You will be reassured to learn that the Municipal Pension Plan’s most recent actuarial valuation shows member pensions are stable and secure despite challenging funding conditions over the last three years. The December 31, 2024 valuation shows the money available for current and future pensions is more than the projected costs of paying for those pensions.

To put it in numbers, the plan is 102.8 per cent funded. If the plan is over 100 per cent funded, it has more assets than liabilities. This means the plan fund has enough money available to pay all the pensions it expects to pay now and into the future.

The plan has a $2.67 billion surplus. When there is a valuation surplus, the board uses the plan’s Joint Trust Agreement (JTA) to make decisions for the allocation of that surplus. The JTA says a surplus must first be used to maintain the current contribution rates.

The surplus alone is not enough to maintain current contribution rates. Therefore, the board transferred $1.06 billion from the plan’s rate stabilization account (RSA) to the basic fund so the current rates can remain unchanged.

The board created the RSA in 2016, and funds have been set aside since then to help offset future increases in contribution rates for times like this. After the transfer, the RSA retains a healthy balance of more than $3.5 billion.

This foresight shows how the board acts to meet its funding goals:

1. Benefit security: Setting aside sufficient funds for every member
2. Contribution rate stability: Maintaining stable contribution rates over time

Maximum cost-of-living adjustment updated

As part of the valuation, an independent actuary reviews the health of the plan, including the inflation adjustment account (IAA). The board uses this information to set maximum cost-of-living adjustments (COLAs) the plan can provide for the next three years. COLAs help preserve the purchasing power of your pension. COLAs are a priority for the board, but they are not guaranteed.

The board reviews the maximum COLA every three years as part of the valuation process. The board uses its funding policy to evaluate the maximum amount of COLA it can provide each year. This means there may be years when COLA does not fully match inflation. This allows the board to respond to changing economic and funding conditions with flexibility and care.

When provided, COLAs take effect in January. Increases apply to your lifetime pension. COLAs also apply to the bridge benefit and any temporary annuity while you are receiving them.

Based on the recommendations of our actuary, and based on our funding policy, the board is reinstating a COLA cap of 2.1 per cent. The cap is the maximum annual cost-of-living adjustment the board can provide. This means for the next three years starting in January 2026, retired members may receive the increase in the consumer price index from September to September or 2.1 per cent, whichever is less.

This helps protect the long-term health and longevity of the IAA. A COLA cap helps ensure fairness across generations and supports the plan’s ability to make inflation adjustments available over the long term.

What is a valuation and why is it important?

A valuation is a point-in-time assessment of the financial position of the plan and its funding requirements. Valuations help us ensure the plan remains financially sustainable and has enough funds available for the current and future pensions of all members, whether active, inactive or retired.

An independent actuary performs a valuation every three years. (An actuary is a professional with specialized knowledge in finance, statistics and risk theory.)

The funded ratio is dependent on a set of assumptions. Some of the assumptions used include estimates of:

• The rate at which salaries of contributing members will grow
• Mortality and mortality improvement rates
• Rates of long-term disability
• Rates of termination and ages at retirement
• The rate of inflation that applies to pensions received by our retired members
• The long-term investment returns earned by the plan’s assets

Also, in keeping with guidance from the Canadian Institute of Actuaries and the advice of the plan actuary, the board has increased pension liabilities to reflect that Canadians—including plan members—are expected to live longer in the future. This provides an important updated view of paying pensions for longer.

What does this mean for active members and employers?

There will be no change to current employer and member contribution rates for each member group.

What does this mean for retired members?

COLA will be capped at 2.1 per cent per year for the next three years. The board reviews the level of COLA every three years as part of the actuarial valuation.

In 2016, the board instituted sustainable COLA as part of the plan’s funding policy. From then until 2023 there was a limit on cost-of-living adjustments—a COLA cap—to help ensure increases are available and equitable over the long term. Because of the financial strength of the plan’s basic and inflation adjustment accounts at the 2021 valuation, the board cautiously removed the COLA cap from 2023 through 2025. As planned, the board reviewed the COLA cap as part of this latest valuation and will do so again at the next valuation.

To read the full valuation report, visit Valuation report accessed under related content. You can also learn more at the plan’s annual meeting, MPP: A Year in Review, on October 16, 2025. To register, see mpp.pensionsbc.ca/annual-general-meeting.

The next valuation will be measured as at December 31, 2027, with the report available in fall 2028.