Fourth

Session, 47th General Assembly

Elizabeth II, 2015

BILL 15

AN ACT TO AMEND THE

TEACHERS'

PENSIONS ACT

Received and Read the First Time .................................................................................................

Second Reading .................................................................................................................................

Committee ..........................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE

ROSS WISEMAN

Minister of Finance and President of Treasury Board

Ordered

to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Teachers' Pensions Act to initiate pension

reform measures.

The Bill would

change contribution rates and

the method of pension benefit and indexing calculation; and

require that, where government

has entered into a joint sponsorship agreement that provides the framework for

a corporation to be established to administer the pension plan and act as

trustee of the fund to be established for the pension plan, the government

shall deliver a promissory note to that corporation, when established, which

will amortize $1,862,000,000 over 30 years.

A BILL

AN ACT TO AMEND THE TEACHERS'

PENSIONS ACT

Analysis

S.2 Amdt.

Interpretation

S.6 Amdt.

Contributions by teachers

S.8.1 R&S

Government payments

4. S.9.1 Amdt.

Election upon termination

5. S.13 Amdt.

Purchase of leave without pay

S.20 Amdt.

Early retirement

7. S.21 Amdt.

Deferred pension

S.22 R&S

22. Calculation of pension

for service before

September 1, 2015

22.1 Calculation of pension

for service after

August 31, 2015

22.2 Pension amount

22.3 Retirement during

school year

9. S.24 Amdt.

Re-employment

S.26.1 R&S

26.1 Indexing

26.2 Indexing- persons in

receipt on coming into

force of

section

26.3 Indexing - persons in

receipt after coming

into force of

section

11. S.30 Amdt.

Pension payments

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

SNL1991 c17

as amended

1. Subsection 2(1) of the Teachers' Pensions Act is amended by deleting the word

"and" at the end of paragraph (q.1), by deleting the period at the

end of paragraph (

r) and substituting a semi-colon and the word

"and", and by adding immediately after that paragraph the following:

(s) "YMPE" means the year's maximum pensionable

earnings as defined under the Canada Pension Plan.

2. Paragraph 6(2)(

a) of the Act is repealed and

the following substituted:

(a) 11.35% of that salary; and

Section 8.1 of the Act is repealed and the

following substituted:

Government payments

8.1

(1) No

earlier than April 1, 2016 and no later than August 31, 2016, where the

government has entered into a joint sponsorship agreement that provides the

framework for a corporation to be established to administer the pension plan

and act as trustee of the fund to be established for the pension plan, the

government shall deliver a fully enforceable promissory note to that corporation,

when established, with the terms set out in this section.

(2) The promissory note shall amortize

$1,862,000,000 over 30 years in equal annual payments of $135,000,000 beginning

on August 31, 2016.

(3) Payments made under subsection (2) shall be

fixed and made regardless of the funded status of the pension plan in the

future.

(4) The present value of the residual payments

described in subsection (2), discounted at 6%, shall be considered to be an

asset of the plan.

(5) The asset referred to in subsection (4) is a

non-investment asset which is non-marketable and non-transferrable except as

otherwise provided in this Act and which shall be used solely for the purpose

of determining the funded ratio of the pension plan.

4. Subsection 9.1(9) of the Act is repealed.

5. Subsection 13(2) of the Act is amended by

deleting the reference "section 22" and substituting the reference

"sections 22 and 22.1".

6. (1) Subsection 20(1) of the Act is amended

by deleting the reference "section 22" and substituting the reference

"sections 22 and 22.1".

(2) Subsection 20(4) of the Act is amended by

deleting the reference "section 22" and substituting the reference

"sections 22 and 22.1".

7. Subsection 21(1) of the Act is amended by

deleting the reference "section 22" and substituting the reference

"sections 22 and 22.1".

Section 22 of the Act is repealed and the

following substituted:

Calculation of

pension for service before September 1, 2015

(1) For

service credited before September 1, 2015, pensionable salary shall be the

greater of the average of the teachers' highest 5 years salary calculated at

August 31, 2015 and the average of the teachers' highest 8 years salary

calculated at the date of termination or retirement.

(2) A pension awarded to a teacher is the sum of

(a) 1.4% of the lesser of

(

i) the teacher's pensionable salary, and

(ii) the average of the YMPE in the 3 years

immediately before retirement; plus

(b) 2% of the excess of the teacher's pensionable

salary over the average of the YMPE in the 3 years immediately before retirement,

multiplied by the number of years and 1/10

years of pensionable service credited after March 31, 1967 and before September

1, 2015.

