables only apply to Money Purchase pensions).
Deferred members of the Plan who are thinking of initiating pension payments this year may want to consider starting payments as at August 31, 2007. On the other hand, members planning to continue to defer pension commencement may also wish to consider that:
Questions? Contact the Pension, Benefits & Insurance Unit of the Department of Human Resources for updated pension estimates.