City pension types
One of the many benefits of a career in public service is participation in a pension plan. In fact, over 85 per cent of Canadian public sector employees have one. Financial well-being, in which pensions play a part, contributes to employee health, retention and productivity. The City’s pension plans are a valuable part of an employee’s total compensation package. There are two types of plans: multi-employer and supplementary.
The vast majority of City employees (nearly 90 per cent) participate in one of two multi-employer pension plan (MEEPs).
- Local Authorities Pension Plan (LAPP), in which most City employees participate.
- Special Forces Pension Plan (SFPP), which covers police officers at The City.
LAPP and SFPP provide a benefit based on years of pensionable service and average pensionable earnings up to the Income Tax Act (ITA) limit.
Multi-employer plans are set up for an entire industry or geographic area so that resources can be pooled and efficiencies gained. A fiduciary, someone with a legal obligation to act in the interest of another party, is appointed to ensure the plans are properly governed by employer and employee representatives.
Both The City and employees contribute to the plans with investment income rounding out the funding.
Supplementary Pension Plans
The federal Income Tax Act (ITA) allows defined benefit pension plans to cover up to two per cent of salary for each year of pensionable service up to certain limits. These limits mean that while most employees can receive a pension of up to two per cent of their salary with a single plan, there are some who cannot. For those who earn over the salary cap set by law, and for firefighters, a supplementary pension plan helps them achieve the 2 per cent.
In these cases, The City’s supplementary plans simply build upon the base plan formula so the two per cent pension covers the employee’s full salary for each year of pensionable service.
The employee who qualifies for a supplementary pension does not receive a duplicate pension benefit. Approximately 12 per cent of City employees participate in supplementary plans. The plans are:
- The City of Calgary Supplementary Pension Plan (SPP), which is supplemental to the Local Authorities Pension Plan (LAPP) and is available to non-unionized staff above a certain pay level.
- The City of Calgary Overcap Pension Plan (OCPP), which is supplemental to LAPP and SPP and is available to non-unionized staff above a certain pay level.
- The City of Calgary Police Chief and Deputies Overcap Pension Plan (PCDOPP), which is supplemental to the Special Forces Pension Plan (SFPP) and is available to the Police Chief and Deputies.
- The Calgary Firefighters Supplementary Pension Plan (FSPP), which is supplemental to the LAPP and is available to Calgary Firefighters.
Why do firefighters receive a supplementary pension plan?
Because of the risks associated with their jobs, firefighters are often not physically able to work as long as other employees. The Firefighters Supplementary Pension Plan keeps them from being penalized for this in retirement.