Indexing

Indexing Proceeding to the Next Phase
As you will recall, over the past few years, the CSI pension plan membership has participated in a detailed examination of pension indexing. In 2003, after careful study and consultation, the CSI trustees and the Board of Directors approved an amendment to add indexing to the plan, for implementation in 2004.
The second step in the indexing plan has now been approved, which means pensions in pay to retirees will increase by 0.4% starting September 2005. The first increase was 0.2%, effective September 2004.

The initial plan for the phase-in of indexing over 10 years was established subject to periodic review by the CSI trustees to ensure that there continues to be the necessary contribution base to support the plan. Recent calculations using the latest demographics confirm that there is still projected to be sufficient money over the next nine years to pay for the implementation of indexing, as outlined in the January 2004 newsletter. These projections also assume that those schools that chose a lower plan option will go back to the plan that they had been participating in prior to the introduction of indexing.

Indexing: Discontinuation of the 2% Plan Option
The 2% plan option was introduced as a temporary measure to assist any schools that may have difficulty coping with the budget pressures of the added contributions for indexing (see our March 2003 newsletter for details). It allowed some schools to contribute at a lower level (3% of salary each from participants and schools). The regular plan options include the 4% plan (requiring contributions of 6% each from participants and schools), and the 3% plan (requiring contributions of 4.5% each from participants and schools).
The CSI trustees have acknowledged all along that the benefit earned under the 2% plan option is not adequate over a career. Extending this temporary option for too long could put some of our community at risk of not having sufficient income in their retirement years.

As a result, the 2% plan option will be discontinued, effective August 31, 2006. The implementation has been delayed to next year to give the affected schools enough time to incorporate the additional contributions into their budgets.

Full Issue: No. 156 - April 27, 2005

Back to CSI Pension Updates