Update on the Ryerson Retirement Pension Plan contributions

The pension plan is a defined benefit plan, which means the pension that a member will receive is based on a set formula. It is funded through equal contributions from plan members and Ryerson University. The university is required to file valuation reports with the regulatory authorities that document contribution requirements. The December 31, 2019 valuation report shows that the RRPP is fully funded on an on-going basis. The report also shows that increased contributions will be required once it is filed. However, with the filing of the report, contributions to the plan need to increase in order to meet regulatory requirements.

Currently, all members of the RRPP contribute based on the following formula:

• 9.5% of the first $3500 of pensionable earnings, plus
• 7.4% between $3500 and the Year’s Maximum Pensionable Earnings (YMPE) which is $58,700 in 2020, plus
• 9.5% of pensionable earnings above the YMPE.

For the RRPP, “pensionable earnings” are defined as regular salary, excluding continuing education earnings, part-time and sessional earnings, and other extra services such as overtime and shift premiums.

The YMPE is the maximum earnings amount on which current benefits of the Canada Pension Plan (CPP) are calculated, and the point at which contributions to the CPP cease. This number is determined by the federal government each year.

On January 1, 2021, member pension contribution rates will increase by about 0.4%.

Currently, member pension contributions are:

• 9.5% of the first $3500 of pensionable earnings, plus
• 7.4% between $3500 and the Year’s Maximum Pensionable Earnings (YMPE) = $58,700 in 2020, plus
• 9.5% of pensionable earnings over the YMPE

As of January 2021, member pension contributions will be:

• 9.95% on the first $3500 of pensionable earnings, plus
• 7.75% between $3500 and  the Year’s Maximum Pensionable Earnings (YMPE) for 2021
• 9.95% on pensionable earnings over the YMPE

Ryerson matches all pension contributions made by employees. 

The members of the Ryerson Joint Pension Committee, which includes union and non-union membership, signed an Equal Contribution resolution in 2006 confirming that pension contributions are shared equally between the plan members and the university. This required increase will therefore be shared equally by plan members and Ryerson.

The change will be effective with the first pay of 2021. For weekly and bi-weekly paid employees, this is January 8, 2021 and for monthly paid employees it will be January 15, 2021.

Since RRPP contributions are tax deductible, the contribution amount is taken before taxes.  For example, if you earn $50,000 the annual contribution increase is $178.50 but your pay will only decrease by approximately $140.00; if you earn $75,000 the annual contribution is $282.30 and your pay will decrease by about $210.00 and if you earn $100,000 the annual contribution increase is $394.80 and your pay will decrease by an estimated $275.00.

No, this contribution increase will remain in effect until a subsequent valuation report indicates otherwise.

Valuations are prepared by an independent plan actuary, Willis Towers Watson (external link) . An actuary is a credentialed professional who analyzes financial risk by using probabilities, statistics, mathematics and certain valuation methodologies. At the request of the university, Willis Towers Watson prepares a valuation each year. The purpose of the valuation is to determine and certify the funded status of the plan and the minimum and maximum contribution requirements. The valuation is subject to the provisions of the Ontario Pension Benefits Act, the Income Tax Act (Canada) and the professional standards of the Canadian Institute of Actuaries.

No, there are multiple calculations used to assess and determine the health and sustainability of a pension plan. On a going-concern basis (which assumes the plan will continue for the long-term), the December 31, 2019 valuation indicated the plan is fully funded.

There are many stakeholder groups at the University that meet to review the plan and its financial status, such as the Ryerson Employee Relations and Pension Committee (a sub-committee of the Board of Governors) and the Joint Pension Committee (which includes representation from: Academic Planning Group, CUPE 233, OPSEU, MAC, RFA and Senior Directors). 

The valuation results are reviewed by all parties and this oversight ensures that any potential issues are identified and dealt with on a timely basis.

Participation in the plan is mandatory for active full-time career employees. Upon reaching 35 years of credited service in the plan, members do not accrue any further credited service and are no longer required to contribute.

While it is optional for term employees to join the plan, once an employee has joined the plan you are unable to leave as long as you remain an active employee.

Ryerson will continue to monitor the financial health of the plan and ensure steps are taken to protect employee pensions now and into the future. Depending on future economic conditions and changes in demographics, additional contribution increases in future years may be required.

While many other university and public sector plans have seen increases in recent years, contributions at Ryerson have not increased since 2012.

Prior to 2012, the last increase was in 1993. Some of our long-service employees might also remember that in the years 2000 through 2004 there was a pension plan surplus which was shared with members through cash refunds along with a temporary contribution decrease.