# Commuted value of my pension drops 70% in one year, need advice



## Needs-advice (Feb 22, 2018)

Hello all

I had a modest amount of money in a pension plan from a job I'd left in 2014. Just about a year ago, the pension fund sent me a letter telling me that because of a 2 year lapse in employment I had the option of taking a lump sum commuted value payout, or I could leave the money in the account.

When I indicated that I'd prefer to remove the money from the account via commuted value payout, they notified me that the amount of money in the account was above a certain threshold which meant that I could not remove it, even to transfer it to a locked in retirement fund. They indicated that they'd recalculate the commuted value on a yearly basis upon my request, and if the commuted value fell below that threshold I'd be able to remove it. 

So I requested another calculation this year, almost exactly a year from the last time they calculated it's commuted value. In the last year the commuted value of that money had dropped from nearly $11000 to $3500......... Which puts me below the threshold to remove it ( last year I was $180 above the threshold ), but I'm not understanding how it dropped that much in one year. From what I've read interest rates going up can have an effect on it, and they have gone up, but did they go up enough for the commuted value to go down that much? 

I honestly know nothing about how they calculate these values, so if anyone can give me any advice I'd appreciate it. It just strikes me as being very odd, and I'm wondering if they possibly made a mistake on the calculations? I was thinking about giving my financial advisor a call to see what he thinks, but I don't want to bother him if this situation seems normal.


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## OptsyEagle (Nov 29, 2009)

I am guessing here. From what I have seen, when a pension plan refuses to transfer the commuted value of a pension, for an employee that has left the company, it is usually because there is some kind of shortfall in the pension plan. A shortfall where the probability of that shortfall being recouped is not very likely.

In these cases they refuse to transfer the commuted value because they don't believe it's fair that you should get away with 100% of your benefits when the remaining pension members will then be required to take the entire hit. They may have decided on a much smaller number, that they perceive to be less material to the plan, that they would be willing to transfer immediately.

Again, this is just my guess. It sounds like they may have now made the necessary adjustment to the pension plan's benefits, or should I say, delved out all the hits to everyone fairly, with the new calculations that they have sent you. It is also possible that they made a mistake in your latest or first calculations. I would call the pension plan administrators and ask them these questions. They will be the only ones with the answers and I am sure you will not be the first one to ask.

Good luck.


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## Beaver101 (Nov 14, 2011)

^ First time I heard of a c.v. "threshold" to meet when the OP was given the option to take it (of which he/she elected) but they're now reneging ... sounds like pension accounting hokeypokey to me. 

To cut to the chase, ask them what interest rate they used to go from ... and don't buy the response that "it's all too complicated for the layperson to understand" in which case, have the "expert pension actuary" to provide the numbers because the response you would get from the plan "administrator" is "we have to ask the pension "experts"". Interest rates did not double in the past 3 years. 



> In the last year the commuted value of that money had dropped from nearly $11000 to $3500...


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## Eclectic12 (Oct 20, 2010)

Also never heard of the offer of a CV of a pension then needing to be under a threshold to make use of it. 
I have heard of the CV exceeding what can be transferred to a LIRA and RRSP so that part of the CV is taxable income.

The 70% drop makes no sense to me either. My understanding is that higher interest rates reduce the payout a small bit (it was a small interest rate hike) while being a year closer to retirement cuts down on the time for the CV to grow enough to provide income.

There are other factors like mortality rates etc. but without a major change like the way the CV is calculated being totally revamped - AFAICT these don't change much.


Do you have any documentation for the pension from when you worked there?
What jurisdiction dictates the rules? You might need to contact the regulator.


Cheers


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## GreatLaker (Mar 23, 2014)

Did the company give you a written response about the threshold above which you cannot remove the CV? If so could you post it here (without revealing any personal details)? 

CVs may have two components: first is the amount that can be transferred tax-free to a LIRA, and second is the CV may be over the Maximum Transfer Value, which means only part may be transferred tax-free to a LIRA and the remainder over the threshold can either be transferred to an RRSP (if you have room), or otherwise paid out as a lump sum that is taxable in the year it is received. You can read about MTV here: https://www.milliondollarjourney.com/how-to-calculate-pension-maximum-transfer-value-mtv.htm

Another unusual item is the ability to defer taking the CV. I have taken the CV from 2 pensions and each one required the decision to take the deferred pension or the CV within a short time after employment ended. Is the pension significantly underfunded? There are some provisions where pensions can refuse to pay out all of the CV immediately if it is underfunded, but they need to have a plan for bringing the pension funding back up within a certain time period.

As far as how to calculate a CV, IIRC it is based on a mix of 7 year and long-term Canada bond yields. You need to take the future pension payment x expected lifespan to determine the lump sum needed when the pension would normally start. Then bring that future need back to the present by discounting it using 7 year and LT Canada bond rates. I managed to calculate a reasonably accurate value for my CV. But an understanding of Present Value calculations is needed. Pensions must follow actuarial guidelines when doing the calculations. This link provides further info: http://www.cia-ica.ca/about-us/actuaries/ask-an-actuary/faq---pensions. Q2 has a link to how to do the calculations. Q3 has a link to how to determine interest rates to use. Q7 describes your options if you disagree with the CV calculations.


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## Beaver101 (Nov 14, 2011)

^ All responses except mine's are all helpful, but GreatLaker's by far give you the nitty gritty details of cv calculations :encouragement: 

But I'm having a hard time seeing that a MTV is applicable to the OP, at $11,000 ... or now $3,000. Unless, the OP was making minimum wage or just had a couple of years of service???


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## OptsyEagle (Nov 29, 2009)

When you look at the Pension Plan's board of directors. Is there anyone on the board named, Tony Soprano, or anyone named Pauly, or basically, anyone with a name that sounds like it would make a great name for a deli cold cut? 

Sorry, couldn't resist. Great Laker did give some very useful information.


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## OhGreatGuru (May 24, 2009)

The whole post doesn't make sense to me as stated. I suggest you ask the company to explain, in writing. I suspect they made an error in calculating the commuted value either a year ago or this year.


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## Needs-advice (Feb 22, 2018)

Thanks to everyone for the responses, I appreciate it. I'm thinking at this point that a visit with my financial advisor is definitely in order, just to get him to take a look and see how to proceed from here. There's something seriously amiss by the looks of things.

Regarding the "small payment threadhold", which is how they refer to it - "A commuted value is determined to be a small payment when it is less than 20% of the years maximum pensionable earnings at the time of recalculation". 

In the last year the "small payment threshold" has increased enough to put my funds under the limit, while the commuted value plummets........ Interesting, isn't it? 

In both calculations they sent me the solvency ratio exceeds 80%, and the pension plan is over 125% funded on a "going concern" basis. 

Now, this may be important and I neglected to mention it previously - They'd sent me correspondence previously that states lump sum payments are now calculated on a "going concern basis". But it seems to imply that this only applies if the pension fund is in deficit, and right now at over 125% that doesn't appear to be the situation at all.

Once again, big thanks to everyone that took the time to respond. I appreciate it.


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## Eclectic12 (Oct 20, 2010)

What justification does the pension fall under?
How many years were you earning credits and if possible, at what rate?

The good news is that I found a link that explains the SPT.
https://www.milliondollarjourney.com/cashing-out-your-pension-the-small-benefit-rule.htm

Here is an example of the details for a pension regulated by Ontario.
http://www.fsco.gov.on.ca/en/pensions/legislative/pages/smallamount.aspx

In case you want to do some checking of the YMPE amounts, here is a list.
https://www.canada.ca/en/revenue-ag...ators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html


The bad news is that I have no idea why it would drop so much or if the "going concern basis" applies.


You say you left the job in 2014, were you offered the chance of a CV then?
The times I have been offered and made use of a CV was within a couple of months of leaving a job where I participated in a DB pension. I have read of some DB pensions that allow one to choose the CV at a particular age.

The SBT seems to be similar to breaking the "wait until age 55" to get money out of LIRA, based on small amounts.
https://retirehappy.ca/unlocking-pension-money-getting-money/


Cheers


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## Beaver101 (Nov 14, 2011)

OhGreatGuru said:


> The whole post doesn't make sense to me as stated. I suggest you ask the company to explain, in writing. I suspect *they* *made an error in calculating the commuted value either a year ago or this year.*


 ... just like that??? "oops, we made a calculation mistake" said the pension "calculations" expert. I wonder how many more are there and did he/she used a calculator even?



> Originally posted by *Needs-advice*:....
> 
> I'm thinking at this point that a visit with my financial advisor is definitely in order, just to get him to take a look and see how to proceed from here. There's something seriously amiss by the looks of things. ...


 ... not sure what kind of financial *advisOr* you got there but for sure he ain't going to be able to identify what's amissed in that cv calculation ... worst yet, he's going to just tell you to accept the $3K as is and transfer that to some mutual fund of his choice.


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## OptsyEagle (Nov 29, 2009)

Agreed. The advisor will not know anything, how could he? The plan administrator should have the answers to your questions.


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## Beaver101 (Nov 14, 2011)

^ And don't expect the plan administrator to have the answer either, when you have originally posted



> ... *they* notified me that the amount of money in the account was above a certain threshold which meant that I could not remove it, even to transfer it to a locked in retirement fund. *They* indicated that *they'd recalculate* the commuted value on a yearly basis upon my request, and if the commuted value fell below that threshold I'd be able to remove it.


 ... I would presume the plan "administrator" here is the one "interpreting the rules and doing the calculations as per such rules" and not is just an administrative paper-pusher. And then don't be surprised with a response "hey, we don't make the investment decisions" or do the pension accounting, hence the 70% plummet on your cv.


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## peterk (May 16, 2010)

This 20% rule sounds like the shenanigans you gotta sort out, that aint right.