(3) A bridge benefit shall be paid to a teacher who retires before attaining the age of

65 and that bridge benefit shall be, subject to limitations imposed under the Income Tax Act (Canada), equal to 0.6%

of the lesser of the teacher's pensionable salary and the average of the YMPE

in the 3 years immediately before retirement multiplied by the number of years

and 1/10 years of pensionable service credited after March 31, 1967 and before

September 1, 2015.

(4) A bridge benefit paid under subsection

(3) shall cease on the last day of the month in which the teacher who receives that

benefit attains the age of 65 years.

(5) Notwithstanding subsection (2), where the

period of pensionable service credited includes service credited or eligible to

be credited for a period before January 1, 1991 and purchased on or after January

1, 1991 and before September 1, 2015, the pension in respect of that

pensionable service shall be the sum of

(a) 1.62% of the lesser of

(

i) the teacher's pensionable salary, and

(ii) the average of the YMPE in the 3 years

immediately before retirement; plus

(b) 2.22% of the excess of the teacher's pensionable

salary over the average of the YMPE in the 3 years immediately before retirement

multiplied by the number of years and 1/10

of pensionable service credited after March 31, 1967 in respect of the

pensionable service credited for the period before January 1, 1991 and

purchased on or after January 1, 1991 and before September 1, 2015.

(6) Notwithstanding subsection (2), a teacher's

accumulated percentage of pensionable service earned before the commencement of

this

section is protected by this Act except that the amount that is 0.6% of

the lesser of the teacher's pensionable salary and the average of the YMPE in

the 3 years before retirement multiplied by the number of years and 1/10 years

of pensionable service credited after March 31, 1967 shall, subject to the

limitations imposed under the Income Tax

Act (Canada), be treated as a bridge benefit that ceases upon attaining 65

years of age.

(7) Notwithstanding subsection (2), where the

contribution to the pension plan of the government of the province is reduced

under this Act and a teacher or former teacher affected by the reduction does

not make a compensating contribution under this Act, the formula set out in

subsection (2) respecting the calculation of an award of pension shall be

adjusted to reduce the teacher's or former teacher's award of pension

proportionately.

Calculation of pension

for service after August 31, 2015

22.1

(1) For

service credited after August 31, 2015, pensionable salary shall be the average

of the teachers' highest 8 years' salary.

(2) A pension awarded to a teacher is the sum of

(a) 1.4% of the lesser of

(

i) the teacher's pensionable salary, and

(ii) the average of the YMPE in the 3 years immediately

before retirement; plus

(b) 2% of the excess of the teacher's pensionable

salary over the average of the YMPE in the 3 years immediately before retirement,

multiplied by the number of years and 1/10

years of pensionable service credited after August 31, 2015.

(3) A bridge benefit shall be paid to a teacher who retires before attaining the age of

65 and that bridge benefit shall be, subject to limitations imposed under the Income Tax Act (Canada), equal to 0.6%

of the lesser of the average of the teacher's pensionable salary and the

average of the YMPE in the 3 years immediately before retirement multiplied by

the number of years and 1/10 years of pensionable service credited after August

31, 2015.

(4) A bridge benefit paid under subsection (3) shall

cease on the last day of the month in which the teacher who receives that

benefit attains the age of 65 years.

(5) Notwithstanding subsection (2), where the

period of pensionable service credited includes service eligible to be credited

for a period before January 1, 1991 and purchased after August 31, 2015, the pension

in respect of that pensionable service shall be the sum of

(a) 1.62% of the lesser of

(

i) the teacher's pensionable salary, and

(ii) the average of the YMPE in the 3 years immediately

before retirement; plus

(b) 2.22% of the excess of the teacher's pensionable

salary over the average of the YMPE in the 3 years immediately before retirement

multiplied by the number of years and 1/10

of pensionable service credited after August 31, 2015 in respect of the

pensionable service eligible to be credited for the period before January 1,

1991 and purchased after August 31, 2015.

Pension amount

22.2

(1) Where

a teacher has service credited before September 1, 2015 and after August 31,

2015, the teacher's pension shall be the sum of the amounts calculated under

section 22 and 22.1.

(2) Notwithstanding subsections 22(3), 22(6) and

22.1(3), the amount equal to the bridge benefit calculated under those

subsections shall continue after a teacher has attained the age of 65 years

only in respect of years and 1/10 years of pensionable service credited after

March 31, 1967 that exceed 35 years or while a teacher was a member of a religious

order.

Retirement during

school year

22.3

(1) Commencing

on September 1, 1998, teachers may elect to retire during the school year only

if they have completely accumulated the required number of years of pensionable

service necessary for eligibility for a pension.

