brock university pension plan · since your personal financial planning extends beyond the brock...
TRANSCRIPT
Contents
Part 1: Your future is worth the investment 3
For more information 3
Part 2: Welcome to the pension plan 4
A “hybrid plan” 4
Morethanaretirementbenefit 4
Whopaysforthebenefits 4
Howtofindoutmoreaboutyourownsituation 5
Frequentlyaskedquestions 5
Part 3: Joining the plan 5
Permanentfull-timeemployees 5
Otherpermanentemployees,12-monthtermfull-timeemployeesandlimitedtermfacultyemployees 5
Otheremployees 5
Frequentlyaskedquestions 6
Part 4: Building your pension 7
MoneyPurchaseAccount 7
ShortTermAccounts 8
MinimumGuaranteeFund 8
Additionalvoluntarycontributions 9
Specialtransfersfromotherregisteredpensionplans 9
Onetrustfund 10
Contributionsunderspecialcircumstances 10
Maximumcontributions 11
Frequentlyaskedquestions 11
Part 5: Calculating your pension 12
How the plan works 12
MoneyPurchasePension 13
MinimumGuaranteedPension 13
Frequentlyaskedquestions 15
Part 6: Leaving the University before age 55 16
Additionalvoluntarycontributions 16
Specialtransfersfromotherregisteredpensionplans 16
Frequentlyaskedquestions 17
1
Booklet updated March 2016
2
Part 7: Leaving the University at age 55 or older 18
Activeplanmembers 18
Deferredplanmembers 19
Makingyourdecision 20
Ifyouchoosetoremainintheplan 20
Additionalvoluntarycontributions 20
Special transfers from other registered pension plans 21
Postponed retirement 21
Forms of pension payments 21
Annualadjustmentstoyourpension 24
Pensionamountsbasedonadditionalvoluntarycontributionsorspecialtransfers 25
Maximumpensionamount 25
Noticeofretirement 25
Receivingyourpensionpayments 26
Frequentlyaskedquestions 26
Part 8: Providing for your survivors 28
Deathbeforepensioncommencement 28
Deathafterpensioncommencement 28
Part 9: Taking care of administrative issues 29
Annualpensionstatements 29
Governance 29
Planassets 29
Frequentlyaskedquestions 30
Part 10: Other sources of retirement income 31
Canada Pension Plan 31
OldAgeSecurity 31
Personal savings 32
Frequentlyaskedquestions 32
Part 11: Covering all the bases 33
Frequentlyaskedquestions 34
Part 12: Glossary 35
3
Mostfinancialexpertswilltellyouthatthe“secret”toafinanciallysecure retirementistoplanandsaveaccordingtothatplan.Yourretirementmaylast longerandcostmorethanyouthink.Youcouldspendathirdormoreofyourlife inretirement.Themoreyousavenow,thebetterpreparedyouwillbeforthepleasuresandunexpectedchallengesthatsometimescomewithretirement.
Ifyoursavingsaresufficient,youshouldbeabletomaintainastandardoflivingafterretiringthatiscomparabletowhatyouenjoyedwhileworking.Yourmonthlypension from the University — as well as from any other employers, if applicable — whencombinedwithyourownsavingsandgovernmentpensionbenefits,will helpyoureachyourretirementgoals.
WeencourageyoutotakethetimetolearnabouttheBrockUniversityPension Plan—yourfutureisworththeinvestment!
Youcanfindoutwhattheplanprovides,whenandhow,byreadingthisbooklet. Youwillfindanswerstosomeofthequestionsthatotherplanmembersfrequentlyaskabouttheplanthroughoutthebooklet.Also,ifyourunintotermsthatyoudonotunderstand,youcanreadthedefinitionswehaveincludedinvarioussidebarsandintheglossarystartingonpage35.
SinceyourpersonalfinancialplanningextendsbeyondtheBrockUniversityPensionPlan,youwillalsofindgeneralinformationaboutpersonalsavingsandgovernmentbenefitsthatyoumayfinduseful.
Formorehelpinplanningandsavingforyourretirement,youshouldconsider usingtheservicesofaqualifiedfinancialadvisor.
For more information ThisbookletisagoodsourceofinformationabouttheBrockUniversityPensionPlan.Itspurposeistosummarizethetermsandconditionsoftheplan.Ifyou havequestionsorcommentsaboutthisbookletorabouttheBrockUniversityPensionPlan,pleasecontactpensionstaffintheHumanResourcesDepartment atextension3186orextension4898.
It is important to note that this booklet is designed to describe, in simple terms, the Brock University Pension Plan for eligible employees as at March 2016. It has been prepared for information purposes only. All examples of benefit calculations in this booklet are for illustrative purposes only. Your own pension benefit entitlement may differ based on your own circumstances and the application of the detailed provisions of the plan documents.
Subject to legislation and collective bargaining, as applicable, future amendments may be made to the plan. If there is a discrepancy between this booklet and the official plan text, or questions of interpretation arise, the official plan text will prevail. The official plan text, as amended from time to time, is available, on request, in the Human Resources Department.
Someday, perhaps not too far in the future, you will be spending your retirement years doing the things you love. Having a pension you can count on is important and the Brock University Pension Plan provides you with a starting point to build your retirement savings.
Part 1: Your future is worth the investment
For more information...
Ifyouhavequestionsabout
this booklet or the Brock
University Pension Plan, please
calltheHumanResources
Departmentatextension3186
orextension4898.
When… The pension plan provides…
YouleaveBrockUniversity Animmediatemonthlypension,adeferredpension atage55orolder startingatafuturedate,oralump-sumcommutedvalue
YouleaveBrockUniversity Deferredpensionstartingatafuturedateoralump-sum beforeage55 commutedvalue
Youdie Abenefitpayabletoyoureligiblespouse,beneficiary or estate
Takeawaythepensionjargon,thebenefitformulae,andthegovernment regulationsandyouwillfindthatmostpensionplansareoneoftwotypes: •definedcontribution(DC)plansthatoffertheopportunityforplanmembers tobenefitfrominvestmentperformance;and •definedbenefit(DB)plansthatofferthesecurityofaclearlydefined pensionbenefit.
A “hybrid plan” TheBrockUniversityPensionPlanisahybridplan,whichoffersyouthebest ofbothworlds.ItsDCcomponent—theMoneyPurchasePension—letsyou participate in the plan’s investment performance. At the same time, the DB component—theMinimumGuaranteedPension—providesaclearlydefined,formula-basedpension.TheMinimumGuaranteedPensionactsasabenefitfloor orsafetynetthathelpsprotectyoufrommarketdownturns.
Onceyourpensionpaymentsbegin,thepensionthatyoureceivefromtheplaneachyearwillbeequaltothegreaterofyourMoneyPurchasePensionorMinimumGuaranteedPension.
More than a retirement benefit Whilethepensionplan’smainpurposeistoprovideyouwithincomeafteryou retire,italsoprovidesbenefitsinothercircumstances.Aboveisanoverviewof whattheplanprovides.Youwillfindmoredetailsasyoureadtherestofthebooklet.
Who pays for the benefits MoneypurchasecontributionsmadebyyouandtheUniversityaredepositedintoyourMoneyPurchaseAccount.TheUniversityalsomakesadditionalcontributionstotheMinimumGuaranteeFund,whennecessary,basedonpensionlegislationandtheadviceoftheplanactuary.
Allcontributionsareplacedinatrustfund.Professionalmoneymanagers,hiredbytheBoardofTrustees,investtheassetsofthefundbasedoninvestmentpoliciesapprovedbytheBoardofTrustees.TheUniversity’sPensionCommitteemonitorsthe performance of the money managers and recommends changes to the University.YouhavenoinvestmentdecisionstomakeregardingtheMoney PurchaseAccountandMinimumGuaranteeFund.
Part 2: Welcome to the pension plan
4
Commuted value refers to
thelump-sumpresentvalueof
yourpension.Inotherwords,
thecommutedvalueofyour
pension is an estimate of what
youwouldneedtoinvestright
nowtogiveyouthepension
youwouldreceiveifyouwere
toleaveyourbenefitsinthe
plan.Thecalculationisbased
onanumberoffactors,such
as interest rates and mortality
rates,andiscarriedout
according to established
actuarialprinciplesandmethods.
5
Permanent full-time employees Ifyouareapermanentfull-timeemployee,youmaychoosetobecomeaplanmemberonthefirstdayofanymonthcoincidentwithornextfollowingyourdateofhire.However,itismandatorytojointheplanthemonthcoincidentwithornextfollowingthecompletionofonefullyearofserviceorwhenyoureachage 30,whicheverislater.
Other permanent employees, 12-month term full-time employees and limited term faculty employees Ifyouareapermanentemployee(otherthanapermanentfull-timeemployee), a12-monthtermfull-timeemployee,oralimitedtermfacultyemployee,youmaychoosetobecomeaplanmemberonthefirstdayofanymonthfollowingyourdateofhire.Membershipintheplanisnotmandatory,regardlessofyourageoryearsofservice with the University.
Other employees Ifyoudonotmeetoneofthecriteriasetoutabove,membershipintheplanisnotmandatory,regardlessofyourageoryearsofservicewiththeUniversity;however,youmayjointheplanafteryouhavebeenemployedbytheUniversityfor24 consecutivemonths,providedyouhave: •earnedatleast35%oftheCanadaPensionPlan’syear’smaximumpensionable earnings(YMPE)fromemploymentwithBrockUniversityineachofthetwo immediatelyprecedingcalendaryears;or •workedatleast700hoursayearatBrockUniversityineachofthetwo immediately preceding calendar years.
YMPE (year’s maximum
pensionable earnings) is the
earningsmaximumusedto
determinecontributionsand
benefitsundertheCanada
PensionPlan.TheYMPE
isadjustedeachyear.
In2016,itis$54,900.
Early participation in the plan might be one of the wisest financial choices you ever make. The sooner you join the plan, the sooner you can begin to build your retirement benefit. If you spend your career at the University, your Brock University pension could be one of your biggest financial assets at retirement.