The CV of 11k seems about right for 2 yrs of service and mid-range income. 

$3500 would have to mean you were making barely minimum wage or the pension plan entitlements were unusually tiny (like <1% per year of service).


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## Needs-advice (Feb 22, 2018)

peterk said:


> This 20% rule sounds like the shenanigans you gotta sort out, that aint right.
> 
> The CV of 11k seems about right for 2 yrs of service and mid-range income.
> 
> $3500 would have to mean you were making barely minimum wage or the pension plan entitlements were unusually tiny (like <1% per year of service).


I had around one year of service. The amount in the pension is based on hours worked, so much per hour.

The pension is administered through a trade union. This is also part of why I find it so odd, because when I left the union I also had money in a pension fund administered through a different local which I'd been a member of for quite some time. When I left my home local ( the one I'd been in much longer ) they simply gave me the option of transferring my money to a retirement account or lump sum payment. Furthermore, I'd been receiving yearly updates as to the status of that money and it had consistently grown, and when the time came to remove it the CV was consistent with the financial updates they'd been sending me all along.


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## Needs-advice (Feb 22, 2018)

This just keeps on getting better.

So I just called them up, and asked for the calculations as to how they wound up with the number that they did regarding the 70% drop in my CV. They're telling me that they might not be obligated to show me those calculations, and they're going to review my file and get back to me.

They started by telling me that they'd mailed me a letter explaining that the government had allowed them to begin making CV calculations based on a "going concern" basis, and that the letter had also explained that the values may go up or down "slightly". I told them that a 70% drop is by no definition slight. 

They told me that because the plan is underfunded, they were allowed to do this. Which I found a bit odd, because according to the letters they sent me the plan was at 82% solvency and 126% funded on a going concern basis both last year and this year. There's been absolutely no change in the numbers in that regard, and I have the paperwork saved and sitting right in front of me. So I brought up the fact that the solvency and going concern numbers had not changed at all over the last year, so if my lower CV is based on funding issues why haven't the numbers changed? Long, long silence after that one. 

Bottom line is that when I started asking questions they kept trying to swing the conversation back to how much that pension would be worth if I'd left it in for another 30 years without removing it, and it was very obvious that my questions were making them very uncomfortable.......... So now I'm waiting for a manger to call me back. 

Are they legally obligated to show me their calculations regarding how they reached the CV? My Bulls$t detector has just started going off in a big way, I can tell when someone is being a bit deceptive and that's the vibe I just got from that phone call.


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## Eclectic12 (Oct 20, 2010)

peterk said:


> This 20% rule sounds like the shenanigans you gotta sort out, that aint right ...


I thought so too ... until I found the links in post number #10 which indicate it is a part of the Pension Benefits Act.
Here is the FSCO version where the Q&A reads that the PBA provides the option to all pensions but the plan itself has to have included the option.
http://www.fsco.gov.on.ca/en/pensions/legislative/pages/smallamount.aspx


It seems to be intended to allow employers to convince employees with small amounts to get their $$ off the books as opposed to applying to unlock a small LIRA due to financial hardship.


Cheers


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## Beaver101 (Nov 14, 2011)

Needs-advice said:


> This just keeps on getting better.
> 
> ...
> 
> Are they legally obligated to show me their calculations regarding how they reached the CV? *My Bulls$t detector has just started going off in a big way, I can tell when someone is being a bit deceptive *and that's the vibe I just got from that phone call.


 ... bingo! 

As for the "legal obligation" to show you the calculations - the $million question for the regulator.


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## OhGreatGuru (May 24, 2009)

When I made the supposition that this was likely "... an error in calculating the commuted value..." , I assumed this was a competently run pension plan, and that someone had likely made data input errors in determining what his entitlements really were after a rather short period of service (which he later says was only a year)

OP's more recent posts about his follow-up contacts with the Plan suggest something is fishy regarding the plan management, and OP should start keeping a file for the regulator of pension in his province.

OTOH, if he only had 1 year of service, it's possible he's entitled to not much more than a return of contributions. It would depend on the pension contract and the laws of the province having jurisdiction.


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## Needs-advice (Feb 22, 2018)

So......... The person I had originally spoken to called me back, said that the manager was unavailable for the rest of the day, and offered to put me through to her voicemail. I left her a detailed message explaining the situation, and if I don't hear back from her on Monday I'll have to start looking at what comes next I guess. The fact that the manager couldn't even find 5 minutes to phone me regarding this situation is bit bit unnerving.

In the interim I also managed to find the letter they'd mailed out regarding the new "going concern" calculation used in determining the CV. In the letter it states that this applies if the "going concern" percentage is less than 100%, in which case your CV would be multiplied by the going concern basis......... IE, if the going concern percentage was sitting at 95% you'd receive a CV that would be 95% of what you'd normally receive.

But once again, this simply doesn't appear to add up because according to both letters the going concern percentage was at 126%........... In order for that to be the reason for the dramatic drop in my CV, it would need to only be funded at around 30% or so.

So, now I stew about it until Monday. In the meantime, if anyone knows who I could contact IE a government department that oversees these issues I'd greatly appreciate it. I've seen it mentioned that this is a provincial issue? So I assume I'd be looking to contact someone in the province that the pension plan resides in?


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## BigMonkey (May 31, 2016)

OptsyEagle said:


> I am guessing here. From what I have seen, when a pension plan refuses to transfer the commuted value of a pension, for an employee that has left the company, it is usually because there is some kind of shortfall in the pension plan. A shortfall where the probability of that shortfall being recouped is not very likely.
> 
> In these cases they refuse to transfer the commuted value because they don't believe it's fair that you should get away with 100% of your benefits when the remaining pension members will then be required to take the entire hit. They may have decided on a much smaller number, that they perceive to be less material to the plan, that they would be willing to transfer immediately.
> 
> ...


As pretty much all defined pension plans are underfunded, I always wondered for those who leave early whether they get the present value calculated amount or whether they get a further reduced amount? Seems to make sense if they get a reduced amount as pointed by OptsyEagle, due to the unfairness of the remaining pension holders taking a bigger hit otherwise.

Anybody who is a pension expert can shed some light?


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## Beaver101 (Nov 14, 2011)

Needs-advice said:


> So.........
> 
> In the interim I also managed to find the letter they'd mailed out regarding the new "going concern" calculation used in determining the CV. In the letter it states that this applies if the "going concern" percentage is less than 100%, in which case your CV would be multiplied by the going concern basis......... IE, if the going concern percentage was sitting at 95% you'd receive a CV that would be 95% of what you'd normally receive.
> 
> ...


 ... it's usually a provincial issue unless you work for the bank (eg.) or a federal government body. If you're in Ontario, the regulator is per FSCO or per link in Eclectric12's post #17.

But in your post #16, you mentioned:



> ... They started by telling me that *they'd mailed me a letter explaining that the government had allowed them to begin making CV calculations based on a "going concern" basis, *and that the letter had also explained that the values may go up or down "slightly". I told them that a 70% drop is by no definition slight. ...


 ... when you contact the regulator, quote them this. Will be interesting (probably not surprising) to see the regulator's answer to your main question(s) if what you posted was the case.


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## Beaver101 (Nov 14, 2011)

BigMonkey said:


> As pretty much all defined pension plans are underfunded, I always wondered for those who leave early whether they get the present value calculated amount or whether they get a further reduced amount? S*eems to make sense if they get a reduced amount as pointed by OptsyEagle, due to the unfairness of the remaining pension holders taking a bigger hit otherwise.*


 ... not sure how it is unfair of the remaining employees (aka pensionholders eventually) taking a bigger hit when 1. you're no longer an "employee" of the company to be around to be able to "share" in any surplus funding when the pension plan turns around, 2. you do not snd did not get to make the investment decisions for the "hit", (and what happened to the "fudiciary duty" rule, btw?), and 3. why offer a cv option then? Better yet, why offer a pension plan?


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## lonewolf :) (Sep 13, 2016)

Interest rates on the 10 year have increased about 30% in the last year in the US never checked Canada. Compounding with 30% increase aprox doubles the principal in about 50 yr compared to the none 30% increase add to that death benefits & the pension fund will grow even faster with the increase in interest rates.


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## Beaver101 (Nov 14, 2011)

^ Yep, when interest rates increase, pension plans will be in the black again and then employers can enjoy a holiday on the premiums. But this is not a problem for the OP's situation here, quite the contrary and where're the pension experts?


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## Beaver101 (Nov 14, 2011)

Beep beep? Wow, what silence ....


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## Needs-advice (Feb 22, 2018)

So........ The plan Administrators continued to refuse to discuss it, so I contacted the superintendent of pensions. Which also went nowhere. The superintendent was hostile and rude, continually talked over me and cut me off, and made no effort to explain things in a way that's easy to understand. I'm still a bit blown away by her conduct, it was unbelievable. 

Apparently the plan is only required to show you the multiplier they use in determining your commuted value, and they're not obligated to show you how they obtained that multiplier. So I know what my multiplier is, I know that the commuted value of my pension has dropped around 70% year over year due to changes in the way your commuted value is calculated, and the plan administrators are not legally obligated to show you the math involved in obtaining their multiplier.

They told me that things such as your age can factor in to the multiplier, but are not obligated to to explain how or why. 

I was told by the Superintendant that I could hire my own actuator if I wanted to, but they are not legally obligated to show me the complete formula they used in obtaining a commuted value that dropped 70% year over year despite an 82% solvency rate and the plan being funded at 126% on a going concern basis. And without knowing the full formula, I'm basically just being forced to take their word that everything is fine.

There's something seriously, seriously wrong with this picture when they can make changes that result in a drop that dramatic without being forced to be transparent about it. They seem to think that showing the multiplier without disclosing the formula used to obtain the multiplier = transparency............. It's twilight zone material.


