The new rates reflect a 2% decrease to the stability contribution rates and a 1% increase to the basic contribution rates, resulting in a net 1% decrease for you and your employer. The decrease in contribution rates is a strong indicator that shows how healthy the Plan is.
Basic contributions fund the expected cost of the pensions that members are earning. Stability contributions provide additional benefit security by helping to build reserves. Stability contributions are being reduced now that CAAT has moved into Funding Level 5. The increase to the basic contribution rate helps to ensure that your contributions (together with your employer’s contributions and investment returns) will cover the cost of your future pension and reflects the expected longer life spans of future retirees. As the Plan’s funding position continues to improve, an elimination of stability contributions can be considered by the Plan’s Governors. This would decrease contributions by another 1%.
Steady, predictable costs are good for the Plan, and good for members
We know you don’t want your contributions to go down only to go up again later. And neither do we. So, the Plan’s Governors will only allow a contribution rate reduction when they are confident that they won’t need to increase those rates for at least the next 5 years. Our detailed analysis shows that the Plan’s Funding Level is expected to remain sustainable even with lower contribution rates in DBprime.