Assignment #$2$ Template for Submission $23$ Marks $=15\%$ of Final Grade For this assignment we will compare and contrast $4$ large defined benefit pension plans. They are: HOOPP, CAAT, OMERS and OPTrust. All of the information you need regarding these plans can be found in the member handbooks, which are provided for you on the course website. $1)$ Calculate what the annual retirement pension would be for a member of the pension plans, given the same set of assumptions $($do this calculation for each plan$)$ at the age of: a$)65(4$ marks$)$ b$)60($including the bridge benefit amount$)(4$ marks$)$ Assumptions to use: $$ Retirement date: December $31,2020.$ Credited Pension Service: $35$ years. $$ Best average $5-$year earnings: $$70,000.$ Be sure to show the pension formula for each plan and your calculations. Hint: You will need to use the $5-$year YMPE average. You can find the YMPEs online. Complete the following table: Year YMPE $2020$ $ $2019$ $ $2018$ $ $2017$ $ $2016$ $ Average $ HOOPP Formula at Normal Retirement Age: a$)$ Retirement at age $65$ Service before January $1,2018$: $32$ years x $1\mathrm{.}75\%$ x $\_\_\_\_\_\_\_\_\_\_=$ $ Service after December $31,2017$: $3$ years x $1\mathrm{.}5\%$ x $\_\_\_\_\_\_\_\_\_\_=$ $ For all service above AYMPE: $35$ years x $2\mathrm{.}0\%$ x $\_\_\_\_\_\_\_\_\_\_=$ $ b$)$ Retirement at age $60$: Pension Amount For All Service $($inc$.$ bridge$)$: $35$ years x $2\mathrm{.}0\%$ x $\_\_\_\_\_\_\_\_\_\_=$ $ CAAT Formula: a$)$ Retirement at age $65$: Average Earnings Above AYMPE: $$\_\_\_\_\_\_\_\_\_$ x $2\%=$ $ Average Earnings Below AYMPE: $$\_\_\_\_\_\_\_\_\_$ x $1\mathrm{.}3\%=$ $ Total per year of service: $ $\_\_\_\_\_\_\_\_\_$ X $35$ years Total Pension Amount: $ $\_\_\_\_\_\_\_\_\_$ b$)$ Retirement at age $60$: Pension Amount $($including bridge$)$: $35$ years x $2\mathrm{.}0\%$ x $ $\_\_\_\_\_\_\_\_\_\_=$ $ OMERS Formula: a$)$ Retirement at age $65$: $2\%$ x $35$ x $$\_\_\_\_\_\_\_\_\_=$ $ Less bridge benefit $0\mathrm{.}675\%$ x $35$ x $$\_\_\_\_\_\_\_\_\_=$ $ Total: $=$ $ b$)$ Retirement at age $60$: Pension Amount $($including bridge$)$: $35$ years x $2\mathrm{.}0\%$ x $ $\_\_\_\_\_\_\_\_\_\_=$ $ OPTrust Formula: a$)$ Retirement at age $65$: $2\%$ x $35$ x $$\_\_\_\_\_\_\_\_\_=$ $ Less bridge benefit $0\mathrm{.}655\%$ x $35$ x $$\_\_\_\_\_\_\_\_\_=$ $ Total: $=$ $ b$)$ Retirement at age $60$: Pension Amount $($including bridge$)$: $35$ years x $2\mathrm{.}0\%$ x $ $\_\_\_\_\_\_\_\_\_\_=$ $ $2)$ For each of the $4$ plans calculate the annual employee pension contribution amount $($in $2020)$ a member of these plans would need to make $($use $2020$ YMPE, and annual salary of $$75,000).$ Show your calculations. $(4$ marks$)$ HOOPP $($show your calculations$)$ CAAT $($show your calculations$)$ OMERS $($assume the Normal Retirement Age is $65,$ show your calculations$)$ OPTrust $($show your calculations$)3)$ What is the maximum annual CPP benefit a Canadian resident $($who worked and lived in Canada since birth$)$ could receive at age $65$ as of December $31,2020?$ What is the difference between the bridge benefit calculated in question #$1$ for retirement at age $60$ and this government benefit? $(4$ marks$)$ Maximum Annual CPP Benefit in $2020$ Per month: $ Per Year: $ HOOPP $($show your calculations$)$ Max Annual CPP Benefit Amount: $ Annual Bridge Benefit Amount: $ Difference: $ CAAT $($show your calculations$)$ Max Annual CPP Benefit Amount: $ Annual Bridge Benefit Amount: $ Difference: $ OMERS $($assume the Normal Retirement Age is $65,$ show your calculations$)$ Max Annual CPP Benefit Amount: $ Annual Bridge Benefit Amount: $ Difference: $ OPTrust $($show your calculations$)$ Max Annual CPP Benefit Amount: $ Annual Bridge Benefit Amount: $ Difference: $ $4)$ What is the indexation that would be provided $($or likely be$,$ if not guaranteed$)$ by these plans? Use the pension amount you calculated in question #$1$ for the scenario where the employee retires at age $65,$ and calculate the pension amount in $2021$ assuming that CPI is $2\%($assume full $2\%$ is used, not prorated$).$ Show your calculations. Note: not all plans provide $100\%$ indexation. $(4$ marks$)$ HOOPP $($show your calculations$)$ Indexation, $\%$ of CPI: Pension benefit at age $65$ x indexation $\%==$ CAAT $($show your calculations$)$ Indexation, $\%$ of CPI: Pension benefit at age $65$ x indexation $\%==$ OMERS $($show your calculations$)$ Indexation, $\%$ of CPI: Pension benefit at age $65$ x indexation $\%==$ OPTrust $($show your calculations$)$ Indexation, $\%$ of CPI: Pension benefit at age $65$ x indexation $\%==5)$ If you had a choice of becoming a member of one of these $4$ plans, which one would you choose? Explain why you picked the plan you did. Consider the amount of pension benefit, amount of bridge benefit, early retirement options and any reductions required, survivor benefits, disability pension, and any other plan features. There is no wrong answer for which plan you choose, but you must explain why you are making the choice you did.