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## Needs-advice (Feb 22, 2018)

So, if the Superintendant is of no help I guess that's it? Any advice is welcomed and appreciated. 

I still can't believe it's that easy for them to make changes regarding other people's money and not be legally obligated to show those people how they obtained their numbers. If the guy that handled my other investments acted like this he'd be out of business with a couple of months. Imagine someone telling you that you'd just lost 70% of your value in the previous year, and refusing to show you where they'd lost it?


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## Saniokca (Sep 5, 2009)

Needs-advice said:


> So, if the Superintendant is of no help I guess that's it? Any advice is welcomed and appreciated.
> 
> I still can't believe it's that easy for them to make changes regarding other people's money and not be legally obligated to show those people how they obtained their numbers. If the guy that handled my other investments acted like this he'd be out of business with a couple of months. Imagine someone telling you that you'd just lost 70% of your value in the previous year, and refusing to show you where they'd lost it?


I skimmed through this thread but didn't read in too much detail. I'm a pension actuary but it's a public forum and I would need to know quite a few details before being able to answer this properly... A 70% drop sounds unreasonable.

Things like province, type of the pension plan, your age, your years of service, your salary history (if applicable), assumptions that were used to calculate the commuted value, etc. In an ideal world I would need to see both the old statement and the new one... If you want to trust a random stranger on the forum you can PM me and I will try to help.


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## Needs-advice (Feb 22, 2018)

Saniokca said:


> I skimmed through this thread but didn't read in too much detail. I'm a pension actuary but it's a public forum and I would need to know quite a few details before being able to answer this properly... A 70% drop sounds unreasonable.
> 
> Things like province, type of the pension plan, your age, your years of service, your salary history (if applicable), assumptions that were used to calculate the commuted value, etc. In an ideal world I would need to see both the old statement and the new one... If you want to trust a random stranger on the forum you can PM me and I will try to help.



I appreciate the offer, but they're refusing to give me the calculations. 

Essentially what they sent me was a commuted value from last year, and a commuted value from this year, with no clear explanation as to what factors and/or calculations were used in determining that number. 

And the Superintendant is telling me that they're not obligated to provide those calculations. They're obligated to provide the multiplier, but they're not legally obligated to show the numbers or factors that determined what the multiplier is........ Which basically makes the entire process totally non transparent and worthless. So while my multiplier is known, they will not tell me how they obtained it, the factors involved or the formula used........ They could be using any method they want to obtain that multiplier, to achieve the number they want, and I'm not allowed to view it.

Despite the fact that my commuted value dropped 70% in a year, and the plan is funded at 126% on a going concern basis with an 82% solvency rate....... And the going concern and solvency rates haven't changed at all in the last year.


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## Saniokca (Sep 5, 2009)

Needs-advice said:


> I appreciate the offer, but they're refusing to give me the calculations.
> 
> Essentially what they sent me was a commuted value from last year, and a commuted value from this year, with no clear explanation as to what factors and/or calculations were used in determining that number.
> 
> ...


Can you ask them for the assumptions they've used? Interest rates, mortality table, % married assumption, % male assumptions (also known as unisex %) etc. I don't usually deal with routine administrative calculations but whenever a commuted value is disclosed we show the assumptions on the statement. If you know the assumptions and some other details, it should be possible to calculate the annuity factor (what you call the multiplier).


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## Saniokca (Sep 5, 2009)

I am more familiar with Ontario private sector regulations. I did do a quick search and it seems that in some provinces and industries the regulators have recently allowed to use going concern assumptions to calculate commuted values. The 70% drop, although on the high side, is not unreasonable.

For example the "solvency" interest rates in effect in October 2016 (1.6% for 10 years and 3% thereafter - those are prescribed). The going concern interest rate is usually the best estimate of the actuary - not uncommon to be 5%-6% these days. Going from the very low rates to 6% could explain the 70% drop.

The big question is this: did your monthly/annual pension change? Ultimately the promise to you is of a pension at some future date. If the pension plan is honoring that promise it's up to you whether you want to take the commuted value or not (assuming it was calculated correctly of course which I realize is what you are questioning).


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## Needs-advice (Feb 22, 2018)

Saniokca said:


> Can you ask them for the assumptions they've used? Interest rates, mortality table, % married assumption, % male assumptions (also known as unisex %) etc. I don't usually deal with routine administrative calculations but whenever a commuted value is disclosed we show the assumptions on the statement. If you know the assumptions and some other details, it should be possible to calculate the annuity factor (what you call the multiplier).


They're flat out refusing to give me that information, and the Superintendant of pensions in Alberta is backing them up on that.

They've given me the calculations used to formulate my benefit at normal retirement age, but they're refusing to give me the new factor tables that have resulted in the much lower commuted value. It mentions that my age is a factor, but they dont give any detail as to how or why it actually effects the value.

So basically the annuity factor ( thanks for giving me the proper terminology ) is a mystery, and they're refusing to give it to me. And apparently they're not legally obligated to.

Theyve explained how they reached my monthly benefit at retirement age, and my new commuted value is that number multiplied by the "annuity factor"....... But there's no mention of how that annuity factor was obtained, other than to say that "going concern basis" and my age.


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## Needs-advice (Feb 22, 2018)

Saniokca said:


> I am more familiar with Ontario private sector regulations. I did do a quick search and it seems that in some provinces and industries the regulators have recently allowed to use going concern assumptions to calculate commuted values. The 70% drop, although on the high side, is not unreasonable.
> 
> For example the "solvency" interest rates in effect in October 2016 (1.6% for 10 years and 3% thereafter - those are prescribed). The going concern interest rate is usually the best estimate of the actuary - not uncommon to be 5%-6% these days. Going from the very low rates to 6% could explain the 70% drop.
> 
> The big question is this: did your monthly/annual pension change? Ultimately the promise to you is of a pension at some future date. If the pension plan is honoring that promise it's up to you whether you want to take the commuted value or not (assuming it was calculated correctly of course which I realize is what you are questioning).


The monthly /annual pension did not change. However it is sitting idle, not gaining any interest and will be the same amount 30 years from now that is is today. If it was gaining even a modest amount of interest I might see things differently, but as it stands right now I'm beginning to question whether or not that plan is even going to exist in 30 years.


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## Saniokca (Sep 5, 2009)

Needs-advice said:


> ...other than to say that "going concern basis" and my age.


 - Was the original calculation (the much higher one) based on solvency basis? If the answer is yes, my guess is that their calculations are probably fine.
- Going concern basis should probably be described in the latest actuarial funding valuation that they have filed. I *think* you may be able to obtain it from the superintendent. The going concern assumptions will definitely be stated there.



Needs-advice said:


> The monthly /annual pension did not change. However it is sitting idle, not gaining any interest and will be the same amount 30 years from now that is is today. If it was gaining even a modest amount of interest I might see things differently, but as it stands right now I'm beginning to question whether or not that plan is even going to exist in 30 years.


You could think of the commuted value as the amount that, when invested today, gets you to the monthly/annual pension (usually at age 65 but could vary) that you have accumulated while working. That's why when you assume higher interest, the amount you need to invest today is lower than if you had assumed a lower interest.

Having said all this I am quite surprised that they haven't just told you what those assumptions are...


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## Needs-advice (Feb 22, 2018)

Saniokca said:


> - Was the original calculation (the much higher one) based on solvency basis? If the answer is yes, my guess is that their calculations are probably fine.
> - Going concern basis should probably be described in the latest actuarial funding valuation that they have filed. I *think* you may be able to obtain it from the superintendent. The going concern assumptions will definitely be stated there.
> 
> 
> ...


They have gone to great effort to refuse revealing the assumptions. The manager at the plan refused to speak about it at all, would not return my phone calls, and only gave me the limited amount of information I have because I made an official request in writing. If they'd simply shown me the formula used to obtain the annuity factor 2 weeks ago I would have nothing else to say regarding the matter, yet here we are with the same unanswered questions.

When initially contacted the Superintendant of pensions and explained the situation they were very helpful about it, and told me that in certain instances they'd actually seen commuted values go up as the result of the change they'd made. I was told that if my commuted value had dropped that much in a single year something was probably wrong with the way they'd calculated it. They told me to write them ( plan administrators ) and explain the situation, as well as formally request the calculations.

The woman I spoke to today from the office of the Superintendant was very hostile, ignorant, rude, it was quite unbelievable really. She would talk over me, try and belittle me, and was easily one of the most unprofessional people I've ever had the misfortune of dealing with. It was so bad that I even had to ask her if I'd done something wrong that had triggered such a hostile attitude towards me........ It was a total 180 from the last person I'd dealt with at that office, who was very professional and helpful. I'm still not sure what to think about that, she did seem very defensive regarding the new formula and mentioned once that many other provinces were thinking about using the new system that Alberta has adopted. Perhaps my questions struck a nerve? Regardless, the hostility was uncalled for. At the end of the day "this is what it is" and if they're operating within the regulations I'll just have to accept it. 

The original calculation was based on a solvency basis of 82%. Where I became confused ( and I still am to a degree ) is that the plan is funded on a going concern basis by 126%. 

Now, I'll admit that this is all Greek to me, but in the notification of the changes to the way they'd be calculating commuted values they provided a much different example. In the example they provided, they showed a scenario where if the plan was less than 100% funded on a going concern basis, your commuted value could be multiplied by the going concern basis....... So the example would be if you had a commuted value of 10k, and the plan was only funded at 90% on a going concern basis, they'd only be obligated to pay out $9k......... 90% of $10k.

As far as the rest of the calculations involved in obtaining the annuity factor, and how these changes could potentially effect that, there was no mention made other than the example provided. And the example they provided doesn't appear to apply to my situation at all. 

