The basis for the calculation of a Commuted Value (CV) has been changed effective December 1, 2020. The Canadian Institute of Actuaries has issued updated standards to better reflect experiences of pension plans from across Canada. The new standard updates the assumptions used for the expected retirement age and the discount rate. The changes will affect CVs for termination and death benefit calculations.
Members will be assumed to commence their pension with 50% probability at the age which maximizes the CV and 50% probability at the age at which the member is eligible for an unreduced pension. The liquidity spread used to calculate discount rates will be changing to a mix of the provincial bond spread and the corporate bond spread for medium- and long-term bonds. Additional information will also be disclosed to members in the options packages.