Part 3: Joining the plan
How to find out more about your own situation Eachyear,youwillreceiveYour Personal Pension StatementasatJune30. Thestatementwillinclude: •yourpersonalinformationonrecord(includingthenamesofyourspouse andbeneficiary); •totalcontributionstoyourMoneyPurchaseAccountoverthepastyear; •youraccountbalances;and •thepensionyouhaveearnedasofthestatementdateandtheprojectedpension onyournormalretirementdate.
Frequently asked questions Q:WhenwillIreceivemyannualstatement? A:Your Personal Pension StatementispreparedasofJune30andissenttoyoubefore December 31 each year.
Q:HowcanIkeepinformedofthefund’sinvestmentperformance? A:Monthlyratesofreturn,marketreviewsandotherrelatedinvestment informationisavailableonthepensionwebsiteat:http://www.brocku.ca/hr-ehs/pension-new/investments
6
Frequently asked questions Q.WhatformsdoIfilloutatenrolment? A.Youmustcompleteandsignanenrolmentform,whichauthorizesthedeductionsfromyourearnings.Aswell,youarerequiredtocompleteaspousaldeclarationanddesignateabeneficiary.ThenecessaryformsareavailablefromtheHumanResourcesDepartment.
Q:WhocanInameasmybeneficiary? A:Ifyouhaveaspouseonthedateofyourdeath,pensionlegislationrequiresthatyourspousereceiveanydeathbenefitpayablefromtheplan,unlessyourspousehaswaivedhisorherentitlementtothisbenefit.Withoutaspousalwaiver,anydeathorsurvivorbenefitwillbepaidtoyourspouse,regardlessofwhomyou havenamedasyourbeneficiary.
Undertheplanandcurrentpensionlegislation,aspouseisdefinedasaperson towhomyouare: •legallymarried,providedyouarenotlivingseparateandapartfromthat persononthedateadeterminationismade(thatis,retirementordeath); •notlegallymarried,butyouandthatpersonhavecohabitedcontinuously inaconjugalrelationshipforatleastthreeyears;or •notlegallymarried,butyouandthatpersonarecohabitinginaconjugal relationshipofsomepermanence,andarejointlythenaturaloradoptive parentsofachild,asdefinedintheFamily Law Act (Ontario).
Thedefinitionofspouseinpensionlegislationmaybedifferentfromhowaspouseisdefinedforotherpurposes,forexample,undertheIncome Tax Act(Canada).
Ifyoudonothaveaspouseonthedateofyourdeathoryourspousehascompletedawaiver,yourdesignatedbeneficiarywillbeentitledtoreceivethedeathbenefitspayableundertheplan.Yourbeneficiarycanbeanypersonofyourchoice.
Ifyouwishtonameachildwhoisyoungerthanage18asyourbeneficiary,we suggestthatyouconsultyourlawyerbeforecompletingthebeneficiarydesignation.
Ifyoudonotnameabeneficiaryornoneofyourbeneficiariessurviveyou,andyoudonothaveaspouseonthedateofyourdeath,anydeathbenefitwillbepayabletoyourestate.
Yourbeneficiarymaybechangedatanytimeinwriting,subjecttoanylegalrestrictions.Tobevalid,yourwrittenbeneficiarydesignationmustbeprovided totheHumanResourcesDepartment.
Q:DoIhavetoupdatemypersonalinformation? A:Yes.KeepingtheUniversityinformedwheneveryouhavelifeeventsthatchangeyourpersonalcircumstancesisimportant.YoushouldnotifytheHumanResourcesDepartmentofanychangesinyourpersonalcircumstances,suchasachangeinyourmaritalstatus,yourdesignatedbeneficiary,oryouraddress.
Youshouldalsoreviewyourpersonalinformationeachyearwhenyoureceive yourannualpensionstatementtoensurethatyourinformationiscorrectand uptodate.
Q:CanIleavetheplanwhilestillemployedatBrockUniversity? A:Onceyouenrolintheplan,youcannotceaseparticipatingintheplanuntil youterminateemploymentorretire.
Example — total earnings below the YMPE
Pensionableearnings $40,000.00
Totalemployeecontributionsin2016 4.4%×$40,000.00=$1,760.00
Example — earnings below and above YMPE
Pensionableearnings $60,000.00
ContributionsonearningsbelowYMPE 4.4%×$54,900.00=$2,415.60
ContributionsonearningsaboveYMPE 6%×($60,000.00—$54,900.00)=$306.00
Totalemployeecontributionsin2016 $2,415.60+$306.00=$2,721.60
Example — earnings below and above YMPE
Pensionableearnings $120,000.00
ContributionsonearningsbelowYMPE 4.4%×$54,900.00=$2,415.60
ContributionsonearningsaboveYMPE 6%×($120,000.00—$54,900.00)=$3,906.00
Totalemployeecontributionsin2016 $2,415.60+$3,906.00=$6,321.60
7
Money Purchase Account Your contributions to the Money Purchase Account Asamember,youmakethefollowingcontributionsbypayrolldeductiontoyourMoneyPurchaseAccount(thedefinedcontributionportionofthepensionplan):
4.4%ofyourpensionableearningsuptotheYMPE plus 6%ofyourpensionableearningsabovetheYMPE
Employee Contributions Hereareexamplesofhowthisformulawouldworkin2016forafewhypotheticalemployees.TheYMPEin2016is$54,900.
Allofyourcontributionsarefullytax-deductiblefromyourannualincome.Youbenefitfromthistaxdeductibilityrightaway,sinceyourpensioncontributionsaretakenintoaccountwhentheincometaxdeductedfromyourpayiscalculated.
The University’s contributions to your Money Purchase Account TheUniversityisrequiredtomakethefollowingcontributionstoyourMoney PurchaseAccount:
7.4%ofyourpensionableearningsuptotheYMPE plus 9%ofyourpensionableearningsabovetheYMPE
Pensionable earnings
areyourregularannual
earnings received from
the University.
Part 4: Building your pension
Both you and the University contribute toward your pension.
Example — total earnings below the YMPE
Pensionableearnings $40,000.00
TotalUniversitycontributionsin2016 7.4%×$40,000=$2,960.00
Example — earnings below and above YMPE
Pensionableearnings $60,000.00
ContributionsonearningsbelowYMPE 7.4%×$54,900.00=$4,062.60
ContributionsonearningsaboveYMPE 9%×($60,000—$54,900.00)=$459.00
TotalUniversitycontributionsin2016 $4,062.60+$459.00=$4,521.60
Example — earnings below and above YMPE
Pensionableearnings $120,000.00
ContributionsonearningsbelowYMPE 7.4%×$54,900.00=$4,062.60
ContributionsonearningsaboveYMPE 9%×(120,000.00—$54,900.00)=$5,859.00
TotalUniversitycontributionsin2016 $4,062.60+$5,859.00=$9,921.60
University Contributions Hereareexamplesofhowthisformulawouldworkin2016forafewhypotheticalemployees.TheYMPEin2016is$54,900.
8
Short Term Accounts Ifyouareanactivememberandage62orolder,youhavetheoptionof transferringannuallyaportionofyourMoneyPurchaseAccounttotheShortTermAccount.Oncethefundshavebeentransferred,theywillremainintheShort TermAccountuntilyoumakeanelectionwithrespecttoyourpension.Thepurpose ofthisaccountistoassistmemberswiththeirfinancialplanningbyremovingsomeoftheuncertaintythatcomesfromfluctuatingmarketvalueinvestmentreturns ontheMoneyPurchaseAccount.
Atretirement,thecombinedbalancesinyourMoneyPurchaseAccountandShortTermAccountwillbeusedtoprovideapensioninthenormalmanner;thatis,withinthepensionplanorbytransferringthemoneyoutoftheplan.TheMinimumGuaranteedPensionrulescontinuetoapply.
TheHumanResourcesDepartmentcontactseligiblemembersonanannualbasiswith more information on this option.
Minimum Guarantee Fund TheUniversityisresponsibleforensuringthatthereisenoughmoneyinthe MinimumGuaranteeFund—thedefinedbenefitcomponentoftheplan—to financetheMinimumGuaranteedPensionthattheplanprovides.
9
Basedonacceptedactuarialprinciplesandmethods—andontherulesspecified inpensionlegislation—theactuaryfortheplandeterminestheamountof contributionstheUniversitymustmaketomaintaintheMinimumGuaranteeFundattherequiredfundinglevel.Becausethefutureisuncertain,thisdetermination isbasedonanumberofassumptions,includingthoseaboutperformanceofthepensionfundassetsandtherateofchangeinbenefitspayabletomembers.
Ateachvaluationoftheplan,ifinvestmentshavenotperformedaswellas assumed,and/orifthebenefitspayablearegreaterthanassumed,theUniversitymayhavetomakeadditionalcontributionstotheMinimumGuaranteeFund.
Ontheotherhand,theUniversitymaybeabletoreduceitscontributionstotheplanuntilthenextvaluationifthefundinvestmentshaveperformedbetterthanassumedand/orthebenefitspayablearelessthanassumed.
Additional voluntary contributions Inadditiontotherequiredcontributionsdiscussedabove,theplanallowsyou tomakeadditionalvoluntarycontributionsthroughpayrolldeductions.These contributionsareaccountedforinaseparateAdditionalVoluntaryContribution Accountinyourname,thatis,theyarenotco-mingledwithyourrequired contributionstotheMoneyPurchaseAccount.Theadditionalvoluntary contributions,however,arecreditedwiththerateofreturnthatisearned by the Brock University Pension Plan.
TheUniversitydoesnotmakeanycontributionsrelatedtotheadditional voluntarycontributionsandthereisnoguaranteedlevelofpensionwithrespect tothesecontributions.
AllpensioncontributionsarelimitedbytheIncome Tax Act(Canada). TheUniversitywillensurethatregularplanmemberandemployer-required contributionsdonotexceedthisgovernmentlimit;however,youareresponsible toensurethatyoudonotexceedthelimitwithadditionalvoluntarycontributions.Ifyougooverthelimitduetoadditionalvoluntarycontributions,youare responsibleforpayinganypenaltiesandcostsassociatedwiththeover-contribution.