I was under the impression, based on the notice and example that they sent out, that the "going concern" would only be applied if the plan was under funded on a going concern basis....... If it's 126% funded, and they've acknowledged in writing that the plan is very healthy is that regard, how does this apply?

If they'd simply mail me the complete calculation I'd have nothing to say, because I'd be able to do the math myself or have my accountant take a look. Instead, they're refusing to do that and basically demanding that I trust their numbers...... It's very disheartening. I'd think that for transparency sake it would be beneficial for everyone involved.

Thanks for taking the time to respond, I appreciate it.


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## Saniokca (Sep 5, 2009)

There are a few things in play here:
1) the assumptions that are used. The original higher calculation could have used the "solvency" assumptions (strictly speaking the more correct way to say this would be something like "Canadian institute of actuaries commuted values assumptions" - don't remember the exact name). The latter calculation could have used the "going concern" assumptions. The impact of using the new assumptions could explain the sharp drop in the commuted value.
2) Some plans, in some jurisdictions say that if the plan overall is underfunded, they would not pay out 100% of the commuted value. It seems to me that since on "going concern" the plan is over-funded you *are *getting 100% of the commuted value. But per my first point, if they switched to the new assumptions some time between the time they had provided the original value to now, the impact is due to the change in the assumptions, *not *the funding level. 

I understand your frustration but there is no easy way to show the complete calculation (and I believe that they are not obligated to). I once had to write a lengthy email about how a specific commuted value was calculated for a member - I think it took a few hours and then a senior consultant had to look at it. I can't remember the exact bill for this email to the client but it was in the thousands of dollars.

Hope this helps...

P.S. The vast majority of accountants and financial advisers are not capable to comment on whether the calculation is correct.


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## scorpion_ca (Nov 3, 2014)

You may contact media and it may help to resolve your issue.


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## Needs-advice (Feb 22, 2018)

Saniokca said:


> There are a few things in play here:
> 1) the assumptions that are used. The original higher calculation could have used the "solvency" assumptions (strictly speaking the more correct way to say this would be something like "Canadian institute of actuaries commuted values assumptions" - don't remember the exact name). The latter calculation could have used the "going concern" assumptions. The impact of using the new assumptions could explain the sharp drop in the commuted value.
> 2) Some plans, in some jurisdictions say that if the plan overall is underfunded, they would not pay out 100% of the commuted value. It seems to me that since on "going concern" the plan is over-funded you *are *getting 100% of the commuted value. But per my first point, if they switched to the new assumptions some time between the time they had provided the original value to now, the impact is due to the change in the assumptions, *not *the funding level.
> 
> ...


You've been extremely helpful, and I appreciate it. 

This is correct that they have switched the assumptions, while the funding of the plan has remained the same. The change in the value appears to be 100% related to this change. 

If this is the norm then it is what it is, and I'll have to accept it and move on. I just wish that the people I had dealt with both at the plan administration and the Superintendant could have taken 5 minutes to try to explain it to me like you have. When you see a dramatic change like this and then the plan administrator refuses to speak to you regarding it, it makes it seem as though they're possibly avoiding you for a reason........ Communication is vastly underrated, particularly effective communication. i believe 95% of the problem I'm having lies in the lack of communication. 

Thanks again. Much appreciated.


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## Needs-advice (Feb 22, 2018)

scorpion_ca said:


> You may contact media and it may help to resolve your issue.


At this point without having the formula they used to generate their annuity factor, I don't even know for certain that they've done anything wrong. And because they're not legally obligated to show me, unless I want to pay for my own actuary to look at it ( as was suggested snarkly by the Superintendant ) there's not much I can do.

It sucks. The company I was working for put in about $13k directly into my pension fund, and if I cash out I'll only see about $3500 of that. And if I leave it in, it won't increase in value for the next 30 years......... If I'd invested $13k in almost anything in 30 years time I'd have a nice little chunk of change. 

The plan only pays out around $1600/year based on my current standing, so even I lived to be 80 I'd be drawing 15x1600....... I'd bet that $13k invested today is would be worth far more than $24k ( the value of the pension assuming I live to age 80 ) 30 years from now. 

People can say what they want about CLAC, but at least with their RRSP matching it's 100% your money. In instances such as this there's something to be said in that regard.


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## Beaver101 (Nov 14, 2011)

Needs-advice said:


> They're flat out refusing to give me that information, and the Superintendant of pensions in Alberta is backing them up on that.
> 
> ....


 ... Wow, just Wow, ... and some folks I know thought it was bad in Ontario. I wonder who all these provincial "Super-intendents" report to or is it self-governing?



> *Saniokca:* ...
> 
> I understand your frustration but there is no easy way to show the complete calculation (and I believe that they are not obligated to). I once had to write a lengthy email about how a specific commuted value was calculated for a member - I think it took a few hours and then a senior consultant had to look at it. I can't remember the exact bill for this email to the client *but it was in the thousands of dollars.*
> 
> Hope this helps...


 ... who could afford that? I'm sure Needs-Advice can't .... not when he/she's now getting a c.v. of $3K, from $11K. 

Now this begs the question, what is the job of a pensions 'regulator aka Super-intendent'? To oversee ... ? to protect .... ? And Lord, Albertans need a suit of armour before mounting a phone call to the Superintendent (hostile, rude, ready to kill?) asking a c.v. question .... or there something to hide?


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## OptsyEagle (Nov 29, 2009)

It is just a loop hole that hasn't been plugged yet. If there were no rules on mutual funds the funds would have said that they would prefer not to offer transparency because it might give out trading strategies, etc. I am sure if we look back to the beginning that is probably how it worked, until some government person had a problem with it and then it was changed.

Pensions are probably just not there yet. It is unfortuneate for the OP but it seems like it is a closed room. It should not be and probably will change in time but for now, he/she is snookered.

It does seem like they are hiding something though.


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## Beaver101 (Nov 14, 2011)

OptsyEagle said:


> *It is just a loop hole that hasn't been plugged yet.* If there were no rules on mutual funds the funds would have said that they would prefer not to offer transparency because it might give out trading strategies, etc. I am sure if we look back to the beginning that is probably how it worked, until some government person had a problem with it and then it was changed.
> 
> *Pensions are probably just not there yet.* It is unfortuneate for the OP but it seems like it is a closed room. It should not be and *probably will change in time* but for now, he/she is snookered.
> 
> It does seem like they are hiding something though.


 ... a known loophole that's supported by the very people who are in charge ... if that's not scary, then I don't know what is. Particularly for pensions (and not there yet? whoa) with members retiring or transitioning by the mass.


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## Needs-advice (Feb 22, 2018)

Beaver101 said:


> ... Wow, just Wow, ... and some folks I know thought it was bad in Ontario. I wonder who all these provincial "Super-intendents" report to or is it self-governing?
> 
> ... who could afford that? I'm sure Needs-Advice can't .... not when he/she's now getting a c.v. of $3K, from $11K.
> 
> Now this begs the question, what is the job of a pensions 'regulator aka Super-intendent'? To oversee ... ? to protect .... ? And Lord, Albertans need a suit of armour before mounting a phone call to the Superintendent (hostile, rude, ready to kill?) asking a c.v. question .... or there something to hide?


The way that she spoke to me on the phone was unbelievable. The first person I'd spoken to at the office was extremely helpful, but this person I spoke with yesterday was openly hostile and repeatedly cut me off, raised her voice, tried to belittle me and was hands down the most ignorant and unprofessional government employee I've ever had the misfortune of dealing with. If I'd spoken to anyone at my job be it client or coworker the way that she spoke to me yesterday, I'd be facing disciplinary action. 

And it was that way from the second she returned my phone call. It was so bad that I asked her if I'd done something wrong or something to make her angry. I'd begin to speak and she'd loudly interrupt and begin talking over me with "NOPE NOPE NOPE NOPE NOPE", then proceed to try and make it seem as though I was out of line for asking questions. 

But one thing she did say that caught my attention was telling me the changes they'd made were going to be adopted by the rest of Canada eventually. Why does that matter? Because in my opinion the only reason you'd make such a statement is if you're attempting to defend the changes......... And that's why I think she may have taken such an attitude with me. She felt personally slighted by my questions because she was involved at some level in bringing the changes about, or had been given the task of defending them.


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## Needs-advice (Feb 22, 2018)

OptsyEagle said:


> It is just a loop hole that hasn't been plugged yet. If there were no rules on mutual funds the funds would have said that they would prefer not to offer transparency because it might give out trading strategies, etc. I am sure if we look back to the beginning that is probably how it worked, until some government person had a problem with it and then it was changed.
> 
> Pensions are probably just not there yet. It is unfortuneate for the OP but it seems like it is a closed room. It should not be and probably will change in time but for now, he/she is snookered.
> 
> It does seem like they are hiding something though.


The rumour mill is that the plan is severely underfunded, and because there hasn't been a recent financial assessment it hasn't been made public yet. And looking at what is known, it makes sense. 

There hasn't been a financial assessment of the plan performed since late 2015, and that assessment would have been conducted when the employment situation was still relatively healthy. The solvency and going concern are both based in numbers that were produced in 2015. Since the beginning of 2016 it's not uncommon for this union to have members out of work for over a year, and at one point about a year ago it was reported that they had 5k out of about 8k members not working. It's so bad that some members are not even working in the trade, and have been forced to find "survival" jobs to get by until things improve. Long story short Alberta is still suffering from the worst downturn in a generation, or maybe even if all times, and the amount of money going into that fund had dropped dramatically as the result. 

My guess is that after the next financial assessment, the sh#t is really going to hit the fan.


