As reported in the Spring 2017 Board Bulletin, a 2 percent experience apportionment for the Pension Plan has been approved by the Board of the Directors of the Board of Pensions and will take effect July 1. As a result, retirees will see an increase in their pension checks effective July 1, and active members will see an increase in pension credits.
What is an experience apportionment?
An experience apportionment is a lifelong increase in pension benefits or credits, depending on employment status:
- For retirees and eligible survivors, an experience apportionment is an increase in the individual’s current pension benefit for as long as the person lives, expressed as a percentage of benefits received.
- For active and terminated vested members, the experience apportionment is an increase in the individual’s pension credits accrued as of December 31, 2016, expressed as a percentage of the accumulated credits.
Pensioners and terminated vested members will be notified of the amount of the increase in July. Active members may always view their estimated pension benefit on Benefits Connect, which will include the recently approved experience apportionment beginning July 1.
Who decides if there will be an experience apportionment?
Experience apportionments are not guaranteed each year. According to the Experience Apportionment Policy, the Pension Plan must be at least 110 percent funded before an apportionment is considered. This guideline enables the plan to honor its three primary tenets:
- solvency of the plan (meeting all existing pension commitments)
- generational equity (ensuring that no one group of plan members fares materially better or worse than another)
- inflation protection
At its March meeting, the Board of Directors reported that the plan’s funded status was 123.7 percent and voted to grant a 2 percent apportionment for the 2016 plan operation year.
Learn more about the experience apportionment process.