Pleasesee“Part10:Othersourcesofretirementincome”formoreinformation.
Youradditionalvoluntarycontributionsstayintheplan,withintheseparate AdditionalVoluntaryContributionAccount,untiltheearliestofretirement, termination, or death.
Special transfers from other registered pension plans IfyouwereamemberofaregisteredpensionplaninCanadabeforejoining theUniversity,youmaybeabletotransferthelump-sumvalueofyourprior benefitintotheBrockUniversityPensionPlan.Theadministratorsofthetransferringplanwouldneedtoagreetothetermsofthetransferandyoumustcompletetherequiredpaperwork.
Thislump-sumtransferisaccountedforinaseparateSpecialTransferAccountinyourname,thatis,theassociatedfundsarenotco-mingledwithyourrequired contributionstotheMoneyPurchaseAccount.Thelump-sumtransfer,however, iscreditedwiththerateofreturnthatisearnedbytheBrockUniversity Pension Plan.
TheUniversitydoesnotmakeanycontributionsrelatedtoatransferandthereisnoguaranteedlevelofpensionwithrespecttothelump-sumtransfer.
The Variable Annuity Fund is
afundwithintheplan’strust
fundintowhichassetsfrom
yourMoneyPurchaseAccount,
AdditionalVoluntary
ContributionAccountand/
orSpecialTransferAccount
aretransferred,ifyouelect
a pension from one or more
oftheseaccounts.Theassets
are invested according to the
plan’s investment policies and
areusedtoprovidepensionsto
pensionersandtheirsurvivors,
according to the form of
pension elected at pension
commencement.Thevalueof
thisfundcanchangebecause
offactorssuchasinvestment
performance and mortality.
Assuch,theamountofmoney
available to pay pensions
varies from year to year and
thisresultsintheannual
increases or decreases to
pensionamounts.
Variable Annuity Fund
Minimum Guarantee Fund
Short Term Accounts
Special Transfer Accounts
Additional Voluntary Contribution Accounts
Money Purchase Accounts
10
Thelump-sumtransfermuststayintheplan,withintheseparateSpecialTransferAccount,untiltheearliestofretirement,termination,ordeath.TheUniversityadministersthefundsonalocked-inornon-locked-inbasis,accordingto instructionsreceivedfromtheotherplanadministrator.
One trust fund WhilethereareseparateaccountsundertheBrockUniversityPensionPlan,allofthemoneyisactuallyheldtogetherunderonetrustfundthatisadministeredbyprofessionalmoneymanagerswhoinvesttheassetsofthefundbasedonthe University’s Statement of Investment Policies and Procedures.
Thefollowingdiagramillustratesthemake-upofthattrustfund.Theproportionsallottedtoeachtypeofaccountcanchangeovertimewiththeflowof contributionsortransfersintoaccountsandbenefitpaymentsfromthoseaccounts.
ThetrustfundisapartfromtheUniversity’soperationalfunds.TheUniversity’sPension Committee monitors the performance of the money managers and makes relatedrecommendationstotheBoardofTrustees.
Contributions under special circumstances While you are totally disabled Ifyoubecometotallydisabled,yourmembershipintheplanwillcontinueas longasyoureceivebenefitsfromtheUniversity’sLongTermDisabilityIncome ContinuancePlan.YouwillcontinuetoearnpensionableserviceandtheUniversity willdeemaspaidbothemployeeandemployercontributionsduringthetime periodthatyouarereceivinglongtermdisabilitybenefits.
TheHumanResourcesDepartmentwillprovideyouwithspecificdetailsduring the disability management process.
While on leave without pay Whileyouareonleavewithoutpay,inaccordancewithapplicablecollective agreements,UniversitypoliciesandlimitsundertheIncome Tax Act(Canada), youmaybeabletoelectto: •providetheUniversitywithpost-datedchequestocoverrequiredcontributions toyourMoneyPurchaseAccountduringtheperiodoftheleave;or •stopcontributingtotheplanduringtheperiodoftheleave.
Beforechoosingtostopcontributingtotheplan,itisimportanttoconsiderthatyoucannotbuybackserviceoraddthesecontributionsatafuturedate.
ContacttheHumanResourcesDepartmenttoprovideyouwithspecificdetailsbeforeyoubeginyourleave.
A Statement of Investment
Policies and Procedures is
adocumentrequiredby
legislation for all pension
plans. It describes the
objectivesandoperation
of the plan. The statement
outlinesinvestment-related
policiesandprocedures,
includingassetallocation
guidelines.
Registered retirement plan
assets that are locked-in
cannot be taken in cash
whenyouleavetheplan.
Theseassetsmustbeused
toprovideyouwith
retirement income.
Plan assets that are
non-locked-in may be
takenincash.Ifyouhave
non-locked-inassetsand
choosetotakeacashrefund
whenyouleavetheplan,
incometaxeswillbededucted.
11
Maximum contributions The Income Tax Act(Canada)limitsyourandtheUniversity’scontributionsto thedefinedcontributioncomponentoftheplan.Themaximumamountchangeseverycalendaryear.For2016,themaximumamountisthelesserof18%ofyourpensionableearningsor$26,010.Thismaximumappliestothetotalofyourand theUniversity’scontributionstoyourMoneyPurchaseAccount,aswellasyour additionalvoluntarycontributions.
OncethetotalofyourandtheUniversity’srequiredcontributionsinacalendaryearreachthismaximum,nofurthercontributionswillbedeductedfromyour pay,andnofurthercontributionswillbemadebytheUniversityinrespectof yourMoneyPurchaseAccountfortherestofthatcalendaryear.
Frequently asked questions Q:CanIchoosehowmyMoneyPurchaseAccountisinvested? A:No.ThefundsinyourMoneyPurchaseAccountareinvestedbyprofessionalfundmanagers according to the plan’s Statement of Investment Policies and Procedures, whichisapprovedbytheBoardofTrustees.
Q:CanIusemypensioncontributionsascollateralonaloanorasadownpaymentonamortgage? A:No.Youcannotuseplancontributionsinthisway.Theycannotbeassignedtoanyone,forexample,topayadebtorsecurealoan,exceptincertaincasesofmarriage breakdown.
Q:Undertheplan,thenormalretirementageis65.MustIcontinuetomaketherequiredcontributionstothepensionplanifIworkpastage65? A:Yes.Employeeandemployer-requiredcontributionstoyourMoneyPurchase Accountarestillrequiredifyouworkbeyondyour65thbirthday.
Contributionswillcontinueuntilyouretireorreachtheageatwhichyoumustbeginreceivingapension.RegulationsundertheIncome Tax Act(Canada)requirethatyoustarttodrawyourpensionnolaterthanDecember1ofthecalendaryearinwhichyoureachage71.
Q:DoIhavetoparticipateintheplanifIamonaleaveofabsence? A:Whenyouareonaleaveofabsencewithoutpay,youcanchoosenotto makecontributionstotheplanduringtheleaveofabsence.Ifyoumakethischoice,however,pensionableserviceforfeitedduringthisperiodcannotbe purchasedlater.
Q:MayIcontributetotheBrockUniversityPensionPlanandaregisteredretirementsavingsaccount(RRSP)atthesametime? A:Yes.However,contributionsarelimitedbytheIncome Tax Act(Canada).FormoreinformationontherelationshipbetweenyourmembershipintheplanandRRSPcontributions,pleasesee“Part10:Othersourcesofretirementincome.”
If your … Then you will receive a pension equal to…
MoneyPurchasePensionisgreater YourMoneyPurchasePension thanyourMinimumGuaranteed Pension
MinimumGuaranteedPensionis YourMoneyPurchasePension,plusatopup greaterthanyourMoney fromtheMinimumGuaranteeFundequalto PurchasePension theexcessofyourMinimumGuaranteedPension overyourMoneyPurchasePension(tobringyour totalretirementincomeuptotheMinimum GuaranteedPensionamount)
The Brock University Pension Planprovides you withthe greater of:
the Money Purchase Pension provided by converting your Money Purchase Account
balance to a variable annuity at pension commencement;
the Minimum Guaranteed Pension determined
in accordance with a prescribed formula.
or
An annuity is a stream of
monthly payments.
Pensionable service is the
completed years and months
ofcontinuousservicewith
theUniversityduringwhich
youareacontributortothe
plan, or the former plan,
sinceJuly1,1964.Part-time
service is prorated.
12
How the plan works Here are the main differences between the DC and DB components. •TheMoneyPurchaseAccount—theDCcomponent—providesyouwithabenefit basedontheaccumulatedcontributionsandinvestmentearnings.Theamount ofyourretirementincomefromthiscomponentcannotbepredictedahead oftimebecauseitisdependentontheinvestmentearnings(orlosses)andthe costofprovidingtheMoneyPurchasePensionwhenyouretire(usingmortality andrate-of-returnassumptions). •TheMinimumGuaranteedPension—theDBcomponent—providesyouwitha benefitbasedonapredeterminedformulathatfactorsinyourpensionable earnings and years of pensionable service.
Hereishowtheplanprovidesyouwiththegreaterofthetwoamounts.
The Brock University Pension Plan is a hybrid pension plan made up of two parts — a defined contribution (DC) component and a defined benefit (DB) component. These parts are combined so that you have the opportunity to benefit from the investment performance of the pension fund, but your pension is protected against market downturns through the provision of a Minimum Guaranteed Pension.
Part 5: Calculating your pension
13
Money Purchase Pension YourMoneyPurchaseAccountholdstheUniversity’sandyourrequiredmoney purchasecontributions,alongwiththeinvestmentreturnsonthosecontributions. Theamountyoubuildinyouraccountisdirectlyaffectedbytheinvestment performanceofthepensionplan’sassetsoverthecourseofyouryearsof membership in the pension plan.
Atpensioncommencement,yourtotalbalanceintheaccountisconvertedto avariablepensionandtransferredtotheVariableAnnuityFund.Itiscalled “variable”becauseofannualincreasesordecreasestopensions,whichare basedoninvestmentandmortalityexperienceoftheVariableAnnuityFund. YourMoneyPurchasePensionispaidoutoftheVariableAnnuityFundand thestartingamountisbasedonactuarialfactorsineffectatthetimeof pension commencement.
