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January 1, 2009

McMaster University Salaried Pension Plan (the “Plan”)

We are pleased to announce that pensions in pay as of January 1, 2009 will be increased in respect of any retiree who was receiving a pension on June 30, 2008.  The calculation for this increase is complex, involving two separate calculations that we have described below in two stages – the “Annual Pension Increase” and the “Supplementary Pension Increase.” 

Annual Pension Increase (2.18%)

The “Annual Pension Increase” for January 1, 2009, calculated in accordance with the Plan text and reviewed by our external auditors, resulted in an increase of 2.18% to pensions paid from the Plan.  This impacts any member who will receive a pension from the Plan on January 1, 2009, and who was also in receipt of a pension on June 30, 2008. Those retirees who retired between August 1, 2007 and June 1, 2008, will receive a pro-rated increase.

Supplementary Pension Increase (1.537%)

The Plan also provides for a “Supplementary Pension Increase” if in any given year the Annual Pension Increase is capped by the Consumer Price Index (“CPI”), and if the Annual Pension Increase was less than CPI in any of the previous 3 years.  As the increase calculations effective January 1, 2006, and January 1, 2007 were less than CPI, we can use the excess amount this year to provide an increase on January 1, 2009 greater than CPI.  This increase will be provided to any retiree who was in receipt of a pension on or before June 1, 2006.

The Plan text provides a detailed formula that determines the amount that can be used to “catch-up” on previous years.  This calculation, which is also based on the June 30, 2008 audited financial statements, results in a Supplemental Pension Increase of 1.537%.

If you retired on or after August 1, 2005, and before June 1, 2006, your supplementary increase will be pro-rated based on the number of months you were retired in a given benefit year.  Please refer to the Supplementary Pension Increase Calculations (Excel) for more details, and to determine the exact Supplementary Pension Increase rate if you retired between August 1, 2005 and June 1, 2006.

Total Increase

In light of the Annual Pension Increase and the Supplemental Pension Increase, the total monthly gross pension (excluding any bridge payments) will increase by 3.75% for any retiree who retired before August 1, 2005.  This rate is the result of multiplying 1.0218 by 1.01537 and then subtracting one.  This formula takes into consideration the compounding of the two increase rates. 

Personalized letters were issued in early 2009 providing each retiree with details of the specific increase amounts.

The information provided on this website is intended to summarize in plain language, the McMaster University Contributory Pension Plans and their respective audited financial statements. For an exact and complete description of the Plan and the financial statements, consult the Plan Text and audited financial statements. In cases where the information provided on this website differs from that contained in the Plan text and audited financial statements, the Plan text and audited financial statements will govern.