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The University of British Columbia
- a place of mind
- The University of British Columbia
- UBC Human Resources
Memorandum
Date: Dec. 12, 2011
From: Michelle Berner, Director, HR, Total Compensation
To: All Faculty and Academic Executives enrolled in the Income Replacement Plan
Subject: Changes to Faculty Income Replacement Plan effective January 1, 2012
The UBC long term disability plan is referred to as the “Income Replacement Plan” (IRP), and is funded by faculty and staff members through contributions deducted from their pay cheques. It provides a monthly income for those who meet the definition of disability, and who have been unable to work for a period of six months (the elimination or qualifying period) as a result of the disability.
There are seven sub-groups within UBC’s long term disability plans, and you are in the sub-group called Faculty. This sub-group is primarily composed of faculty members represented by the Faculty Association, but also includes various excluded faculty, M&P and senior excluded staff members.
Over recent months the University and its employee representatives (i.e., unions and associations) have been engaged in a “governance review process” of the IRP. The Faculty Association was the representative body for faculty members with professional advice from Pointbreak Consulting. Excluded faculty and staff were represented throughout the process by the University’s Human Resources department, with professional advice from Mercer, our benefits consultant. The IRP governance review has resulted in the decision to make some changes to the underlying nature of the plan.
The primary change for the “Faculty” sub-group is that the plan will become a “fully insured” income replacement plan, effective January 1, 2012. This is a change from the current “self insured” arrangement. The plan will remain with Sun Life, and this was determined through an extensive tendering process. A new policy number for the IRP will be issued by Sun Life Financial.
The primary difference between fully insured and self insured plans pertains to who holds the financial risk, ensuring the plan has sufficient capacity to meet its obligations for benefit payments, etc. Under a self insured arrangement, the risk is carried by the plan itself and the plan members. Under a fully insured arrangement, the insurance company carries the risk.
Most aspects of the IRP for the “Faculty” group remain the same as they were in the past. The IRP benefit payments that claimants receive will continue to be non-taxable income.
There will be some changes to the following aspects of the IRP:
[a] New Income Benefit Formula: 67% of first 5,500 gross monthly salary and 43% of the remaining gross monthly salary to a monthly maximum of $30,000.
[b] Partial Income Benefit stability when approved for permanent partial claim. Improvements are being made to the permanent partial disability provision with regards to the benefit amount paid. Permanent partial disability benefits will no longer be offset by other income from additional sources and will stay constant (with indexing) for the duration of benefit payments.
If you are actively at work on or after January 1, 2012, you are eligible for the new provisions of the plan, as outlined above. If you are on an approved leave for non-medical reasons, you also qualify for the new plan provisions as of January 1, 2012. If you are absent from work due to accident, illness, or injury as at January 1, 2012, you are eligible for the old plan provisions (i.e., prior to the above changes). If you return to active employment from an absence due to accident, illness, or injury after January 1, 2012 and were not in receipt of disability plan benefits, you will be eligible for the new provisions of the new plan. If you were in receipt of disability plan benefits and return to active employment for at least four months or more, you are eligible for the new provisions of the plan.
For faculty and staff members who are members of the “Faculty” IRP sub-group, the primary implication of the change is that there will be less risk.
Effective January 1, 2012, the new premium rate will be 0.650% of gross monthly salary. The new premium rate is a decrease of approximately 27% over the current rate of 0.90%.
The IRP premium rate will be reviewed by the insurance company each year, and may increase or decrease, although relative stability over time is anticipated. The University and the Faculty Association, with assistance from our benefits consultants, will review any proposed rate changes to ensure that they are reasonable and justified.
Click here to view detailed information about the Faculty IRP.
If you have any questions, please contact Stephanie Mah at 604-822-6823 or stephanie.mah@ubc.ca.