YourMoneyPurchasePensionisdeterminedasfollows:
Money Purchase Account balance at pension commencement ÷ Annuity factor
Unlike most DC pension plans, the Brock University Pension Plan does not transfer yourMoneyPurchaseAccountbalancetoaninsurancecompanyatretirementforthepurchaseofanannuity.Ifyouchoosetoremainintheplan,theplanconvertsyouraccountbalancetoavariablepensionandyoucontinueparticipatinginthe experience of the plan.
WhenyourMoneyPurchaseAccountisconvertedtoavariablepension,the amountofyourpensionwillbeadjustedannuallytotakeintoaccountthe investmentreturnsoftheplanandmortalityexperienceofpensioners.For moreinformationontheseannualadjustments,see“Annualadjustmentsto yourpension”onpage24.
Minimum Guaranteed Pension YourMinimumGuaranteedPensionisdeterminedasfollows:
1.7% × your best average earnings × pensionable service
minus
1/35 × 25% × lesser of best average earnings and final average YMPE × pensionable service (maximum 35 years)
Thispensionispaidforyourlifetimewithafive-yearguaranteeandisactuariallyreducedifyourpensioncommencesbeforeage65.Atyourpensioncommencement, youcanchoosetoreceiveyourpensioninadifferentform,inwhichcasethe pensionamountisactuariallyadjustedaccordingtotheformselected.For example,theautomaticformifyouhaveaneligiblespouseprovidesa60% survivorpensionforyourspouseandtheamountofthispensionislessthanthat of the normal form. Please see “Forms of pension payments” starting on page 21 for more information.
TheMinimumGuaranteedPensionisadjustedannuallybasedontherateofchangeintheConsumerPriceIndex(CPI).Again,formoreinformationonadjustments, see“Annualadjustmentstoyourpension”onpage24.
Herearethreeexamplestoshowyouhowthepensioncalculationswork.Allexamplesassumethatthememberhaselectedtoreceivethepensioninthenormalform,whichispayableforthemember’slifetimewithafive-yearguarantee.
Money Purchase Pension
MoneyPurchaseAccountbalanceatpensioncommencement÷ annuityfactor $300,000÷12.3=$24,390 $24,390
Minimum Guaranteed Pension
(1.7%×bestaverageearnings×pensionableservice)—(1/35×25%× lesserofbestaverageearningsandfinalaverageYMPE×pensionable service(cappedat35years)) (1.7%×$40,000×35)—(1/35×25%×$40,000×35)= $23,800—$10,000=$13,800 $13,800
Emma’s annual pension
InEmma’scase,thehigherpensionisprovidedbytheMoneyPurchase Pensionandthereisnotop-upfromtheMinimumGuaranteeFund. $24,390+$0=$24,390 $24,390
Money Purchase Pension
MoneyPurchaseAccountbalanceatpensioncommencement÷ annuityfactor $150,000÷12.3=$12,195 $12,195
Minimum Guaranteed Pension
(1.7%×bestaverageearnings×pensionableservice)—(1/35×25%× lesserofbestaverageearningsandfinalaverageYMPE×pensionable service(cappedat35years)) (1.7%×$60,000×25)—(1/35×25%×$52,440×25)= $25,500—$9,364=$16,136 $16,136
Jakob’s annual pension
InJakob’scase,thehigherpensionisprovidedbytheMinimum GuaranteedPensionandthereisatop-upfromtheMinimumGuarantee FundtotheMoneyPurchasePension. $12,195+($16,136—$12,195)=$16,136 $16,136
An annuity factor is a factor
usedtoconverttheMoney
PurchaseAccounttoamonthly
retirementbenefit.Thefactor
takesintoaccountexpected
mortalityrates,yourage,
form of pension selected, and
theassumedrateofreturn
thatthefundwillearngoing
forward.Forexample,ifyou
retireatage55,adifferent
annuityfactorwillbeused
tocalculateyourpension
thanifyouretireatage65,
toaccountforthefactthat
yourpensionmaybepaidfor
a longer period of time.
The term best average
earnings refers to the average
ofyourpensionableearnings
duringyourfivehighest-paid
years of pensionable service.
Ifyouhavefewerthanfive
years of pensionable service,
theaverageofyourtotal
pensionableearningsisused.
Final average YMPE is the
averageoftheYMPEduring
thelastfiveyearsbefore
termination or retirement.
14
ExampleEmmaisage65,hasaMoneyPurchaseAccountbalanceof$300,000,bestaverageearningsof$40,000,and35yearsofpensionableservice.ThefinalaverageYMPEis$52,440.
ExampleJakobisage65,hasaMoneyPurchaseAccountbalanceof$150,000,bestaverageearningsof$60,000and25yearsofpensionableservice.ThefinalaverageYMPEis$52,440.
Money Purchase Pension
MoneyPurchaseAccountbalanceatpensioncommencement÷ annuityfactor $650,000÷12.3=$52,846 $52,846
Minimum Guaranteed Pension
(1.7%×bestaverageearnings×pensionableservice)—(1/35×25%× lesserofbestaverageearningsandfinalaverageYMPE×pensionable service(cappedat35years)) (1.7%×$120,000×30)—(1/35×25%×$52,440×30)= $61,200—$11,237=$49,963 $49,963
Cynthia’s annual pension
InCynthia’scase,thehigherpensionisprovidedbytheMoneyPurchase Pensionandthereisnotop-upfromtheMinimumGuaranteeFund. $52,846+$0=$52,846 $52,846
15
AswiththecontributionstoyourMoneyPurchaseAccount,theIncome Tax Act (Canada)placescertainlimitsontheleveloftheMinimumGuaranteedPensionthatcanbeprovidedbytheplan.Additionaldetailsregardingthedefinedbenefitlimitcanbefoundonpage24.
ExampleCynthiaisage65,hasaMoneyPurchaseAccountbalanceof$650,000,bestaverageearningsof$120,000and30yearsofpensionableservice.ThefinalaverageYMPEis$52,440.
Frequently asked questions Q:Iamanactiveplanmember.HowcanIfindoutformyselfwhatmypensionmightbe? A:TheBrockPensionEstimatorallowsyoutoestimateyourprojectedmonthlypension.YoucanusetheEstimatortoestimatethebenefitsyouwouldbeentitledtofromtheMoneyPurchaseAccountandtheMinimumGuaranteeFund.TheEstimator’scalculationsarebasedontheassumptionthatyouwillremainemployedbytheUniversityuntilyouretire.Tocompleteitscalculations,theEstimator usestheinformationonyourmostrecentannualstatementaswellasyour assumptionsoffutureratesofreturnandsalaryincreases.
FeaturesoftheEstimatorinclude: •yourup-to-datepersonaldata(employeenumber,dateofbirth,salary,etc.); •accountbalances; •projectedpension;and •howtheoptionalformofpensionyouchoosewouldimpactyourpensionand thebenefitthatwouldgotoyoursurvivingspouseorbeneficiary.
YoucanaccesstheEstimatorfromyour“MyWork”tabinthe“my.brocku.ca”portal.Detailedlogininstructionsareavailableonthewebsite.
IfyouhaveaShortTermAccount,orifyourequirepensionprojectionsbeyond age65,youshouldcontacttheHumanResourcesDepartmenttorequestestimates.
A deferred pension means
pension payments that start at
afuturedate,asopposedto
beingpaidasofthedayyou
stop working for the University.
A locked-in retirement
account (LIRA) is similar to a
RRSPforincometaxpurposes,
butissetupwithlocked-in
fundsthataretransferredout
of a pension plan. Financial
institutionsacceptinglocked-in
fundsmustagreetoadminister
themassetoutinthePension
Benefits Act(Ontario).The
range of investments offered
inaLIRAdependsonyour
financialinstitution,butis
often the same range as
for RRSPs.
16
Youcanchoose: •adeferredpension;or •totransferyourMoneyPurchaseAccountbalancetogetherwiththecommuted value,ifany,oftheexcessofyourMinimumGuaranteedPensionoveryour projectedMoneyPurchasePensionto: –yournewemployer’spensionplan,ifallowed;or –alocked-inretirementaccount(LIRA).
Ifyoucontributedtotheplanbefore1987,youcantake25%ofyourpre-1987MoneyPurchaseAccountbalanceincash(lesswithholdingtaxes)andtransfertheremaindertoalocked-inretirementaccount.
Ifyourpensionbenefitisconsideredtobea“smallbenefit”underpensionlegislation,youcantakeyourMoneyPurchaseAccountbalancetogetherwiththecommutedvalue,ifany,oftheexcessofyourMinimumGuaranteedPensionoveryourprojectedMoneyPurchasePension: •incash,lesswithholdingtaxes;or •transferittoanon-locked-inRRSP.
TheoptionsavailableifyouleaveemploymentwiththeUniversityatage55orolderaredescribedin“Part7:LeavingtheUniversityatage55orolder.”
Additional voluntary contributions Additionalvoluntarycontributions(alongwithinvestmentincomeonthem)canbe: •takenascash,lesswithholdingtaxes; •transferredtoyournewemployer’spensionplan,ifallowed;or •transferredtoanon-locked-inRRSP.
Theamountofinvestmentincomegeneratedisdependentoninvestmentearningsor losses.
Special transfers from other registered pension plans Whatyoucandowithamountstransferredfromotherpensionplans(alongwithinvestmentincomeonthoseamounts)willdependonwhetherornottheseamountsweretransferredtotheBrockUniversityPensionPlanonalocked-inbasis.
Theamountofinvestmentincomegeneratedisdependentoninvestmentearningsor losses.
Amountstransferredonalocked-inbasiscanbetransferred: •toyournewemployer’spensionplan,ifallowed;or •toaLIRA.
Amountstransferredonanon-locked-inbasiscanbe: •takenascash,lesswithholdingtaxes; •transferredtoyournewemployer’spensionplan,ifallowed;or •transferredtoanon-locked-inRRSP.
