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Introduction
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The Ontario Teachers’ Federation (OTF), the Ontario government and the Teachers’ pension plan jointly commissioned a survey to gauge member preferences for possible changes in contribution and benefit levels if required to ensure the continued financial health of the pension plan. |
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Telephone interviews were conducted with 2,820 randomly-selected working members, between April 11 and May 2, 2007. The respondents represented a cross-section of the membership. |
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The survey was conducted by POLLARA, an independent research firm. |
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Statistically, the survey results accurately reflect the views of the plan’s 167,000 working members. |
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The survey findings are not binding, but provide valuable information for the OTF and government to consider if a funding shortfall must be addressed in the future. |
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Key findings
Pension plan knowledge
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The majority of members have a high level of awareness of key member benefits. For example, 95% of respondents were aware of the 85 factor, 87% knew their monthly pension is based on a formula, and 74% were aware their pension is inflation-protected. |
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Almost 25% of members know how much they contribute to their pension, while 77% are aware contribution rates will increase in the next two years. |
Contribution levels
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Members would be willing to pay an average maximum of 12.3% of their base earnings to preserve their current pension package. This is 1.3% higher than the average amount members will contribute when scheduled rate increases are fully implemented in 2009. |
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New members, mid-career members and older members share similar contribution rate tolerances, ranging from an average maximum of 11.9% to 12.8%. |
Benefits
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Members were asked whether they would favour the following benefit changes if required to ensure the continued financial health of the pension plan after contribution rates reached their maximum acceptable level. The results show:
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51% would support making cost-of-living increases on future pension service conditional on the financial well-being of the pension plan |
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41% would support increasing the 85 factor to a 90 factor |
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32% would support decreasing monthly pensions for future service by 10% |
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When asked to select which of the three potential benefit provisions they would most prefer to change, conditional cost-of-living increases was the clear favorite. When asked to name which one of the three potential benefit changes they would least prefer, the 85 factor was named. |
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Support for changes in cost-of-living increases is highest among newer members (59%) and decreases as members approach retirement to as low as 37%. |
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Members who are already eligible for an unreduced pension are 74% in favor of switching to a 90 factor, while support among other groups is as low as 34%. |
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Only 24% of members eligible for an unreduced pension support reducing monthly pensions for future service by 10%, while 33% of teachers more than five years away from retirement support the change. |
Next steps
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The Ontario Teachers’ Federation (OTF) and the Ontario government, which jointly sponsor the pension plan, will consider the survey results, along with actuarial advice and financial findings, when deciding how to handle possible future funding shortfalls. |
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A shortfall exists when the plan’s funding valuation shows that plan liabilities (the cost of future benefits) exceed plan assets (stocks, bonds, contributions, etc.). A funding valuation must be filed with the provincial regulator every three years with plan assets and liabilities in balance. If the valuation shows a shortfall, there must be an increase in contribution rates, a reduction in pension benefits to be earned in the future or a combination of the two options to balance the pension fund. See Funding and Financial status Q&As for more information. |
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