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## Beaver101 (Nov 14, 2011)

Needs-advice said:


> The way that she spoke to me on the phone was unbelievable. The first person I'd spoken to at the office was extremely helpful, but this person I spoke with yesterday was openly hostile and repeatedly cut me off, raised her voice, tried to belittle me and was hands down the most ignorant and unprofessional government employee I've ever had the misfortune of dealing with. If I'd spoken to anyone at my job be it client or coworker the way that she spoke to me yesterday, I'd be facing disciplinary action.
> 
> And it was that way from the second she returned my phone call. It was so bad that I asked her if I'd done something wrong or something to make her angry. I'd begin to speak and she'd loudly interrupt and begin talking over me with "NOPE NOPE NOPE NOPE NOPE", then proceed to try and make it seem as though I was out of line for asking questions.
> 
> But one thing she did say that caught my attention was telling me the changes they'd made were going to be adopted by the rest of Canada eventually. Why does that matter? *Because in my opinion the only reason you'd make such a statement is if you're attempting to defend the changes.*........ And that's why I think she may have taken such an attitude with me. She felt personally slighted by my questions because she was involved at some level in bringing the changes about, or had been given the task of defending them.


 ... sounds very much like it, but "overly defensive" and wonder why? 

Well at least she was barking and biting so you can comment whereas here in Ontario I heard the Superintendent is *unavailable 24/7*, *unreachable*, hard at work being invinsible ... despite being on the Sunshine List (aka salary $100K+ per annum), generously funded by the working class of Ontario.


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## Needs-advice (Feb 22, 2018)

Beaver101 said:


> ... sounds very much like it, but "overly defensive" and wonder why?
> 
> Well at least she was barking and biting so you can comment whereas here in Ontario I heard the Superintendent is *unavailable 24/7*, *unreachable*, hard at work being invinsible ... despite being on the Sunshine List (aka salary $100K+ per annum), generously funded by the working class of Ontario.


I probably called there a total of 5-6 times, and every single time I called nobody answered the phone. Your phone calls go immediately to voice mail, and they only promise to call you back within 48 hours......... And if you miss that phone call you're outta luck, you need to call back and leave another message and hope that you're available to take the call whenever they decide to call you back. So, coupled with plan administrators that refused to call me back at all despite repeated voice mail messages, it's pretty incredible to think about the amount of money they're overseeing. 

What other entity, particularly in the private sector, would get away with not answering their phones and only promising to call back within 48 hours? Where I live even the dog catcher will get back to you sooner than that, that is if they don't immediately answer their phone........ And the dog catcher isn't overseeing potentially billions of dollars worth of pension funds. 

I don't think I've ever dealt with a branch of government at any level that operates this way. Even my local municipal councillor will pick up his phone, or call you back quicker.


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## londoncalling (Sep 17, 2011)

[QUOTE=Needs

I just read through this thread. I had a similar experience a number of years ago where I had calculated that I had contributed $45k into a DB plan and my CV was about $16k when I moved it to a LIRA. I was pissed off for quite some time. Even to this day I get irritated. I have since become a trustee for on a pension fund and understand things much better. As Saniokca mentioned the CV is the amount you would need at an assumed rate of return to create the monthly or annual payment indicated based on contribution hours. I am sympathetic to your plight especially the lack of communication and failure for them to explain it to you. I am a little taken aback at your comparison to CLAC's RRSP plan being better than your current DB plan. I can't say for certain but I believe if the plan increases the monthly payout in future years you would also receive an increase. Yes it's not the same as getting a X% increase each year but it is likely the plan will increase its payout over the years. If you don't mind sharing could you explain why you had a break in service. Did you leave the trade? did you transfer locals? If you did transfer you may be able to recip the contribution hours/amount to your new plan. If it were me I would likely just leave it there provided you are eligible for increases to future monthly payouts. 

Cheers


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## Saniokca (Sep 5, 2009)

londoncalling said:


> I had a similar experience a number of years ago where I had calculated that I had contributed $45k into a DB plan and my CV was about $16k when I moved it to a LIRA.


Unless I misunderstood this sounds very odd (and unlikely) for a DB plan. Not an expert of Saskatchewan rules but it seems that no more than half of your CV can be paid by your contributions. So if your contributions were 45k and pure CV was 16k then you would receive a CV of 16k plus excess contributions of 37k (=45k-50%*16k) so in total 53k.

Here's the quote from the Saskatchewan Pension Benefits Act (Section 31) - I just assumed Saskatchewan based on your location but it's similar in most (if not all) provinces with slight variation to specifics:
_"Where a member is required to make contributions in order to attain a pension pursuant to a defined benefit plan, not more than one-half of the commuted value of the pension with respect to the member’s membership in the plan may be provided by the member’s contributions with interest."_

Here is the direct link - note that I didn't check if this is up to date:
http://www.qp.gov.sk.ca/documents/English/Statutes/Statutes/P6-001.pdf

Hope this helps.


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## londoncalling (Sep 17, 2011)

Thanks for the information. You have attached the most recent version of the act AFAICT. The details of my CV are a bit foggy as it was over a decade ago. That being said my plan was administered through Alberta. I really appreciate the expertise you have offered this forum. This is a wonderful place where actuaries, accountants, CPP, real estate experts etc. share the knowledge for the benefit of all and ask little or nothing in return. Hopefully the OP will let us know how things turn out.

Cheers


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## Beaver101 (Nov 14, 2011)

> *Originally posted by londoncalling*:
> 
> I just read through this thread. I had a similar experience a number of years ago where I had calculated that I had contributed $45k into a DB plan and my CV was about $16k when I moved it to a LIRA. I was pissed off for quite some time. Even to this day I get irritated. *I have since become a trustee for on a pension fund and understand things much better.* As Saniokca mentioned the CV is the amount you would need at an assumed rate of return to create the monthly or annual payment indicated based on contribution hours. I am sympathetic to your plight especially the lack of communication and failure for them to explain it to you. I am a little taken aback at your comparison to CLAC's RRSP plan being better than your current DB plan. I can't say for certain but I believe if the plan increases the monthly payout in future years you would also receive an increase. Yes it's not the same as getting a X% increase each year but it is likely the plan will increase its payout over the years. If you don't mind sharing could you explain why you had a break in service. Did you leave the trade? did you transfer locals? If you did transfer you may be able to recip the contribution hours/amount to your new plan. If it were me I would likely just leave it there provided you are eligible for increases to future monthly payouts.
> 
> Cheers


 ... if you don't mind me asking, what is the role of a "trustee" of a pension plan? In Canada, of course. Is it similar to a plan administrator and if so, a third party one? Like one of those expert consulting house or are you in inhouse?


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## Beaver101 (Nov 14, 2011)

Saniokca said:


> Unless I misunderstood this sounds very odd (and unlikely) for a DB plan. Not an expert of Saskatchewan rules but it seems that no more than half of your CV can be paid by your contributions. So if your contributions were 45k and pure CV was 16k then you would receive a CV of 16k plus excess contributions of 37k (=45k-50%*16k) so in total 53k.
> 
> Here's the quote from the Saskatchewan Pension Benefits Act (Section 31) - I just assumed Saskatchewan based on your location but it's similar in most (if not all) provinces with slight variation to specifics:
> _"Where a member is required to make contributions in order to attain a pension pursuant to a defined benefit plan, not more than one-half of the commuted value of the pension with respect to the member’s membership in the plan may be provided by the member’s contributions with interest."_
> ...


 ... good to know this "basic" rule for Saskatchewan. In Ontario, the PBA changes every other day if you really dig into it. Anyhow, in the OP's case I don't think he made any contributions to his DB plan ... i.e. his DB plan was fully funded by the employer. So in essence, they can calculate his CV anyway they like because his provincial "Superintendent" supports the rip-off ...


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## Saniokca (Sep 5, 2009)

Beaver101 said:


> ...So in essence, they can calculate his CV anyway they like because his provincial "Superintendent" supports the rip-off ...


I have to disagree about the rip-off part. When someone joins a Defined Benefit pension plan the "defined" part is in relation of the pension that they accrue and is payable at retirement. *The CV is not the promise* - that's the fundamental difference between DB plans and DC plans. In DB you are promised a pension that is clearly defined by a formula but who is to say how one should calculate what it is "worth" today? On the other hand in DC plans you essentially are given small bits of "CV" and you don't know what it will grow to - so the difficulty there is to do the reverse: what pension can your balance today buy you in 10,20,30 years?

The DB pension plans are valued so highly because they "promise"* you something you can understand "X dollars per month". Not many people can figure out what an account balance in an RRSP/DC can provide (or how to invest it!).

Trust me the employers are not crazy about rule changes either... And by the way there are some major funding reforms coming to Ontario very soon (or so we're told).

_*I will caveat this because most pension plans could fail and be underfunded if the company goes bankrupt (in Ontario there is an insurance scheme that provides some support). Most plans don't fail and if they do you lose only a part of your benefit._


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## Beaver101 (Nov 14, 2011)

Saniokca said:


> I have to disagree about the rip-off part. When someone joins a Defined Benefit pension plan the "defined" part is in relation of the pension that they accrue and is payable at retirement. *The CV is not the promise* - that's the fundamental difference between DB plans and DC plans. *In DB you are promised a pension that is clearly defined by a formula but who is to say how one should calculate what it is "worth" today?*


 ... so why offer a cv calculation or cv option then or have a cv option in the PBA for that matter? And with the part "who is to say how one should calculate what it is "worth" today" ... isn't this the same as what I was saying "they (meaning the pension "experts") can calculate his CV anyway they like it .... "? And why wouldn't it be viewed as a "rip-off" when 1. common sense from the OP's posts (plan was 80% funded, his cv was $11K, currently plan is in a surplus at 125% funding, cv drops to $3K or by 70%), 2. where're the calculations details?, and 3. his enquiries were/are met with hostilities. Why the mystery?