If you leave employment with the University before you reach age 55, the plan provides a termination benefit that allows you some flexibility.
Part 6: Leaving the University before age 55
Lump-sum amount Percentage of withholding tax
Uptoandincluding$5,000 10%
$5,000.01to$15,000 20%
Morethan$15,000 30%
17
Frequently asked questions Q:WhendoIfindoutwhatmybenefitsareifIleaveemploymentwiththeUniversity? A:TheUniversitywillprovideyouwithaStatement and Election of Benefits on Termination of Employmentformthatwilldetailallofyourpensionbenefits, theirvalue,andyouroptions.Theformsarenormallysentwithin30daysof yourterminationdate.It’simportantthatyoucompletetherequiredpaperwork,andreturnittotheHumanResourcesDepartmentsothatyourbenefitscanbe paidtoyouaccordingtoyourwishes.
Q:CanItransfermyBrockUniversitypensiontomynewemployer? A:Yes,youcantransferyourBrockUniversitypensiontoanotherregisteredpensionplansolongastheplanisregisteredinCanada,acceptssuchtransfers,andtheplan administrators agree to the terms of the transfer.
Q:Whatdoes“locked-in”mean? A:Locked-inreferstofundsthatcannotbetakenascash.Youmustusethese fundstoprovideyourselfwithretirementincome.Pensionlegislationandthetermsoftheplantextdeterminewhenyourpensionbenefitsbecomelocked-in.
Financialinstitutionsacceptinglocked-infundsmustagreetoadministertheminaccordancewithapplicablepensionregulations.Locked-inmoneydoesnothavetostayinthesameaccountuntilretirement.Youmaytransferittootherpermittedlocked-inarrangementsoruseittobuyanannuityatanytime.
Q:Whatarewithholdingtaxesandhowmucharethey? A:Withholdingtaxesaresetratesoftaxdeductedatthesourcefromany lump-sumcashpaymentyoureceivefromaregisteredpensionplan.Cash refundsaretaxablebecauseyoureceivedataxdeductionwhenyoumade contributionstotheplan.
SinceJanuary1,2005,thewithholdingtaxratesarethoseshowninthetable.ThesearesetbytheCanadaRevenueAgency(CRA)andaresubjecttochange.
Inadditiontowithholdingtaxes,theamountofyourcashrefundwillbeadded toyourincome.Dependingonyourpersonalsituation,youmayberequiredto payadditionalincometaxwhenyoufileyourreturnoryoucouldgetarefund.
Youarenotsubjecttowithholdingtaxesifyoutransferamountsdirectlyfrom aregisteredpensionplantoanotherregisteredplan,suchasaRRSP.
The normal retirement date
intheplanisthefirstofthe
monthfollowingyour65th
birthday,oronyourbirthday
shouldthedatescoincide.
(Whilethisisthenormal
retirementdateunderthe
plan,facultymembers
typicallyretireonJune30th,
which is aligned with the
academicyear.)
LIF (life income fund) is an
arrangement that provides
retirement income from
fundsthatoriginatedfrom
a registered pension plan or
LIRA.ALIFisregulatedby
the Income Tax Act(Canada)
and by provincial pension
benefitslegislation.
18
Active plan membersYoucanretireandbeginreceivingyourpension: •atage65(thenormalretirementdate); •asearlyasage55withapensionthatisactuariallyreducedfor earlyretirement;or •aslateasDecember1ofthecalendaryearinwhichyoureachage71.
Your two main choices for retirement income TheBrockUniversityPensionPlanoffersyouflexibility.Atnormal,early,or postponedretirement,youhavetwochoices.Youcan: •staywithintheplanandtakeapension;or •transferyourMoneyPurchaseAccountbalancetogetherwiththecommuted value,ifany,oftheexcessofyourMinimumGuaranteedPensionoveryour projectedMoneyPurchasePensionto: –alocked-inretirementaccount(LIRA);or –alifeincomefund(LIF).
AllamountspayablefromtheplanaresubjecttolimitsundertheIncome Tax Act(Canada).
Ifyouchooseapensionwithintheplan,ineachyearafterpensioncommencement,youwillreceivethegreaterofyourMoneyPurchasePensionoryourMinimum GuaranteedPension.Thiswasdescribedinmoredetailearlierinthisbookletin“Part5:Calculatingyourpension.”
Insteadofchoosingapensionwithintheplan,youcanchoosetotakethevalueofyourpensionoutoftheplantoalocked-inretirementaccount.ThisvalueismadeupofyourMoneyPurchaseAccountand,ifapplicable,thecommutedvalueof anyexcessofyourMinimumGuaranteedPensionoveryourprojectedMoney PurchasePension.
Your Brock University Pension Plan helps provide you with a foundation for retirement.
Part 7: Leaving the University at age 55 or older
19
Deferred plan membersYoucanbeginreceivingyourpension: •atage65(thenormalretirementdate); •asearlyasage55withapensionthatisactuariallyreducedfor earlyretirement;or •aslateasDecember1ofthecalendaryearinwhichyoureachage71.
Normal or early retirementTheBrockUniversityPensionPlanoffersyouflexibility.Atnormalor earlyretirement,youhavetwochoices.Youcan: •staywithintheplanandtakeapension;or •transferyourMoneyPurchaseAccountbalancetogetherwiththecommuted value,ifany,oftheexcessofyourMinimumGuaranteedPensionoveryour projectedMoneyPurchasePensionto: −alocked-inretirementaccount(LIRA);or −alifeincomefund(LIF).
AllamountspayablefromtheplanaresubjecttolimitsundertheIncome Tax Act (Canada).
Ifyouchooseapensionwithintheplan,ineachyearafterpensioncommencement,youwillreceivethegreaterofyourMoneyPurchasePensionoryourMinimumGuaranteedPension.Thiswasdescribedinmoredetailearlierinthisbookletin“Part5:Calculatingyourpension.”
Atnormalorearlyretirement,youcanchoosetotakethevalueofyourpensionoutoftheplantoalocked-inretirementaccount.ThisvalueismadeupofyourMoneyPurchaseAccountand,ifapplicable,thecommutedvalueofanyexcessofyourMinimumGuaranteedPensionoveryourprojectedMoneyPurchasePension.
Postponed retirement (after age 65)Atpostponedretirement(afterage65),youwillreceiveapensionfromthePlan.YoumustbeginreceivingapensionbyDecember1ofthecalendaryearinwhichyoureachage71.
AllamountspayablefromtheplanaresubjecttolimitsundertheIncome Tax Act (Canada).
Eachyearafterpensioncommencement,youwillreceivethegreaterofyourMoneyPurchasePensionoryourMinimumGuaranteedPension.Thiswasdescribedinmoredetailearlierinthisbookletin“Part5:Calculatingyourpension.”
20
Making your decisionThere are many reasons why some people choose to remain in the plan, while otherschoosetotransfertheirbenefitsoutoftheplan.
Somepeoplechoosetoremainintheplanbecause: •theylikethesecurityprovidedbytheMinimumGuaranteedPension;or •theydonotwanttheresponsibilityofinvestingtheirassetsandcreating retirement income.
Sometransferthevalueoftheirpensionoutoftheplanbecause: •theywanttomaintaincontrolovertheirretirementsavings; •theyareconfidenttheycangainahigherreturnusingtheirowninvestment strategy;or •theybelievetheydonothavealonglifeexpectancy.
Whateveryoudecide,youshouldconsiderspeakingwithaqualifiedindependentfinancialadvisorbeforemakingyourchoice.Anindependentadvisorcangive youunbiasedadviceonwhatoptionisbestbasedonyourpersonalcircumstances.BrockUniversitycannotgiveyoufinancialadvice.
If you choose to remain in the plan Ifyouchoosetoreceiveyourpensionfromtheplan,yourMoneyPurchase AccountbalancewillbetransferredtotheVariableAnnuityFundandconverted toavariablepension(yourMoneyPurchasePension)basedontheactuarialfactors ineffectatthetimeofyourretirement.
YourMinimumGuaranteedPensionwillbecalculatedbasedontheplanformula. Ifyouareleavingbeforeyournormalretirementdate,thispensionisactuariallyreducedtoreflecttheexpectedlongerpaymentperiod.
IfyourMoneyPurchasePensionislowerthanyourMinimumGuaranteedPension,thedifferencebetweenthetwoamountswillbepaidtoyouasatop-uppensionfromtheMinimumGuaranteeFund.
Formoreinformationonhowyourpensioniscalculated,see“Part5:Calculatingyourpension”earlierinthisbooklet.
Additional voluntary contributions Inthecaseofretirement,additionalvoluntarycontributionscanbe: •takenascash,lesswithholdingtaxes; •transferredtoanon-locked-inRRSP; •transferredtoaninsurancecompanytopurchasealifeannuity;or •usedtoprovideanadditionalpensionfromtheVariableAnnuityFund.The additionalamountofpensionwouldbecalculatedusingthesameactuarial factorsthatwereusedtocalculateyourMoneyPurchasePension,andbe subjecttothesameannualadjustments,butwithnominimumguarantee.
Actuarially reduced means
thatyourpensionwillbe
reducedbasedonactuarial
factorstoaccountforthefact
thatyouwouldbereceiving
the pension for a longer
period of time.
21
Special transfers from other registered pension plans Inthecaseofretirement,whatyoucandowithamountstransferredfromotherpensionplans(alongwithinvestmentincomeonthoseamounts)willdependonwhetherornottheseamountsweretransferredonalocked-inbasis.
Amountstransferredonalocked-inbasiscanbetransferred: •toaLIRAorLIF;or •toaninsurancecompanytopurchasealifeannuity.
Amountstransferredonanon-locked-inbasiscanbe: •takenascash,lesswithholdingtaxes; •transferredtoaregisteredretirementsavingsplan;or •transferredtoaninsurancecompanytopurchasealifeannuity.
Alternatively—whetherlocked-inornot—thetransferredamountscanbeusedtoprovideanadditionalpensionfromtheVariableAnnuityFund.TheadditionalamountofpensionwouldbecalculatedusingthesameactuarialfactorsthatwereusedtocalculateyourMoneyPurchasePension,andbesubjecttothesameannualadjustments,butwithnominimumguarantee.
