2013 Contribution Rate Announcement
August 4, 2011
At its last meeting, in July, the LAPP Board of Trustees voted for a small increase in employee and employer contribution rates for 2013.
Beginning Jan. 1, 2013, employees will pay approximately 52 cents more on every $100 of salary earned up to the Yearly Maximum Pensionable Earnings (YMPE) and will pay approximately another 73 cents more on every $100 of salary earned above the YMPE.
In setting the new contribution rates for 2013, the Board confirmed an earlier decision to keep the contribution rate increase already planned for 2012, which was set in 2009 as part of a three-year rate increase.
What are the new rates? The rates for 2011 (current rates) along with the contribution rates set for 2012 and 2013 are as follows:
|
2011 |
2012 |
2013 |
|
|
Members' Rate up to YMPE* |
8.49% |
8.91% |
9.43% |
|
Members' Rate over YMPE |
12.13% |
12.74% |
13.47% |
|
Employers' Rate up to YMPE |
9.49% |
9.91% |
10.43% |
|
Employers' Rate over YMPE |
13.13% |
13.74% |
14.47% |
*YMPE refers to the Year's Maximum Pensionable Earnings level determined by the Canada Pension Plan annually. In 2011, the YMPE is $48,300
As always, contribution rates are divided between employees and employers, with employers paying 1% more.
Every year the Board conducts an actuarial valuation of the plan, to get an overall assessment of the plan's financial health and an accurate picture of its assets and liabilities. The purpose of the valuation is to make sure the earned benefits of the pension plan are secure. This is done by determining whether the plan has sufficient assets to cover its obligations to pension holders.
The December 31, 2010 valuation indicates that a further increase in contribution rates is warranted, primarily as a result of the low interest rate environment and lower expectations for future long-term investment yields.
The contribution rate increases are the direct result of lower investment returns and continuing low interest rates. Other than investment returns, LAPP has only contribution rate adjustments to fund plan liabilities.
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