Changes to Worker Benefit Plans2010 All Church Workers

Conference

AGENDA

Introduction Why are benefits changing? Consultation Process Details of Pension and PRB Financial

Challenges Overview of plan changes Questions

Consultation and Change Process

Process to date: Survey of employers and employees Strategic Planning session with

representative stakeholders Focus groups held with members and

employers across Canada Announcement of changes in July

Why are the benefits changing?

Employers’ concerns regarding increasing pension and benefit costs and costs for part- time members benefits

Increasing post-retirement benefit plan costs Substantial increases in Pension costs because

of: Lower investment returns than expected Historically low interest rates resulting in

pension plan liabilities being dramatically increased

DB Pension Plan Cost DetailsFinancial Position – (000’s)

Dec 31, 2009 Dec 31, 2006

Going Concern Basis Assets $ 65,684 $ 63,530

Liability 78,995 65,418

Surplus (deficit) $ (13,311) $ ( 1,888)

Funded Ratio 83% 97%

Solvency Basis

Assets $ 65,255 $ 67,248

Liability 87,166 70,049

Surplus (deficit) $( 21,911) $ ( 2,891)

Funded Ratio 75% 96%

Post-Retirement Benefits Plan Estimated Future Cash Costs

Estimated Future Costs - Current and Future Retirees

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Reasons for Post Retirement Benefits

Increases Medical and Dental increases above

inflation Increase in utilization Government cost shifting to private

plans Increasing number of retirees We are all living longer

Summary of Changes

Employer Match on DC pension suspended

Post-retirement benefits discontinued Long Term Disability to be paid by

members Least Cost Alternative required on drugs Minimum hours increased for benefits

eligibility

9

Pension Plan ChangesDefined Contribution (DC)

Effective January 1, 2011 employer match to the DC Plan suspended

Member Contributions - % of earnings

LCC Contributions as a % of member contributions

0-1% 75%

1-2% 25%

2-3% 0%

3-4% 0%

Pension Plan ChangesDefined Benefit (DB)

No immediate changes to the DB Pension Plan

Alternatives being reviewed (could be either DB or DC)

Will be contributory in the future

Changes to Post-Retirement Benefits (PRB)

PRB consist of Health, Dental and Death Benefit

No longer offered to future retirees except: Eligible members who retire before July 1,

2012 Anyone age 60 with 15 years at July 1, 2010

All retirees will be required to pay a premium for PRB (most will pay $11.70 - single; $24,03 - family)

Changes to Post-Retirement Benefits (PRB)

Extended Health Deductible added Least Cost Alternative Drugs added Dispensing fee cap of $ 7 per prescription Private Nursing coverage capped at $10,000

per year Dental

Check ups, x-rays, now once every nine months

Long-Term Disability (LTD)

Effective January 1, 2011 members will be required to pay the cost of LTD

Costs increase for members but so do benefits

When members pay the premium, benefits at the time of claim are non-taxable

Long-Term Disability (LTD) – 60% option

Monthly Salary

Non-Taxable Plan (Employee Paid)

Taxable Plan (Employer Plan)

Estimated Gross Benefits Paid

Estimated Net Benefits Paid

Estimated Gross Benefits Paid

Estimated Net Benefits Paid

$ 4,200 $ 2,520 $ 2,520 $ 2,520 $ 1,875

$ 6,300 $ 3,780 $ 3,780 $ 3,780 $ 2,560

Long-Term Disability (LTD

Members will be able to elect coverage under the following non-taxable LTD options: 50% non- taxable 60% non- taxable 60% non- taxable with a 2% per year cost of

living adjustment (COLA)

Long-Term Disability (LTD Costs

Monthly Salary

Cost

50% non-taxable option

60% non- taxable option

60% non-taxable option (with COLA)

$ 4,200 $ 54.22 $ 60.90 $ 65.77

$ 6,300 $ 81.33 $ 91.35 $ 98.65

Least Cost Alternative Drugs

Several provinces enacted legislation to lower the price of generic drugs

When a generic is available we will pay for the least cost alternative (brand name or generic)

Generic has same active ingredient but filler, binder or dye maybe different

Will pay for brand name if medically required

Least Cost Alternative DrugsExample : Lipitor

BrandLipitor

Generic Atorvastin

Cost Saving

3 month supply

$ 231.29 $ 114.95 $ 116.34

Information from Manulife Financial

Least Cost Alternative DrugsExample : 20% Coinsurance

Member buys brand name:

Brand Lipitor

Generic Atorvastin

Drug cost $ 231.29 $ 114.95

Plan member cost

$ 139.33 $ 22.99

Plan Cost $ 91.96 $ 91.96

Information from Manulife Financial

Eligibility for Permanent Part-time (PPT) Benefits

Employers concerned with providing full active benefits to PPT

Benefits significant part of compensation Pension legislation specifies pension eligibility;

no legislation for benefits except Saskatchewan

Eligibility generous compared to other Canadian employers.

Eligibility for Permanent Part-time (PPT) Benefits

Eligibility: 24 hours per week Current PPT employees will continue to be

covered under current benefits plan until January 1, 2011; thereafter coverage depends on hours worked.

Membership in pension continues regardless if hours are less than 24 hours per week.

Questions

Thank-you for listening!