Postponed retirement Retirementatage65isnotmandatory.Ifyoudecidetocontinueworkingat theUniversityafterage65,youwillcontinuecontributingtotheplanandaccruingservice. However, according to Income Tax Act(Canada)regulations,youmust beginyourpensionnolaterthanDecember1ofthecalendaryearinwhich youreachage71.
Forms of pension payments Onceyouarereadytoapplyforyourpension,andyouhavedecidedtoremain intheplan,youwillhavetochooseaformofpension.Theplanpromisesyouthe normalformofpension.Italsogivesyoutheflexibilitytochooseapensionoptionthatbestreflectsyourneedsatretirement.
Theavailableoptions—orthewayyourpensionwillbepaidout—willdependonwhetherornotyouhaveaneligiblespouseatthetimeyourpensionpaymentsstart.Howmuchthevariousoptionspaydependsonyourageandtheageofyoureligiblespouse(ifthereisone).Onceyourpensionstarts,theformofpension cannot be changed.
Normal form of pension Thenormalformofpensionisapensionpaidforyourlifetime(calledasingle-lifepension)withafive-yearguarantee.Underthisform,paymentswillendonyourdeath.Ifyoudiebeforetheendofthefive-yearguaranteeperiod,paymentsin thesameamountaswerepayableduringyourlifetimewillcontinuetobepaid toyourbeneficiaryforthebalanceoftheguaranteeperiod.Alternatively,your beneficiarycouldchoosetoreceivethevalueoftheremainingguaranteed paymentsinalumpsum.
Joint-and-survivor
percentage is a percentage
ofyourpensionthat
continuestoyoureligible
spouse,forthespouse’s
lifetime,ifyoudieduring
retirement. In Ontario, the
lawrequiresthatyourspouse’s
pensionbeatleast60%ofthe
pension that was being paid
toyou(unlessawaiverwas
signedbyyourspouse).
22
Automatic form of pension UndertheOntariopensionlegislation,ifyouhaveaneligiblespouseatpensioncommencement,youmustprovideatleasta60%survivorpensionforyoureligiblespouse(calleda60%joint-and-survivorpension),unlessheorshewaivestherighttothisbenefitbysigningaWaiver of Joint-and-Survivor Pension form. The waiver takeseffectprovidedtheUniversityreceivesitbeforeyourretirementdate.Thewaivermaybecancelledbywrittennoticereceivedbeforeyourpensionstarts.
Asaresult,ifyouhaveaneligiblespouseatpensioncommencement,theautomatic formforpayingyourbenefitsisonethatpaysyouapensionforyourlifetimeand a60%pensiononyourdeathtoyoureligiblespouse,untilyourspouse’sdeath. Thepensionamountthatyoureceiveunderthisformwillbeactuariallyadjusted toreflecttheadditionalcostofprovidingthesurvivorpensiontoyourspouse.
Optional forms of pension If you do not have a spouse or you have filed a spousal waiver Ifyoudonothaveaneligiblespouse,oryouhavefiledaspousalwaiver,instead ofthenormalform,youcanchoosetoreceiveyourpensionasasingle-life pensionwith: •noguarantee; •a10-yearguarantee;or •a15-yearguarantee.
Ifyoudiebeforetheendofanyguaranteeperiod,pensionpaymentsinthesameamountaswerepayableduringyourlifetimewillbepaidtoyourbeneficiaryforthebalanceoftheguaranteeperiod.Alternatively,yourbeneficiarywillhaveachoiceofchoosingtoreceivethevalueoftheremainingguaranteedpayments inalumpsum.
If you have a spouse Ifyouhaveaneligiblespouse,insteadoftheautomaticform,youcanchoose toreceiveyourpensionasajoint-and-survivorpensionat: •60%withaguaranteeof5,10,or15years; •75%withnoguaranteeoraguaranteeof5,10,or15years;or •100%withnoguaranteeoraguaranteeof5,10,or15years.
Thesepensionsarepayableforaslongasyoulive.Onyourdeath,thejoint-and-survivorpercentageofpensionthatwaspayabletoyouwillcontinuetoyourspouseforaslongasheorshelives.Ifyouandyourspousebothdiebeforetheendof theguaranteeperiod,theestateofthelastpensionrecipientwillreceivethe commutedvalueofthepaymentsremainingintheguaranteeperiod.
Eachoptiondiffersintwofundamentalways—howmuchyoureceiveforyour lifetime,andhowmuchyoureligiblespouseorbeneficiaryreceivesonyourdeath.
Joint-and-survivor percentage
Percentage of member’s pension paid to eligible spouse upon member’s death Years guaranteed Amount of member’s pension
60% 0 $91.74
60% 5 $91.74
60% 10 $91.72
60% 15 $91.63
75% 0 $89.78
75% 5 $89.78
75% 10 $89.75
75% 15 $89.64
100% 0 $86.68
100% 5 $86.68
100% 10 $86.64
100% 15 $86.51
Single-life pension
Years guaranteed Amount of member’s pension
0 $100.55
5(normalform) $100.00
10 $98.51
15 $96.29
23
Aloweredpensionamountispaidforyourlifetimewhentheguaranteeperiodislongerorwhenthepercentageofthesurvivorpensionprovidedtoyoureligiblespouseishigher.
Thefollowingchartsshowexamplesofamountsofreductionson$100worthofpension for different forms of pension for a person beginning his or her pension at age65(thenormalretirementdate)andhasaspousewhoisage61atthattime.
TheBrockPensionEstimatorprovidesestimatesforactivemembersofhowtheoptionalformofpensionyouchoosewouldimpactyourpensionandthebenefitthatwouldgototheirsurvivingspouseorbeneficiary.
YoucanaccesstheEstimatorfromyour“MyWork”tabinthe“my.brocku.ca”portal.
24
Annual adjustments to your pensionAfterpensioncommencement,bothyourMoneyPurchasePensionandyour MinimumGuaranteedPensionwillbeadjustedannuallyeffectiveJuly1.
Adjustment to Minimum Guaranteed Pension YourMinimumGuaranteedPensionwillbeadjustedeffectiveeachJuly1toreflectchangesintheConsumerPriceIndexduringthepreceding12months,cumulativefrompensioncommencement.TheincreaseintheMinimumGuaranteedPensioninanygivenyearislimitedto2%andyourMinimumGuaranteedPensionwillnotdecreaseasaresultofthisadjustment.
Adjustment to Money Purchase Pension YourMoneyPurchasePension,ontheotherhand,cangoupordowninagivenyear.
Whenyoufirstretire,theactuarialfactorsusedtoconvertyourMoneyPurchase AccountbalancetoaMoneyPurchasePensionarebasedonassumptionsregardingthe rateofreturnthattheplanassetswillearninthefutureandfuturemortalityrates.
Totheextentthattheactualinvestmentandmortalityexperienceisdifferentfrom theseassumptions,orexpectationsoffutureexperiencechange,yourMoneyPurchase Pensionswillbepositivelyornegativelyadjustedonanannualbasis.
Currentcalculationsassumethattheplanassetswillearnarateofreturnof6%annuallythroughoutyourretirement.Therefore,beforetakingintoaccountanymortalitygainsorlosses,theinvestmentsfromtheMoneyPurchaseAccountmustearn6%tomaintainaconstantpension.Forexample,iftheplan’srateofreturn inagivenplanyearis9%,withnomortalitygainsorlosses,yourMoneyPurchasePensionamountwouldincreaseby3%(9%minus6%=3%).Iftheplan’srateofreturnwas3%inagivenyear,withnomortalitygainsorlosses,yourMoneyPurchasePensionamountwoulddecreaseby3%(3%minus6%=-3%).
Throughoutyourretirement,thepensionyoureceiveeachyearwillbeequaltothegreaterofyourMoneyPurchasePensionforthatyearoryourMinimumGuaranteedPensionforthatyear.IntheyearsthatyourMinimumGuaranteedPensionexceedsyourMoneyPurchasePension,theexcesswillbepaidasatop-upfromthe MinimumGuaranteeFund.
WhileeffectiveJuly1eachyear,theannualadjustmentmaynotappearonyourpensionpaymentuntilOctober1.Theadjustmentsaremaderetroactively,asittakessometimetocalculate,confirm,andadministertheadjustments.
25
Pension amounts based on additional voluntary contributions or special transfers PensionsbasedonyouradditionalvoluntarycontributionsorspecialtransfersareadjustedonJuly1inthesamemannerasyourMoneyPurchasePension;however,thereisnominimumguaranteeamountassociatedwitheitherofthese.
Maximum pension amount The Income Tax Act(Canada)limitstheamountofpensionbenefityoumayearnundertheMinimumGuaranteedPensioncomponentoftheplan.Thelimitchangesfromtimetotime.Thecurrentlimitin2016is$2,890.00peryearofserviceforapension that starts at the normal retirement date.
Example Jimretiresin2016andhas35yearsofservice.ThemaximumlimitplacedbytheIncome Tax Act(Canada)onJim’sannualpensionwouldbe$101,150.00.
35×$2,890.00=$101,150.00.
Ifyouarestartingyourpensionbeforeyournormalretirementdate,thismaximumisreducedaccordingtotherulesprescribedbytheIncome Tax Act(Canada).
Notice of retirement YoushouldcontacttheHumanResourcesDepartment12monthsbeforeyourretirementdatetoreceiveestimatedpensionvalues.
YourwrittennoticeofretirementshouldbeprovidedtotheHumanResourcesDepartmentatleastthreemonthsbeforeyourretirementdate.Thenoticeshouldincludetheretirementdateandyoursignature.
OncetheUniversityreceivesyournotice,youwillbemailedaStatement and Election of Benefits on Retirement.Itwillinclude: •yourpersonalinformationonrecord(includingthenamesofyoureligible spouseandbeneficiary); •thetotalcontributions; •yourestimatedaccountbalancesintheMoneyPurchaseAccount,ShortTerm Account,AdditionalVoluntaryContributionsAccount,Locked-inTransfer Account,andNon-Locked-inTransferAccount; •theestimatedpensionyouhaveearnedasofyourretirementdate;and •abenefitoptionsform.
