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How Contributions Are Set

​The ATRF B​oard adjusts contribution rates as required following each actuarial funding valuation.

Contribution rates are set to cover the cost of plan benefits currently being accrued, including cost-of-living adjustments. Retired members are eligible to receive an adjustment equal to 60% of the change in the Alberta Consumer Price Index (ACPI) for pensionable service prior to 1993 and 70% of the ACPI for pensionable service after 1992.

Active plan members and the Alberta Government or contributing employers sh​are equally in funding for benefits related to pensionable service after August 1992, including the 60% cost-of-living adjustments. Active plan members are solely responsible for funding the additional 10% cost-of-living adjustments provided for pensionable service after 1992.

Deficiencies with respect to earned benefits must be funded over a 15-year period by additional contributions. These additional contributions are to be shared equally between active plan members and the Alberta Government or contributing employers. However, active plan members alone are required to fund all the actual cost with respect to that portion of deficiencies related to the additional 10% cost-of-living benefit for pensionable service earned after 1992.

What is a plan defi​ciency?

A plan deficiency is the amount by which the liabilities of the Plan exceed plan assets, at a given date.

To determine the status of the Plan’s liabilities, the Plan's actuary determines the expected pension, death, termination and other benefit payments that will be made in future to all retired members, teachers and beneficiaries based on pensionable service and salary earned to a given date. The present value of these earned benefit payments is then established to determine the Plan's total liabilities.

For example, a benefit payment of $106.25 one year from now, based on expected rate of return on assets of 6.25%, would produce a Plan liability of $100 today and a requirement for $100 in Plan asse​ts to ensure full funding. As this $100 is expected to earn 6.25%, in one year there will be $106.25 to pay the required benefit payment. This process is used for each of the thousands of future benefit payments under the Plan to determine the total liabilities of the Plan.

The Plan's total liabilities are then compared to the value of the Plan's investments as of the same date. If the total Plan liabilities exceed the Plan assets, the Plan has a deficiency.

​The Teachers' Pension Plan deficiency for pensionable service before Sept 1992 is referred to as the Pre-1992 Unfunded Liability. The Alberta Government advances sufficient funds to ATRF to pay for all benefits for pensionable service before September 1992, as they become due.​

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