> On the other hand in DC plans you essentially are given small bits of "CV" and you don't know what it will grow to - so the difficulty there is to do the reverse: what pension can your balance today buy you in 10,20,30 years?


 ... the CV for DC plan would be clearer to determine as you've posted/#49 ... one would expect your CV is at least the amount of contributions you had made. 



> The DB pension plans are valued so highly because they "promise"* you something you can understand "X dollars per month".
> Not many people can figure out what an account balance in an RRSP/DC can provide (or how to invest it!).


 ... then best to abolish those DB plans. Plenty of $$$,$$$,$$$ saved. Plus forcing employees to rely on their RRSP or be educated about investing prudently in their DC plan also. 



> Trust me the employers are not crazy about rule changes either


... This doesn't divert the CV miscalculation issue the OP has. A matter that he has entrusted the "Superintendent" to "explain" and not go hiding under a rock, only to give a rabid response after being pried.



> And by the way there are some major funding reforms coming to Ontario very soon (or so we're told).


 ... don't matter what funding reforms come into effect if they ain't gonna be enforced. 



> _*I will caveat this because most pension plans could fail and be underfunded if the company goes bankrupt (in Ontario there is an insurance scheme that provides some support). Most plans don't fail and if they do you lose only a part of your benefit._


 ... tell this to the Nortel pensioners, plus others ... Sears being the latest.


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## Saniokca (Sep 5, 2009)

You have so many questions I don't know where to start... But I'll give it a shot.



Beaver101 said:


> ... so why offer a cv calculation or cv option then or have a cv option in the PBA for that matter?


It's the law - Maybe because then it's easier to take your money out with you and when you work for multiple employers you don't have to keep track of every one - just take the money with you. From what I remember (I may be mixing up provinces or thinking about the US), it wasn't always the law and after you are eligible to retire employers aren't required to give you a CV (at least in Ontario). Many don't because it's so expensive.



Beaver101 said:


> And with the part "who is to say how one should calculate what it is "worth" today" ... isn't this the same as what I was saying "they (meaning the pension "experts") can calculate his CV anyway they like it .... "?


There are clear rules as to how a CV should be calculated. Rules can change from time to time and sometimes the changes are significant. When you join a DB pension plan you are promised a pension. In OP's case that didn't change and he/she is still entitled to receive it.



Beaver101 said:


> And why wouldn't it be viewed as a "rip-off" when 1. common sense from the OP's posts (plan was 80% funded, his cv was $11K, currently plan is in a surplus at 125% funding, cv drops to $3K or by 70%),


As discussed in earlier posts, the drop in CV probably had nothing to do with the funding level of the plan. Sorry if I'm being harsh but trying to apply common sense when you have very little knowledge about something often leads you to the wrong conclusions.



Beaver101 said:


> 2. where're the calculations details?, and 3. his enquiries were/are met with hostilities. Why the mystery?


As I've already stated I agree with this to a degree. In my view the statement should always provide the assumptions behind the calculations so that, if needed, you can replicate it. From what I remember, the OP wrote that he spoke to two people at the superintendent: one who was patient and tried to help and the other not so much. I suspect that's the case in any industry - public or private. 



Beaver101 said:


> ... the CV for DC plan would be clearer to determine as you've posted/#49 ... one would expect your CV is at least the amount of contributions you had made.


Not really. DC plans typically work like this: You and your employer put money in your individual account and you choose the investments. If you didn't choose well and lost money too bad... Imagine if you were trying to retire in 2009 and lost half of your money. Employer doesn't have to put a dime to make you whole again. If you were in a DB plan on the other hand your pension is a dollar amount per month. So if there isn't enough money in the pension fund it's the employer who's on the hook for the difference. That's why employers don't like DB pension plans - they bear most of the risk. Note that I didn't say "all" the risk - that's because when an employer fails/goes bankrupt employees face benefit cuts.



Beaver101 said:


> ... then best to abolish those DB plans. Plenty of $$$,$$$,$$$ saved. Plus forcing employees to rely on their RRSP or be educated about investing prudently in their DC plan also.


You have two choices: Don't work for a company with a DB plan or just don't join the plan (sometimes it's mandatory so you're back to option 1).



Beaver101 said:


> ... This doesn't divert the CV miscalculation issue the OP has. A matter that he has entrusted the "Superintendent" to "explain" and not go hiding under a rock, only to give a rabid response after being pried.


How do you know there was a "miscalculation"? Also answering every call/complaint is very expensive. Who do you think pays the salaries of people who work for the superintendent? If you don't trust the calculation go ahead and pay an expert to check it. Or try to learn about it - which the OP did by posting the question on this forum.



Beaver101 said:


> ... don't matter what funding reforms come into effect if they ain't gonna be enforced.


Why do you think they aren't enforced? I have to deal with superintendents on a regular basis - they audit pension plans, put checks and balances in place so that it would be easier to catch errors (or fraud). Once again, their staff is limited and they can't catch everything. Do you want the government to divert more money there? I don't.



Beaver101 said:


> ... tell this to the Nortel pensioners, plus others ... Sears being the latest.


They know it. The fact is that DB plans are not bulletproof so when the company goes under and there's a deficit there will be cuts to benefits. Ontario has the Pension Benefits Guarantee Fund which covers benefits up to 1,000 per month (soon it'll be up to 1,500). Not perfect but something. There are also rules that enforce employers to value the plan's assets/liabilities and if there is a deficit to make contributions.


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## Beaver101 (Nov 14, 2011)

Saniokca said:


> You have so many questions I don't know where to start... But I'll give it a shot.
> 
> ...
> 
> As discussed in earlier posts, the drop in CV probably had nothing to do with the funding level of the plan. Sorry if I'm being harsh *but trying to apply common sense *when you have very little knowledge about something *often leads you to the wrong conclusions*.


 ... no offense but is this how an actuary in the pension space has been trained to think and practice?


And let's not divert the CV calculation issue with a long winded post so to the CV issue,



> As I've already stated I agree with this to a degree. *In my view the statement should always provide the assumptions behind the calculations so that*,* if needed, you can replicate it. *


. ... well, the OP did ask and they told him they were *not obligated *to reveal these "assumptions". And is this the law? Surely, a CV calculation doesn't require quantum physics math or even grade 12 calculus for that matter. IIRC, it's a simple formula based on some factors (not assumptions). It was posted by another member of this forum some time ago (year(s)?) ... will have to search for it. 




> From what I remember, the OP wrote that he spoke to two people at the superintendent: one who was patient and tried to help and the other not so much. *I suspect that's the case in any industry - public or private*.


 ... Wow, talk about really low service standards expectations from "professionals", much less from a "regulation agency". Just Wow.




> How do you know there was a "miscalculation"? *Also answering every call/complaint is very expensive*. Who do you think pays the salaries of people who work for the superintendent? If you don't trust the calculation go ahead and *pay an expert to check it.* Or try to learn about it - which the OP did by posting the question on this forum.


 ... kind of contradictory if not self-interest here, don't you think? 

As for who pays the Sunshine salaries of people who work for the super, that would be all the provincial working taxpayers, including you and me plus some other thousands of non-government workers. And since I don't work in the industry, my expectations are different and much higher than yours on service, nothing to say about transparency plus accountabilities.


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## Saniokca (Sep 5, 2009)

Beaver101 said:


> ... no offense but is this how an actuary in the pension space has been trained to think and practice?


"No offence" but if someone is ignorant of a specific field/science etc. their common sense is often worthless.



Beaver101 said:


> ...Surely, a CV calculation doesn't require quantum physics math or even grade 12 calculus for that matter. IIRC, it's a simple formula based on some factors (not assumptions). It was posted by another member of this forum some time ago (year(s)?) ... will have to search for it.


Why don't you do that instead of trolling and looking for conspiracies? By the way, things like interest rate, mortality table, and others are *assumptions* that determine the factor in this simple formula.



Beaver101 said:


> ... Wow, talk about really low service standards expectations from "professionals", much less from a "regulation agency". Just Wow.


I know - it's shocking that some people provide substandard service. Haven't seen it anywhere.



Beaver101 said:


> ... kind of contradictory if not self-interest here, don't you think?


Should I apologize for my desire to get paid for what I do or for preferring not to fund certain government services more than they are now?



Beaver101 said:


> As for who pays the Sunshine salaries of people who work for the super, that would be all the provincial working taxpayers, including you and me plus some other thousands of non-government workers. And since I don't work in the industry, my expectations are different and much higher than yours on service, nothing to say about transparency plus accountabilities.


Good/comprehensive service costs money and when it's a specialized field (doctors, lawyers, accountants, etc.) the amounts are not trivial (hence the sunshine list). You can train lots of actuaries or pension specialists in general to answer everyone's questions about their CVs or you can have the individuals who are not happy pay someone to educate/verify their suspicion. I choose the latter.


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## Beaver101 (Nov 14, 2011)

^ I guess the easiest way of being unable to or unwanting to "explain" or being transparent about it is to label the other person as being "ignorant with useless common sense", plus accusing them of trolling on a DIY money forum. 

So here's the conspiracy formula you alluded, right from the Canadian Institute of Actuaries site http://www.cia-ica.ca/about-us/actuaries/ask-an-actuary/faq---pensions:



> *Lump sum present value of pension = [pension amount] x [present value (PV) factor]*
> 
> The components of the calculation formula are more fully described below, assuming that the pension has not yet started to be paid.
> 
> ...


 ...

and I don't suppose that "actuarial software" needs to be built from scratch? The key is the "interest rate" being used in the PV - all other "applicable" assumptions (eg. gender, age) are fixed. Even the OP had that figured out prior to posting here, in needs of help from CMF "volunteering members." 


