Table of Contents
2001 Annual Report to Members
What is the PSMIP?
Board of Trustees
Scope of the Plan
Premiums and Benefits
Reserves and Surplus
Plan Disbursements
Premium rate Changes
Changes to Group Insurance Policy
Further Information
2001 PSMIP Plan Changes
Limitation on Conversion Privilege for members over
age 65
Dependant's insurance
Definition of "full-time employee" and
"part-time employee"
Benefit restriction
Deduction of pension benefits
Changes applicable to Executives,
Parliamentarians and Judges
Post-retirement life insurance
Introduction of Judges Plan
The PSMIP is a group insurance plan established by the Treasury Board of
Canada. It provides Long-Term Disability (LTD), Life, Accidental Death and
Dismemberment (AD&D) and Dependants' Insurance for federal employees who are
excluded from collective bargaining because they are working in managerial or
confidential capacities. Executives, Parliamentarians, and Judges are also
covered by the Plan and have distinct benefits. The PSMIP is insured through
National Life of Canada.
A Board of Trustees, appointed by the President of the Treasury Board,
monitors the financial operations of the Plan and oversees its administration.
The current members of the Board are:
The Chairperson, Scott Serson, President, Public Service Commission
Jane Roszell, Chief Executive Officer, Canadian Forces Housing Agency
Nicole Jauvin, Deputy Solicitor General
Bill Baker, Assistant Commissioner, Canada Customs and Revenue Agency
Larry Murray, Deputy Minister, Veterans Affairs Canada
Judith LaRocque, Deputy Minister, Canadian Heritage
Since its inception in 1968, the Plan has paid $478.6 million in cash
benefits under the various classes of insurance to 10,658 members and their
beneficiaries. As of December 31, 2001, approximately 42,000 members
were covered under the Plan. In addition to Dependants' Insurance, members were
insured as estimated below:
| Line of Insurance |
Amount |
| Basic Life |
$2,787,846,000 |
| Supplementary Life |
$1,423,799,000 |
| Accidental Death and Dismemberment (AD&D) |
$6,025,496,000 |
| Long-term Disability (LTD) |
$2,495,211,000 |
| Post-Retirement Life (PRLIP) |
$96,785,000 |
Premiums paid into the Plan during 2001 are shown in the following table and
are compared with the amount paid out to claimants or set aside as reserves.
| Line of Insurance |
Premiums |
Claims (& Increases to Reserves) |
Ratio of Claims to Premiums |
| Basic Life |
$7,692,034 |
$7,563,088 |
98.3% |
| Supplementary Life |
$2,283,539 |
$2,273,121 |
99.5% |
| Members' AD & D |
$580,846 |
$271,411 |
46.7% |
| Dependants' Life and AD & D |
$302,596 |
$154,106 |
50.9% |
| LTD* |
$24,320,776 |
$46,080,212 |
189.5% |
| PRLIP |
$1,832,825 |
$704,025 |
38.4% |
| TOTAL |
$37,012,616 |
$57,045,963 |
154.1% |
When a disability claim is received, sufficient funds are set aside to pay
all future monthly benefit installments to the claimant. These funds are
referred to as "reserves". As of December 31, 2001, plan
reserves totaled $160.7 million. In addition, most of the lines of
insurance under the Plan held an accumulated surplus. Total plan surplus at the
end of 2001 was $16.1 million.
LTD experience*
The surplus at the beginning of the year was above the target range, but
dropped substantially during the year. In order to ensure that the plan's
surplus is brought back to a more comfortable level, the Trustees have
recommended that the Treasury Board consider increasing the LTD premium
rate.
The total amount paid out of the plan during the year was $36.3 million. Of
this amount, 92.7% was paid in the form of benefits to plan members and their
families, 4.8% was for expenses and 2.5% was for premium taxes.
The Treasury Board approved the following recommendations by the Board of
Trustees for changes effective January 1, 2002:
- that the monthly cost for $250,000 of AD&D insurance under the Main
Plan be increased from $1.00 to $2.75;
- that the monthly premium rates for Supplementary Life Insurance be reduced
by 20%;
- that the monthly premium for Executive Plan AD& D Insurance be reduced
from $5.00 to $2.25;
- that the monthly premium for Executive Plan Dependants' Insurance be
reduced from $1.50 to $1.21; and
- that there be a 12 month premium holiday for AD&D and Dependants'
Insurance under the Parliamentary Plan.
A list of the group policy amendments endorsed by the Trustees during 2001 is
attached.
If you have questions about your coverage under the Plan or need general
information about the benefits available, please contact your compensation
advisor or visit the HR Connexions Web site at http://www.tbs-sct.gc.ca/hr-rh/bp-rasp/index_e.asp.
If you would like to have further information on the general experience and
operations of the Plan, please contact:
Beverly Bell, Secretary
Board of Trustees
Public Service Management Insurance Plan
5th floor, West Tower
300 Laurier Avenue West
Ottawa, Ontario, K1A OR5
Bell.Bev@tbs-sct.gc.ca
A plan member whose PSMIP life insurance is discontinued or reduced (by at
least $10,000) may apply to the Insurer to purchase an individual life insurance
policy to replace the coverage lost. Proof of good health is not required to
take advantage of this conversion privilege. Coverage is available at National
Life's standard rates for individual insurance.
Effective June 13, 2001, a $200,000 limit has been placed on the amount of
life insurance a member over age 65 can convert to an individual policy.
Employees less than 66 years of age are still eligible to convert up to the
amount of life insurance discontinued, even if it exceeds $200,000. This limit
on conversion falls within industry guidelines as established by the Canadian
Life and Health Insurance Association.
Since June 1996, with the agreement of the Insurer, the term
"Dependant" has included a same-sex common law partner with whom the
member is co-habiting in a conjugal relationship, having so co-habited for at
least one year.
Effective June 13, 2001, the revised definition has been incorporated into
the group policy.
Effective June 13, 2001, the group policy has been amended to bring PSMIP
definitions into line with related pension and insurance provisions. The
amendment is for administrative purposes only and does not affect eligibility
for benefits or levels of coverage.
Effective June 13, 2001, the wording of the group policy has been clarified
to ensure that Plan members are not eligible for long-term disability (LTD)
benefits for periods during which they are receiving full salary (other than
vacation leave).
Effective June 13, 2001, the policy has been amended to include a chart
summarizing how entitlement to pension benefits under the Public Service
Superannuation Act (PSSA) will impact monthly long-term disability
benefits.
One of the conditions that must be met in order for a retired member of the
Executive or Parliament Plans to be eligible for post-retirement life insurance
is that the member must be entitled to an immediate continuing pension under the
Public Service Superannuation Act or the Members of Parliament
Retiring Allowances Act.
Effective June 13, 2001, the policy has been clarified to extend eligibility
to Executive and Parliamentarian Plan members whose pension becomes payable
within 30 days of ceasing to be an active member.
Prior to August 1, 2001, federally appointed judges were eligible for life
insurance coverage under the Main Plan portion of the PSMIP. Based on the
recommendation of the 1999 Committee on Judicial Compensation and Benefits, the
Treasury Board agreed to provide federally appointed judges with coverage under
the PSMIP that is substantially similar to that provided to Executives and
Parliamentarians.
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