Youwillalsoreceiveotherformsrequiredfortransferringyourpensionbenefit toalocked-inretirementaccount(LIRA)orlifeincomefund(LIF).
Youwillbeaskedtoprovideproofofyourageaswellasyourspouse’sage.
Youwillalsoreceivea Declaration of Marital Status Formthatmustbecompletedregardlessofwhetheryouchoosetostayintheplanortransferyourpensionout of the plan.
CompletedpensionpaperworkshouldbeprovidedtotheHumanResources Departmentatleasttwomonthsbeforeyourretirementdate.
26
Receiving your pension payments Pensionsarepaidonthefirstbusinessdayofthemonth.Yourveryfirstpaymentwillbedelayedaweekortwoasyourpaymentcalculationtakesplace,the Universitypreparesinstructionfortheplan’scustodiantomakepaymentto you,andthecustodianupdatestheirsystemsforthenewpayment.
PaymentismadebydirectdeposittoaCanadianbankaccountofyourchoice.AvoidchequemustbeprovidedtotheHumanResourcesDepartmentbeforeyourpensionpaymentsbegin.IfyouwillbelivingoutsideofCanadaduringyourretirement,youshouldcontacttheHumanResourcesDepartmenttodiscussamethodofpayment.
AllpensionpaymentsfromtheplanaremadeinCanadianfunds.
Frequently asked questions
Q:Doesmypensionamountchangeifmyspousediesbeforeme? A:No,yourpensionamountdoesnotchangeafteraspouse’sdeath.Allthesame,youshouldnotifytheHumanResourcesDepartmentofyourspouse’sdeathifyouretiredwithajoint-and-survivorpension,asitisimportanttoensurethatyourrecordsareuptodate.
Q:WhathappensifIremarryafterpensioncommencement? A:Onlythespouseyouhaveonpensioncommencement,ifany,iseligibletoreceiveaspousalpension.Ifyouremarryorenterintoacommon-lawrelationshipafterthedateyourpensionpaymentsbegin,yournewspousewillnotbeeligible toreceiveaspousalbenefit.
Q:IfIretire,doIhavetostartdrawingmyBrockUniversitypensionimmediately? A:No,youcanelectadeferredpensionfromtheBrockUniversityPensionPlan.Regulationsunderthe Income Tax Act(Canada)requirethatyoustarttodrawyourpensionnolaterthanDecember1ofthecalendaryearinwhichyouturnage71.
Q:WhatisthelatestdatethatIcanstartreceivingmypension? A:YoumustbeginreceivingyourpensionnolaterthanDecember1ofthecalendar yearinwhichyoureachage71.
Q:IfIresignfromtheUniversityandgotoworkforanotheremployer,canIleavemypensionwithBrockUniversity? A:Yes.ChoosingtodeferyourpensionmeansthatthepensionispayablefromtheBrock University Pension Plan at a later date.
Under Ontario pension
legislation, a spouse is a
persontowhomyouare:
•legallymarried,provided
youarenotlivingseparate
and apart from that
person;
•notlegallymarried,but
youandthatpersonhave
cohabitedcontinuouslyin
aconjugalrelationshipfor
atleastthreeyears;or
•notlegallymarried,but
youandthatpersonare
cohabitinginaconjugal
relationship of some
permanence, and are
jointlythenaturalor
adoptive parents of a
child,asdefinedinthe
Family Law Act (Ontario).
Q:HowsooncanIhavemymoneyafterIretire? A:IfBrockUniversityreceivesyourpaperworkinatimelyfashion—thatis,atleasttwomonthsbeforepensioncommencement—yourfirstpensionpaymentwillbeprocessedtobedepositedtoyouraccountwithintwoweeksofthepension commencementdate.Thereafter,thepaymentwillbedepositedintoyour accountonthefirstbusinessdayofthemonth.
Ifyouchosealump-sumtransferratherthanapension,thetransfertypically willbeprocessedwithinthreeweeksofyourretirementdate.
Q:IfIdiewhilecollectingapension,doesmyspouse,family,orestatereceiveasurvivorbenefit? A:Ifyoudiewhilecollectingapension,thesurvivorbenefitdependsontheform ofpensionyouchoseatpensioncommencement.Forexample,ifyouchoseajoint-and-survivor60%witha15-yearguarantee,afteryourdeathyourspousewouldreceive60%ofyourpensionamountfortherestofyourspouse’slife.BothMoneyPurchaseandMinimumGuaranteedPensionamountsarereducedby60%andbothamountscontinuetobeadjustedonanannualbasis.Formoreinformationontheadjustmentprocess,seepage23.
Ifbothyouandyourspousediebeforetheendofthe15-yearguaranteeperiod,thevalueofanyremainingpaymentswouldbepaidtotheestateofthelastlivingpensionrecipient.Ifyouand/oryourspouselivebeyondthe15-yearguaranteeperiod, pension payments will end after the death of the last pension recipient. Nopaymentwouldbemadetotheestate.
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Death before pension commencement
Options for an eligible spouse or beneficiary Ifyoudiebeforepensioncommencement,youreligiblespouseorbeneficiarywillreceiveasurvivorbenefitbasedonyourMoneyPurchaseAccountbalancetogetherwiththecommutedvalue,ifany,oftheexcessofyourMinimumGuaranteed PensionoveryourprojectedMoneyPurchasePension.
Note:Ifyouhaveaneligiblespouse,andunlessyourspousehaswaivedhisorherentitlementtothesurvivorbenefit,yourspousewillreceivethesurvivorbenefitevenifheorsheisnotyourdesignatedbeneficiary.
Options for an eligible spouse Insteadofalump-sumbenefit,asurvivingspousemaytransferthelump-sumbenefitamounttoaregisteredretirementsavingsplanortoaninsurancecompanytopurchasealifeannuity.
Alternatively,asurvivingspousemaychoosetotakeanannualpension.TheHumanResourcesDepartmentwillprovidethesurvivingspousewithdocumentationoutlininghisorheroptions.
Death after pension commencement
Ifyoudieafterpensioncommencement,anysurvivorbenefitsprovidedwill depend on the form of pension payment thatyouchoseatpensioncommencement (forexample,foryourlifeonly,foryourlifewithaguaranteedperiod,orajoint-and-survivorpensionthatcontinuestoyourspouseafteryoudie).
On your death, the plan provides your survivors with benefits, whether you die before or after your pension begins.
Part 8: Providing for your survivors
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Annual pension statements As an active member of the plan, each year before December 31, the University will provide Your Personal Pension Statementtoyou. Thestatementwillinclude: •yourpersonalinformationonrecord(includingthenamesofyourspouse, ifapplicable,andbeneficiary); •totalcontributionsoverthepastyear; •theaccountbalancesintheMoneyPurchaseAccount,ShortTermAccount, AdditionalVoluntaryContributionsAccount,Locked-inTransferAccountand Non-Locked-inTransferAccount;and •thepensionyouhaveearnedasofthestatementdateandtheprojectedpension onyournormalretirementdate.
IfyouleavetheUniversity,theUniversitywillcontinuetosendyouanannual statement.Thisstatementwillincludeyourpersonalinformationonrecordand thebalancesofanyaccountsyouhold.
Youshouldreviewtheinformationonthisstatementandreportanyinaccuracies as soon as possible.
Yourstatementisanimportantestate-planningdocument.Reviewitcarefully andfileitforfuturereference.
Governance The plan is a registered pension plan, sponsored and administered by Brock University. TheplanisregisteredwiththeFinancialServicesCommissionofOntariounder registrationnumber0327767.ItisalsoregisteredwiththeCRA.
TheBrockUniversityPensionPlanbecameeffectiveJanuary1,1972,replacing theoriginalplanthatwasestablishedJuly1,1964.Amendmentshavebeenmadefromtimetotimetoclarifywordingortoreflectchangesinregulationspertainingto registered pension plans. The pension plan text was most recently restated July1,2009.
A Pension Committee, appointed by the University, acts in an advisory capacity regardingtheadministrationoftheplanandincludesrepresentativesfromvariousemployeegroupsandretirees.
Plan assets The plan’s assets are held separate from the remaining assets of Brock University. ThatmeanstheassetsoftheplanareprotectedifBrockUniversityshouldcease to exist.
The plan’s assets are invested so that the investment earnings can help to meet the cost of the promised pensions. The plan’s assets are managed in accordance with the terms of the plan, the Statement of Investment Policies and Procedures, and applicable legislation.Investment-relatedinformationisavailableonthepensionwebsite.
Part 9: Taking care of administrative issues
RRSP (registered retirement
savings plan)isatax-deferred
vehicle for retirement savings.
RRSPs were established to
encourageCanadianstosave
for retirement by permitting
tax-deductiblecontributions
andtax-deferredgrowth
of investments.
29
Frequently asked questions
Q:Whathappenstomypensionifmymarriagebreaksdown? A:ApensionisconsideredmaritalpropertyunderOntariolaw.Youmayassignup to50%ofthepensionbenefitearnedduringthemarriagetoyourformerspouseinthe case of marriage breakdown.
TheFinancialServicesCommissionofOntario(FSCO)introducedchangestothefamily law provisions of the Pension Benefits Act(Ontario)asofJanuary1,2012.TheprocessenactedrequiresthePlanAdministrator(BrockUniversity)tocalculatethevalueofthepension(the“FamilyLawValue”)andprovideforimmediatedivisionofassetsasprescribedbyFSCO,usingtheFSCOapprovedformsthroughoutthe process.
BelowisalinktotheFSCOwebsitewithmoreinformationontheValuationandDivisionofPensionAssetsonBreakdownofaSpousalRelationshiponandafterJanuary1,2012:http://www.fsco.gov.on.ca/en/pensions/Family-Law/Pages/ marriage_breakdown.aspx
Formoreinformationonnextsteps,seethelinkbelowandclickmarriagebreakdown: http://www.brocku.ca/hr-ehs/pension-new/member-pension
AllFamilyLawValuepensionrequestsarekeptinconfidence.