To OP, this seems to be applicable to you:


> *10. I did not submit all the required paperwork to effect the transfer of the commuted value of my pension within six months of my termination date. As a result, the commuted value was recalculated, and unfortunately for me, went down due to an increase in the interest rates used in the recalculation. Is this six-month recalculation date a standard of the CIA or would it be a standard that our company has chosen in consultation with our actuary?*
> 
> The CIA Standards of Practice do not dictate the period after which a termination benefit commuted value must be recalculated. Paragraph 3550.01 of the CIA Standards of Practice specific to pensions simply indicates that a recalculation date must be part of the disclosure accompanying a termination benefit commuted value calculation. *Except where the rules around recalculation are set by pension legislation (e.g., Québec), the recalculation date is typically set in discussion with the plan administrator and their actuarial adviser.
> *


 ... summary: your employer + plan administrator can use whatever "factors" or "assumptions" or whatever they like to come up with your cv.



Glad I'm not a pensions actuary ... guess that's why I'm so ignorant and poor.


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## Saniokca (Sep 5, 2009)

Beaver101 said:


> ^ I guess the easiest way of being unable to or unwanting to "explain" or being transparent about it is to label the other person as being "ignorant with useless common sense", plus accusing them of trolling on a DIY money forum.





Beaver101 said:


> And let's not divert the CV calculation issue with a long winded post so to the CV issue


I thought you wanted me to stop? I tried to explain how things work but all you have been doing is making incorrect statements and trying to find proof that the OP was "ripped off". You don't agree with the statement that if someone is ignorant the common sense could lead to the wrong conclusions?



Beaver101 said:


> So here's the conspiracy formula you alluded, right from the Canadian Institute of Actuaries site http://www.cia-ica.ca/about-us/actuaries/ask-an-actuary/faq---pensions:
> 
> ...
> 
> and I don't suppose that "actuarial software" needs to be built from scratch? The key is the "interest rate" being used in the PV - all other "applicable" assumptions (eg. gender, age) are fixed. Even the OP had that figured out prior to posting here, in needs of help from CMF "volunteering members.


Congratulations, you're an actuary now. If I know Newton's laws does it make me a physicist?



Beaver101 said:


> To OP, this seems to be applicable to you:
> 
> _The CIA Standards of Practice do not dictate the *period after which a termination benefit commuted value must be recalculated*. Paragraph 3550.01 of the CIA Standards of Practice specific to pensions simply indicates that a recalculation date must be part of the disclosure accompanying a termination benefit commuted value calculation. Except where the rules around recalculation are set by pension legislation (e.g., Québec), the recalculation date is typically set in discussion with the plan administrator and their actuarial adviser._


You need to read more carefully:
-This talks about *when *a CV is recalculated - not *how*.
-The OP wanted to take the money out originally but was denied see the first post (unless I missed something later).



Beaver101 said:


> ... summary: your employer + plan administrator can use whatever "factors" or "assumptions" or whatever they like to come up with your cv.


This would be an example of how an ignorant person would arrive to an incorrect conclusion.



Beaver101 said:


> Glad I'm not a pensions actuary ... guess that's why I'm so ignorant and poor.


You are ignorant of the actuarial field. Why is it so hard to admit? I'm not a doctor or a lawyer. My "ignorant" comment was referring to your knowledge as it relates to the pension field. You could be brilliant in your own field or as rich as Bill Gates for all I know.


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## off.by.10 (Mar 16, 2014)

Saniokca said:


> You can train lots of actuaries or pension specialists in general to answer everyone's questions about their CVs or you can have the individuals who are not happy pay someone to educate/verify their suspicion. I choose the latter.


I don't think OP is expecting an actuary to sit down with him for hours and explain everything. But providing the numbers (assumptions, as you call them) they used to everyone does not require "lots of actuaries". Just goodwill. Right now, without the numbers, he does not even have the option of paying someone to explain it to him.


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## ian (Jun 18, 2016)

DB pensions can be confusing. Especially since they often have different regulations based on Province or in some cases Federal.

I had an issue with my pension. It took me a fair amount of research to get through. Including accessing the pension plan documents, and amendments. Had to read them several times and do some on line research to understand some of the sections. But there was a payoff for me.

The one thing that I did not question was the CV calculaton. It was a straightforward math equation. But of course the equation changed with interest rates and interest rate projections. Low interest rates translate into higher CV values. No different than lower interest rates translate into either higher annuity costs or lower annuity payments. This is to be expected on any present day value calculation. A low pension funding ratio can of course impact the CV. This was the issue with Nortel, it may be the issue with Sears, and it has been the issue with a number of multi employer DB plans.

My issue dealt with the calculation of pensionable income. Reading through and gaining an understanding the the Plan and the ammendments enabled me to successfully challenge the pension plan administrators. The result was a thirty percent increase.

But it took some work, some digging, and a fair amount of head scratching to get to meat of the issue. No one was trying to cheat me. Neither the administrators or my former employer. There had been several corporate buyouts and the current administrators did not have a thorough understanding of the plan.


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## sags (May 15, 2010)

Commuted values include ancillary benefits of the DB pension like inflation indexing, survivor benefits, life insurance, health benefits and other benefits ?

It is more than a simple math equation to calculate the monetary value of these benefits for their inclusion in the commuted value.

We are awaiting the demutualization of Economical Insurance, who will be announcing the payouts to policyholders sometime this year.

Accountants can do the calculations but the law requires several actuaries render their professional opinions that the disbursement of benefits is fair and equitable.

Actuaries perform functions far beyond accounting.


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## ian (Jun 18, 2016)

Absolutely. But once the actuaries have finished, the result is a formula. From my experience, with my plan, that formula can change every 60 days or so. As does the CV. As I recall, the CV's that I was given were only good for 60 days. If there was not a take, a recalculation was required. Longevity is always a consideration for the actuaries.

In the short term, my understanding is that current interest rate changes, and changes in long term interest rates are what really drive the calculation. Someone considering taking a CV would be well advised to make a decision earlier rather than later given where interest rates seem to be headed.

Several years ago a colleague of mine decided to work one more year at the request of our employer. He had a CV for the original date that he planned to retire. Just over a year later he got an updated CV. Turns out that he spent the year working for no money. His CV decreased in value by about the same amount as his earnings during that year.

Anyone who is in a DB plan and plans to take the CV, and is contemplating retirement would do well to consider the options. Rising interest rates over the next two years will serve to decrease that CV.


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## Saniokca (Sep 5, 2009)

off.by.10 said:


> I don't think OP is expecting an actuary to sit down with him for hours and explain everything. But providing the numbers (assumptions, as you call them) they used to everyone does not require "lots of actuaries". Just goodwill. Right now, without the numbers, he does not even have the option of paying someone to explain it to him.


I agree with this - that's why I was surprised that he wasn't provided the assumptions (which he could provide to an actuary or someone who knows how these calculations are done and could replicate the calculation). I know that every letter I sign which shows a CV has a section with assumptions that have been used to calculate it.

One thing I forgot to mention - you don't need an actuarial designation to calculate someone's CV and sign off on it. Anyone can open a shop and do it which means that usually individual calculations for members who retire/terminate/pass away (unless they're for execs or are highly sensitive) are done by people who have not gone through formal training/education. Mind you that while some of them don't have a designation they are better actuaries than many I know (including myself) but those are exceptions and usually have managerial roles.


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## Saniokca (Sep 5, 2009)

ian said:


> I had an issue with my pension. It took me a fair amount of research to get through. Including accessing the pension plan documents, and amendments. Had to read them several times and do some on line research to understand some of the sections. But there was a payoff for me.
> 
> But it took some work, some digging, and a fair amount of head scratching to get to meat of the issue. No one was trying to cheat me. Neither the administrators or my former employer. There had been several corporate buyouts and the current administrators did not have a thorough understanding of the plan.


This is great to hear and I would encourage everyone to try and understand how it works but very few do (despite the fact that often it involves hundreds of thousands of dollars). It's not rocket science but could be complicated for the reasons you mentioned.

P.S. It still puzzles me why a country with 35m people needs different pension rules for each province while the US, from what I understand, is fine with having just the one.


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## Saniokca (Sep 5, 2009)

sags said:


> Commuted values include ancillary benefits of the DB pension like inflation indexing, survivor benefits, life insurance, health benefits and other benefits ?


It does reflect everything you mentioned except life insurance and health benefits.



sags said:


> Accountants can do the calculations but the law requires several actuaries render their professional opinions that the disbursement of benefits is fair and equitable.
> 
> Actuaries perform functions far beyond accounting.


Accounting is actually one thing we _have to live with_... January is hell for pension actuaries because we have to come up with numbers very quickly for majority of our clients who report year-end financial results. Then if accountants don't like something we have to "fight it out" with them because they are the ones who actually put the final signature on the financial report (of which our numbers constitute a very small part).


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## Saniokca (Sep 5, 2009)

ian said:


> Absolutely. But once the actuaries have finished, the result is a formula. From my experience, with my plan, that formula can change every 60 days or so. As does the CV. As I recall, the CV's that I was given were only good for 60 days. If there was not a take, a recalculation was required. Longevity is always a consideration for the actuaries.


That's interesting but not surprising. Usually we say anywhere between a couple of months to a half a year - really depends on the administrative practice.



ian said:


> In the short term, my understanding is that current interest rate changes, and changes in long term interest rates are what really drive the calculation. Someone considering taking a CV would be well advised to make a decision earlier rather than later given where interest rates seem to be headed.