(2) At the end of a school year, teachers who require

5/10 or less of a year of pensionable service in order to qualify for a

pension, may elect to retire but that benefit shall be determined by the number

of years and tenths of years of pensionable service accumulated to the date of

retirement.

(3) For the purposes of subsections 22(2) and (5) and

22.1(2), 1/10 part of a year of pensionable service shall be credited as prescribed.

(4) For the purposes of subsections 22(2) and (5) and

22.1(2), not more than 10 1/10 parts of a year of pensionable service may be

credited in a teaching year, and where fewer than 10 1/10 parts of a year of

pensionable service are credited in a teaching year, that fraction may be added

to fractions credited in other teaching years for the purpose of computing pensionable

service.

9. Subsection 24(3) of the Act is amended by

deleting the reference "section 22" and substituting the reference

"sections 22 and 22.1".

Section 26.1 of the Act is repealed and the

following substituted:

Indexing

26.1

(1) A

teachers' indexing account shall be established as a separate account within

the pension fund to provide for the increase in the amount of pension or

survivor benefits referred to in sections 26.2 and 26.3.

(2) The following amounts shall be allocated to

the teachers' indexing account:

(a) .85% of the salary of every teacher to whom

the pension plan applies from the money deducted under subsection 6(2); and

(

b) an amount equivalent to the amount under

paragraph (

a) from the contributions of the government of the province under

subsection 8(1).

(3) Section 26.2 only applies to a pension or

survivor benefit where the teacher to whom that pension or benefit relates

retired after August 31, 1998.

(4) The amount of increase determined under

subsection 26.2(2) and 26.3(2) shall be paid only to the extent that funds are

available in the teachers' indexing account and in the event that the funds in

the teachers' indexing account are insufficient to pay the full amount of the

actuarial cost of the increase under subsections 26.2(2) and 26.3(2), the

amount of the increase shall be reduced in accordance with subsection (5).

(5) A reduction in the increase payable under

subsections 26.2(2) and 26.3(2) shall be determined by the ratio of the funds

in the teachers' indexing account to the total actuarial cost of the increase under

subsections 26.2(2) and 26.3(2).

(6) For the purposes of subsections (4) and (5),

the total actuarial cost of the increase under subsections 26.2 (2) and 26.3(2)

shall be determined by the plan's actuary on September 1 of the year in which

the adjustments are made.

(7) For the purposes of this section, the teachers'

indexing account shall participate in the fund as if it were a plan defined

under paragraph 2(

c) of the Pensions Funding

Act.

(8) Notwithstanding subsection (4),

section 9 of

the Pensions Funding Act does not

apply to the teachers' indexing account required under subsection (1).

Indexing -

persons in receipt on coming into force of

section

26.2

(1) Persons

in receipt of a pension or a survivor benefit at the date of the coming into

force of this

section shall have their pensions indexed in accordance with this

section.

(2) On September 1 in a year the amount of a

pension or survivor benefit being paid to a person who has reached the age of

65 shall be adjusted by multiplying

(

a) the annual amount of the pension or survivor

benefit;

(b) 60% of the ratio that the Consumer Price Index

for the previous calendar year bears to the Consumer Price Index for the

calendar year immediately before the previous calendar year,

but the amount of any increase shall not

exceed 1.2% of the annual pension or survivor benefit.

(3) The amount of a pension or survivor benefit

being paid to a person shall not decrease by reason only of an adjustment under

subsection (2).

Indexing -

persons in receipt after the coming into force of

section

26.3

(1) Employees

who retire after the coming into force of this

section shall have their

pensions and survivor benefits indexed in accordance with this section.

(2) On September 1 in a year the portion of a

pension or survivor benefit being paid to a person who has reached age 65

relating to years and months of service credited before the coming into force

of this

section shall be adjusted by multiplying

(

a) the annual amount of the portion of pension or

survivor benefit relating to years and months of service credited before the

coming into force of this section;

(b) 60% of the ratio that the Consumer Price Index

for the previous calendar year bears to the Consumer Price Index for the

calendar year immediately before the previous calendar year,

but the amount of any increase shall not

exceed 1.2% of the annual pension or survivor benefit relating to the years and

months of service credited before the coming into force of this section.

(3) The amount of a pension or survivor benefit

being paid to a person shall not decrease by reason only of an adjustment under

subsection (2).

11. Paragraphs 30(1)(

a) and (

b) of the Act are

amended by deleting the reference "section 22" wherever it appears

and substituting the reference "sections 22 and 22.1".

Commencement

12. This Act comes into force on a day to be

proclaimed by the Lieutenant-Governor in Council.

Queen's Printer