Notice of Change to Interest Crediting Rate on Member Contributions to the Memorial University Pension Plan
In accordance with a recommendation of the University Pensions Committee and approval by the Board of Regents, the interest rate credited to contributions under the Memorial University Pension Plan has changed from a net fund rate of return to a market rate based upon five-year personal fixed term chartered bank deposit rates. Memorial was recently notified of ministerial approval to implement the interest rate change which is effective July 1, 2020, as per Directive 2020-2 which can be found here. The interest rate used for 2020 will be a blended rate of 8.6 per cent and for 2021 onwards the rate will be market-based. For 2021, the interest rate is 1.1 per cent.
The Memorial University Pension Plan is a defined benefit plan, under which pensions are determined based upon the formula: 2 per cent x best five-year average salary x years of pensionable service (includes a bridge benefit to age 65). As a result, the change in the interest crediting rate will not affect pension values upon retirement. However, the change does have the potential to impact pension refunds for members who choose to move their pensions from the pension plan once their employment ends. Due to the method of calculating termination benefits, it is not expected that this will have a material impact on refund values.
Please note that as a result of the change, pension statements for 2020 have been re-posted in the my.mun.ca portal to incorporate the new interest rate basis. To access pension statements in the portal, please click on the Employees tab and then choose the Memorial Pension Information and Tools link located in the Employee Self Service channel. Anyone with questions about their statement can email email@example.com.