Agreed if you think rates will continue to rise (or, as in OP's case, the basis on which the CV is calculated will change in a way that is not beneficial to the plan member).



ian said:


> Several years ago a colleague of mine decided to work one more year at the request of our employer. He had a CV for the original date that he planned to retire. Just over a year later he got an updated CV. Turns out that he spent the year working for no money. His CV decreased in value by about the same amount as his earnings during that year.


Yep I've seen this too...



ian said:


> Anyone who is in a DB plan and plans to take the CV, and is contemplating retirement would do well to consider the options. Rising interest rates over the next two years will serve to decrease that CV.


Agreed (again if you believe that rates keep rising) but I would add two things:
- Many plans don't offer the CV option once you are eligible to retire
- If you take the CV, not only do you need to know what to do with it but also realize that the investment risk is on you. Some people are fine with risk and can bear it, most don't.


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## Beaver101 (Nov 14, 2011)

Saniokca said:


> I agree with this - *that's why I was surprised that he wasn't provided the assumptions* (which he could provide to an actuary or someone who knows how these calculations are done and could replicate the calculation). I know that every letter I sign which shows a CV has a section with assumptions that have been used to calculate it.


 ... I'm surprised that you're surprised that he wasn't provided with the numbers/factors (aka assumptions in the actuarial world). And why not? No obligations on the experts' part ?



> One thing I forgot to mention - you don't need an actuarial designation to calculate someone's CV and sign off on it. Anyone can open a shop and do it which means that usually individual calculations for members who retire/terminate/pass away (unless they're for execs or are highly sensitive) are done by people who have not gone through formal training/education. Mind you that while some of them don't have a designation they are better actuaries than many I know (including myself) but those are exceptions and usually have managerial roles.


 ... good to know but then the formula is provided by the CIA itself (as per earlier post/link) so it should mean it's accurate enough. 


So in the OP's case, ... what interest rate was used for the $11K cv and now the $3K cv?


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## ian (Jun 18, 2016)

Sanioca...you are absolutely correct about DB pensions and supplementary pensions being worth a great deal. I sometimes wonder if people truly understand the present day values of their DB plans or even bother to audit/review on an annual basis to ensure that they have an understanding of all of the components of their particular plan. 

My perseverance and work to truly comprehend my plan and challenge the administrators resulted in a gain to me in excess of $300K on the supplemental side (paid out in lump sums) and an increase of about $6K year on the DB component. Several of my colleagues in the same position were able to benefit from this-one retroactively.


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## Spudd (Oct 11, 2011)

Beaver, if you read the formula you posted it's not really a formula. It lists the factors that are taken into account but it just says that actuarial software needs to be used to calculate the CV, given those factors. There's no way someone who doesn't have that software could ever calculate it on their own.


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## Beaver101 (Nov 14, 2011)

Spudd, that's a simplified equation (version) offered by the CIA. And the factors would make up the formula that produces that equation. And I had agreed that actuarial software would be needed to cough up those factors. And for someone (other than a pension actuary) who does not have that software or those numbers, they cannot "validate" the cv that was calculated for them. in which case for the OP, it plunged from $11K to $3K ... so what's so hard about looking up and copying those numbers off from some stats tables on an Excel spreadsheet? 

Specifically, what interest rate (assumption?) was used in calculating the $11K and now the $3K? 12%, 10%, 6%, 3%, 1%? Can't no-tell?


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## Spudd (Oct 11, 2011)

Beaver101 said:


> Spudd, that's a simplified equation (version) offered by the CIA. And the factors would make up the formula that produces that equation. And I had agreed that actuarial software would be needed to cough up those factors. And for someone (other than a pension actuary) who does not have that software or those numbers, they cannot "validate" the cv that was calculated for them. in which case for the OP, it plunged from $11K to $3K ... so what's so hard about looking up and copying those numbers off from some stats tables on an Excel spreadsheet?
> 
> Specifically, what interest rate (assumption?) was used in calculating the $11K and now the $3K? 12%, 10%, 6%, 3%, 1%? Can't no-tell?


Sorry, I misinterpreted your post. I thought you had been saying since there's a formula that anyone should be able to calculate it. But now I see that's not what you meant.


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## Saniokca (Sep 5, 2009)

Beaver I should start charging you my hourly rate just because of how offensive your tone and comments are. I am answering purely for the benefit of others.



Beaver101 said:


> ... I'm surprised that you're surprised that he wasn't provided with the numbers/factors (aka assumptions in the actuarial world). And why not? No obligations on the experts' part ?


What's your point? Or just another misdirected rant?



Beaver101 said:


> ... good to know but then the formula is provided by the CIA itself (as per earlier post/link) so it should mean it's accurate enough.


A formula is useless if you're missing the inputs.



Beaver101 said:


> So in the OP's case, ... what interest rate was used for the $11K cv and now the $3K cv?


Did you read my post #32?
_"For example the "solvency" interest rates in effect in October 2016 (1.6% for 10 years and 3% thereafter - those are prescribed). The going concern interest rate is usually the best estimate of the actuary - not uncommon to be 5%-6% these days. Going from the very low rates to 6% could explain the 70% drop."
_
Going Concern interest rate is based on the asset mix of the plan and is the best estimate of future returns of the pension fund. 
Solvency CV interest rates are tied to yields on Government of Canada bonds with an added spread (which was mentioned before by others).


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## ian (Jun 18, 2016)

It is like pulling teeth.


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## Beaver101 (Nov 14, 2011)

^ LOL ... keep in mind, it's 2 way street. 

^^ Will return in a couple of days.


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## Beaver101 (Nov 14, 2011)

Saniokca said:


> Beaver I should start charging you my hourly rate just because of how offensive your tone and comments are. I am answering purely for the benefit of others.
> 
> 
> What's your point? Or just another misdirected rant?
> ...


 ... sorry, not sure how I missed those interest rates mentioned in your post #32(?). Anyhow, still not sure how using 5%-6% or going from very low rates (.5%?) to 6% resulting in a 70% drop on the CV can increase the plan's solvency rate by 25% in the OP's case. 

Btw, participating in this forum is purely optional (aka volunteering) so can't see how you can "charge", particularly for the benefits of the others (members of this forum). And that my tone is as offensive as yours by calling me ignorant earlier.


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## Saniokca (Sep 5, 2009)

I was beginning to miss this.



Beaver101 said:


> ... sorry, not sure how I missed those interest rates mentioned in your post #32(?). Anyhow, still not sure how using 5%-6% or going from very low rates (.5%?) to 6% resulting in a 70% drop on the CV can increase the plan's solvency rate by 25% in the OP's case.


Here is a calculator that is free to the public (by the Society of Actuaries of which I'm a fellow). It produces numbers that are "close enough" to suggest that the 70% drop is reasonable.
https://afc.soa.org/

Only playing around with discount rate:
discount rate = 2.5%; factor is 12.4
discount rate = 6%; factor is 4.7

The drop in the factor is *more than 60%*. If you set the benefit commencement age to 65, or lower the primary annuitant's age you'll get higher drops. That's because the longer the period the higher the sensitivity to interest rates.



Beaver101 said:


> Btw, participating in this forum is purely optional (aka volunteering) so can't see how you can "charge", particularly for the benefits of the others (members of this forum). And that my tone is as offensive as yours by calling me ignorant earlier.


I said you are ignorant about the pension field because you make claims and statements that are incorrect (but think that they are). Why is admitting ignorance about something so difficult? I am ignorant about many things - English, cars, medicine, quantum physics, and countless other things. When someone is spending time trying to explain it to me I don't insult them (or their field).


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## ian (Jun 18, 2016)

An OP posted a comment about understanding you pension plan. I had a great employer but the pension knowledge base depreciates after a merger. In our case 2 mergers.

Ours was an enhanced DB. The employer paid 100 percent of the DB. We had an option of adding up to 3 percent extra, max. about $3300. that went toward a specific DB enhancement menu. The employer matched 50 percent, $1650. A few years after the first merger I discovered through a ten minute review of my annual statements, that the employer had failed to make the matching payments. Purely an administrative error. The deficit was slightly under $10K. Had I not reviewed these statements I would have been out by $10K plus another $10K for successive years had the error not been discovered/corrected. Very easy to miss. Understanding the plan and doing a quick audit was simple. Getting it corrected took much more time!

When I retired, the DB administrator did not include performance bonus payments in the calculation of pensionable earnings. These were significant. I had to plow through the pension document and subsequent amendments to prove this. The result was a thirty three percent increase in the value of my pension.

There is lots of money at stake in a pension plan-DB or DC. It really pays to understand the plan, do the occasional audit to agree the employer's numbers, and to spend time as required in reviewing you investment options, if applicable. This is really no different that checking your pay stubs to ensure that the numbers are correct.


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## Saniokca (Sep 5, 2009)

ian said:


> There is lots of money at stake in a pension plan-DB or DC. It really pays to understand the plan, do the occasional audit to agree the employer's numbers, and to spend time as required in reviewing you investment options, if applicable. This is really no different that checking your pay stubs to ensure that the numbers are correct.


I agree 100%. But when you get half a paycheque you notice right away - when you get the pension statement I could see how most people would have trouble understanding it. It's probably similar to me trying to make sense of the auto insurance policy... Takes a lot of effort.


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## ian (Jun 18, 2016)

I just finished reading Fred Vettese's 'The Essential Retirement Guide'. I thought that it was excellent. Some parts I had to read twice. Made me think. Like his statement that saving for retirement actually reduces the amount of money you will require when you retire. Basis of the book is that the 70 percent number is hogwash for the vast majority of retirees.


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## NotJustDreaming (Oct 20, 2013)

Saniokca said:


> ... And by the way there are some major funding reforms coming to Ontario very soon (or so we're told).[/I]


Hello Saniokca, interesting read. Is there any new info on the major funding reforms for Ontario? I heard the pension fund can account for funding shortfalls into the CV calculation?


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