Group 5 – Police officers and firefighters

Group 5 was established January 1, 2010. Employees who are plan members earn a larger pension benefit than those in other groups for the same salary and service. This is valuable because police officers and firefighters can retire earlier, giving you a competitive advantage when recruiting.

Joining group 5

Admission to group 5 is approved by the board. To apply, the employer and the union have to collectively bargain an agreement. This change can be facilitated by either the employer or the union.

The agreement must comply with plan rules and the board’s terms and conditions for enrolment.

Non-unionized members must enter into an employment contract that allows for group 5 membership.

Joining group 5 increases the value of the pension plan for both you and your employees.

• Talent recruitment and retention: If you join group 5, you provide a more valuable pension plan to the police officers and firefighters working for you. This is a benefit when you are recruiting and will be important to retaining workers.
• Cost efficiency: Reduced financial stress among workers has been proven to increase productivity. While a higher contribution rate might seem like it will cost more, increased productivity and more efficient work can save money over time.
• Administrative benefits: There are no special agreements in group 5, which could mean an overall decrease in cost in contributions and time spent administrating the plan. Group 5 contribution rates are calculated separately from group 1 rates. For employers who have employees in group 1 and group 2, the move to group 5 would mean they would no longer receive a blended contribution rate, which may also decrease time spent administrating.

Participation in group 5 is mandatory for all eligible employees covered by a collectively bargained agreement between you and the union that specifies membership in group 5. Participation is also mandatory for non-union firefighters and police officers (e.g., chiefs and deputies) who are hired after an employer has joined group 5.

For employers who have moved from group 2 to group 5, some employees might remain in group 2 if their work does not meet the definition of police officer or firefighter. New employees would not be able to join group 2. If they are ineligible to join group 5, they will be enrolled in group 1. The move from group 2 to group 5 is a permanent, one-way move.

For more information, see the Employer Group 5 Enrolment Application form.

Cost

The difference in cost to move from group 2 to group 5 depends on the current amount being contributed. Contribution rates are higher for group 5; however, this does not necessarily mean your contributions overall will increase by that percentage. Once you move to group 5, contribution rates for group 1 and group 5 employees will be calculated separately.

Special agreements

Group 5 members are not eligible for special agreements. This means if you move from group 2 to group 5, special agreement contributions you may have will stop. While the group 5 contribution rate is a higher percentage overall, the true cost will need to account for no longer contributing to special agreements.

Contribution rates

Contribution rates are set by the board. Rates are based on valuation by the plan actuary to ensure the pension liability is fully funded. A valuation is conducted at least every three years. If the valuation determines there is an unfunded liability, any required increase in total contributions would be shared equally by members and employers. The plan has a group contribution rate rebalancing account that helps protect against potential future rate fluctuations.

Please refer to your respective collective agreements to determine your current contribution rates for comparison purposes.

Impact on employees

Your employees’ contribution rate will increase. However, their pension benefit will increase, and they will earn a larger pension benefit.

If an employee has service in both group 1 and group 5 or is working in group 5 at the same time as working in another group, they will receive two member’s benefit statements each year. These separate statements will show their current and future pension benefits for each group separately.

As with other groups, when an employee reaches 35 years of service in the plan, they no longer make contributions or accrue further service at either accrual rate. You must continue to report service and salary because this information is used to calculate the employee’s highest average salary.

Employees can learn more about group 5 on the member website.

Pension calculations

Pensions will be calculated using the group 2 pension formula for all service before the date the employee joined group 5, and the group 5 pension formula for group 5 service.

The bridge benefit will also be calculated using the employee’s combined group 2 and group 5 service.

Pension adjustments

The annual pension adjustment for employees in group 5 will be calculated using the higher accrual rate. This produces a higher pension adjustment and will reduce the amount employees can contribute to a registered retirement savings plan.

Enrolment

Enrolment generally occurs on the date your application is approved by the board or a future date. You can ask for an earlier effective date for your enrolment within the calendar year of approval. The earlier enrolment would be subject to you having deducted the appropriate pension contributions and held them in trust until your application is approved.