TRIO Pension Plans and Options


General Information

TRIO Pension Plan (the "Plan") has been in place since October 1, 1978. As of January 2013, the assets of the Plan exceed $64 million.

There are three principal reasons why eligible municipatlities should enrol in a TRIO plan;

Expertise – our plans are administered by experts who have an intimate knowledge of the municipal environment

Flexibility – you can choose the plan that best suits your economic circumstances

Administrative Cost Savings - The centralized management of the Plan by TRIO means that individual municipalities do not need to budget for Plan administration or have their own staff spend valuable time managing the Plan. Each municipality does not have to set up administrative structures to run the plan, but benefits from the professional management of the Plan.

Eligibility

Any municipality in Newfoundland and Labrador who is a member of the Municipalities Newfoundland and Labrador is eligible to join. All full time employees and all permanent part-time employees (15 hours /week) must enrol in the plan.

Types of Plans

TRIO offers both defined benefit plans and a defined contribution plan.

A defined benefit plan guarantees that a specific monthly amount will be available to each employee upon retirement. If the investment returns are less than anticipated, the municipality is responsible to make up any shortfall to fulfil the guaranteed obligation.

A defined contribution plan contemplates that a separate account is maintained for each employee. Both the employee and the municipality make fixed contributions to the plan, and these contributions are invested over time. This type of arrangement acts in a similar way to an RRSP in that the amount of pension at retirement will depend on the employee�s account balance at that time and the cost of buying a pension from an insurance company which is closely tied to the interest rates in effect at the date of retirement. Of course, the amount of pension will also depend on other factors such as the employee�s age and form of pension chosen.

Benefit Options

Effective January 1, 2020, this table illustrates the options available for the defined benefit plan.

Option Employee Contribution (% of Salary) Normal Retirement Age Early Retirement Penalty Condition for Optional Retirement at age 55 Benefit Formula CPI
Indexing
1
6.25%
65
4% per year
(60-65)
6% per year
(55-60)
N/A
2% Career
No
3
9.25%
60
6% per year
N/A
2% Career
Yes
(max 6%)
7
7.25%
65
6% per year
80 "points"
2% Career
(1994 base year)
See Note 1
8
5.75%
60
6% per year
N/A
1.3% Career
Yes
(max 2%)
10
10.25R%
60
6% per year
N/A
2% Best 5
85% of
annual
CPI
(max 5.1%)
11
12.25%
60
6% per year
N/A
2% Best 5
100% of CPI (maximum 6% per year)
12
7.00%
65
4% per year
(60-65)
6% per year
(55-60)
N/A
2% Best 5
No

Note 1 – For service earned between 2000 to 2012, an annual CPI adjustment to a maximum of 2% applies. For service earned after December 31, 2012, CPI adjustments will be made at the discretion of the TRIO Board, dependent upon favourable economic conditions.

Municipalities who are currently participating in options, 2, 4, 5 and 6 (not shown above) will still, however, be permitted to continue their participation in these options Click here for a chart outlining the conditions as amended on January 1, 2013.

Defined Contribution Plan

Option Employee Contribution (% of Salary) Normal Retirement Age Early Retirement Penalty Condition for Optional Retirement at age 55 Benefit Formula CPI
Indexing
9
3.00 –
9.00%*
N/A
N/A
N/A
Defined Contribution
N/A

* The annual contribution rate is chosen by the employer and can be any value between 3.00% to 9.00% of the employee’s annual salary.

Definitions

Contributions – Both the employee and the employer contribute to the plan. On the defined benefit plan, employer contribution rates are reviewed and if necessary, altered on an annual basis. The Plan administrator is committed to using any surplus which might develop in the Plan to improve benefits. Employers match employee contributions equally.

On the defined contribution plan, both the employer and the employee contribute equally, at the chosen rate between 3% - 9%.

Normal Retirement Age - Normal Retirement Age is the age at which employees would normally be expected to retire from employment with an unreduced pension.

Early Retirement - Pension benefits on early retirement for option 1 are reduced by 4% per year for the first five years that a member retires prior to the Normal Retirement Age and by 6% per year of early retirement in excess of 5 years. Early pensions for options 3 and 8 are reduced by 6% for each year that retirement precedes age 60. For Option 7 members, a reduction of 6% per year is applied for each year of retirement prior to the earlier of Normal Retirement Age and Optional Retirement Age (described below).

Optional Retirement Age – Under Option 7, a member may retire early with an unreduced pension as early as age 55 if the member has the required number of "points". A member's "points" are the total of his or her age plus years of service with the employer. For Option 7, 80 points are required.

Benefit Formula – Pension credits earned prior to December 31, 2012 for Options 1,2,3,4,5 & 8 are frozen as of that date.

Effective January 1, 2013

  • Benefits for Options 1, 2, 3, 5, & 6  are equal to 2% of earnings in each year beginning in 2013 (i.e. a career average formula)
  • Benefits for Option 4 are 1.4% of earnings up to the yearly maximum pensionable earnings (YMPE), and 2% of earnings that exceed the YMPE
  • Benefits for Option 7 are equal to 2% of 1994 earnings for years of service prior to 1995 and 2% of earnings in each year beginning in 1995
  • Benefits for Option 8 are equal to 1.3% of earnings in each year.

Indexing – Benefits for Option 3 are indexed each January 1 after retirement by the increase in the Consumer Price Index (“CPI”), to a maximum of 6%.

Benefits for Options  8 are indexed after retirement by the increase in the CPI, to a maximum of 2%.

CPI adjustments will be made for Options 6 and 7 retirees at the discretion of the Board and when favourable economic  conditions exist.”


Effective November 1, 2023

Two important improvements have been made to Option 9:

  • Age Related Risk Moderation
    As you get closer to your normal retirement age, your assets will be automatically invested in low-risk funds. This is intended to protect your assets against unexpected severe market fluctuations that could negatively impact your investments just prior to your expected retirement date.
     
  • High Quality Investment Options
    If you wish, you will have the opportunity to direct some of your pension assets into high quality investment funds of your choosing. This is in addition to the investments that are chosen and overseen by the professionals.

If you need more information, please contact us.