A pension adjustment (PA)
isthevalueassignedto
thebenefitearnedperyear
in a pension plan. A PA
reducestheamountyoucan
contributetoaRRSPinthe
following year.
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31
YourBrockUniversityPensionPlanisakeypartofyourretirementincome.However, itisnotintendedtobeyouronlysourceofretirementincome.Twoothersourcesofretirementincome—governmentbenefitsandpersonalsavings—arenecessarytoensureacomfortableretirement.
Canada Pension Plan WhenyouworkinoutsideofQuebec,youandyouremployercontributetotheCanadaPensionPlan(CPP).Theretirementbenefityoureceiveisbasedonseveralfactors:youryearsintheworkforce,theCPPcontributionsyoumadewhileyouwereworkingandyourearningsduringthoseyears.Ifyoursalaryisbelowtheyear’smaximumpensionableearnings(YMPE),youdonotgetamaximumCPPbenefit.Themaximummonthlybenefitin2016is$1,092.50.
YoucanstartyourCPPbenefitasearlyasage60,oraslateasage70.Yourpension willbeadjustedtoreflecttheearlierorlaterpaymentstartingdate.AfteryoubeginreceivingyourCPPpension,adjustmentsaremadeeachyeartoreflect increases in the cost of living.
Ifyoudie,yoursurvivorscanapplyforCPPsurvivorbenefits.Ifyouandyourspousemeetcertaineligibilityrequirements,yourspousecouldreceiveamonthlybenefitafteryourdeath.Yourdependentchildrenmayalsoreceiveamonthlybenefit,andaone-timelumpsumequaltosixmonthsofyourpaymentsor$2,500tocoverthecostoffuneralexpenses,whicheverisless.
Old Age Security Ifyourincomeinretirementisbelowacertainamount,youmaybeeligibleto receiveamonthlypaymentfromOldAgeSecurity(OAS)atage65.Adjustments aremadetoOASpaymentstoreflectincreasesinthecostofliving.
Aboveacertainincome,OASpaymentswillbegintobereduced.Thisreductionbeginstoapplywhenyourindividualincomeisaboveacertainlevel($72,809in2015).Paymentswillnolongerbemadewhenyourindividualincomeisatoraboveacertainlevel($118,055in2015).
Up-to-dateCPPandOASbenefitamounts,aswellascompletedescriptionsoftheseplans,areavailableontheGovernmentofCanadawebsiteat:http://www.esdc.gc.ca/en/cpp/index.page
ThewebsitealsoallowsyoutoviewyourpersonalCPPbenefitsstatementonline.
Part 10: Other sources of retirement income
Thisyear,Astridearns$60,000.HerPAisthesumofher andtheUniversity’scontributionstoherMoneyPurchase Account.Astridhadnoadditionalvoluntarycontributions.$7,489.60.
Astrid’soveralltax-shelteredamountis$10,800, or18%ofherearnings. $60,000X18%=$10,800
Thenextyear,Astridcancontribute$3,310.40to aRRSP,plusanyunusedRRSProomshecarried $10,800—$7,489.60= forwardfrompreviousyears. $3,310.40
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Personal savings Yourownsavingswillplayanimportantpartinensuringanadequateretirementincome.FormostCanadians,accumulatingpersonalsavingsforretirementmeanscontributingtoregisteredretirementsavingsplans(RRSPs).Youcanputmoney intoapersonalorspousalRRSPandsaveonincometax,uptocertainlimits.
The Income Tax Act(Canada)setsouthowmuchyoucancontributetoyourRRSP.Thetotalyoucancontribute—yourcontributionroom—fortheyeardependsonyourearnedincomeandthedeemedvalueofpensionbenefitsyouearnedundertheBrockUniversityPensionPlanthepreviousyear.
TheCRAindicatesyourRRSPcontributionroomontheNotice of Assessment youreceivewhenyoufileyourincometaxreturn.Youcancarryforwardunusedcontributionroomtolateryears.
RRSP contribution considerations The Income Tax Act (Canada)limitshowmuchyoucancontributetoyourRRSP. YourparticipationintheBrockUniversityPensionPlanaffectstheamountyou cancontributetoyourpersonalRRSP.
Aformulaprescribedunderthe Income Tax Act(Canada)determinesthedeemedvalueofthebenefityouearnunderthepensionplanforeachyear.Theendresult ofthisformulaisapensionadjustment(PA).YourPAisreportedontheT4slipyoureceive from the University andreducestheamountofRRSPcontributionroomyouhave available in the next year.
InthecaseoftheBrockUniversityPensionPlan,thePAisequaltothetotalofplanmemberandUniversity’sannualcontributionstotheMoneyPurchaseAccount,aswellasanyadditionalvoluntarycontributionsmadebytheplanmember.
ThefollowingexampleexplainshowthePAeffectsRRSPcontributionroom.
Frequently asked questions Q:WhenshouldIapplyformyCPPpension? A:Althoughyouarenotrequiredtodoso,itisbesttoapplyatleastsixmonthsbeforeyouwantyourCPPpensiontobegin.Pleasenotethattherearelegislativerestrictionsonretroactivepayments.Adelayinapplyingcouldresultinlost benefits.Forinformation,contactServiceCanada.
Q:HowdoesCPPaffectmyBrockUniversitypension? A:YourBrockUniversitypensiondoesnotchangewhenyoubegintoreceiveCPP.
Q:WhenshouldIapplyforOAS? A:AnapplicationforOASshouldbecompletedandsubmittedsixmonthsbeforeyour65thbirthday.
33
AsthetimenearswhenyouwillleaveemploymentwiththeUniversityandyourpensionwillbegin,considertakingthefollowingsteps:
•Reviewyourannualpensionstatementtoseehowmuchpensionyouhaveearned todateandtheestimatedamountyouwillreceivewhenyourpensionbegins.
•UsetheBrockPensionEstimatortoproduceestimatestobeginyourplanning process.
•Ifyouareage62orolder,considerwhetherornotyouwanttotransferannually aportionofyourMoneyPurchaseAccounttotheShortTermAccountineach oftheyearsbeforeretirement.TheHumanResourcesDepartmentprovides more information on this option to eligible members.
•Visitaqualifiedfinancialadvisortoreviewyouroptionsandyour retirement income.
•Checkdatesandproceduresforapplicationstoreceivegovernment retirementbenefits.
•Reviewyourbeneficiarydesignationandmakesureallofyourpersonal informationisuptodate.
•Around12monthsbeforethedateyouwishtoretire,contacttheHuman ResourcesDepartmenttorequestanestimateofyourpensionamount.
•ArrangeameetingwithstaffintheHumanResourcesDepartmenttodiscussyour pensionoptionsandotherretirementitems.Ifyouhaveaspouse,itisalso beneficialforyourspousetoattendthismeeting.
•Atleastthreemonthsbeforeyourretirementdate,providetheHuman ResourcesDepartmentwithwrittennoticeofyourretirement.
•Carefullyconsiderandthenchooseyourpensionoption.Rememberthatonce yourpensionpaymentsbeginoryourfundsaretransferred,youwillnotbeable tochangeyouroption.Allcompletedpaperworkshouldbereturnedtothe HumanResourcesDepartmenttwomonthsbeforeyourretirementdate.
Part 11: Covering all the bases
34
Frequently asked questions
Q:HowdoIprovidenoticeofmyretirement? A:WrittennoticeofyourretirementshouldbeprovidedtotheHumanResourcesDepartmentatleastthreemonthsbeforeyourretirementdate.Thenoticemustincludethedateofretirementandyoursignature.
Q:DoIpaytaxesonmypensionbenefits? A:Yes.YouwillpaytaxesonyourpensionaswellasbenefitsfromCPPandOAS.However,youmaybenefitfrombeinginalowertaxbracketduringretirementthanthebracketthatcurrentlyappliestoyou.Theplan’scustodianwilldeductapplicabletaxesandprovideyouwiththeappropriatetaxformrequiredforyou tousewhenpreparingyourincometaxreturn.
Q:Isitpossibleformetohavemoretaxesdeductedfrommypension? A:Yes.Ifyouprovidethecustodianwithwritteninstruction,theamountoftaxesdeductedcanbeincreased.Thewritteninstructionshouldincludethedollaramountofextrataxesthatyouwouldlikedeductedandthemonththatyou wouldliketheincreasetobegin.
Q:WhenIretire,canIsplitmypensionincomewithmyspouseforincome taxpurposes? A:Sincethe2007taxyear,underCRArules,Canadianresidentsmaysplitcertainpensionincomewiththeirresidentspouse.Youmaybeabletojointlyelectwithyourspousetosplityoureligiblepensionincomeifyoumeetalloftherequirements.
Tosplitpensionincome,youandyourspousewillneedtomakeajointelection onFormT1032,Joint Election to Split Pension Income,andsubmititwith yourandyourspouse’sincometaxreturnsfortheyearbyyourfilingduedate. Formoreinformation,visittheCRAwebsiteat: www.cra-arc.gc.ca/tx/ndvdls/tpcs/pnsn-splt/
Thedecisiontosplityourpensionincomedoesnotinanywayaffectthepensionpayable from the plan or the income taxes withheld at the time of payment. It issimplyanelectionthatyouandyourspousemakewhenyoufileyourpersonalincometaxreturnswiththeCRAandonlyaffectstheamountoftaxthatyouoweorthetaxrefundowedyou.
35
Actuarially reduced—referstoareductionbasedonactuarialfactorstoaccountforthefactthatyouwillbereceivingthepensionforalongerperiodoftime.
Annuity—isastreamofmonthlypayments.Whenbuyinganannuityfroman insurancecompany,youarebuyingapromiseoffuturemonthlypayments.Theamountofthesepaymentswilldependonmanyfactors,includingthesizeofthelump-sumamountthatyoustartwithandtheannuitypurchaseratesatthetime ofthepurchase.Theformofannuityyouchoosewillalsoaffecttheamountof yourmonthlypayment.
Annuity factor—isafactorusedtoconverttheMoneyPurchaseAccounttoamonthlyretirementbenefit.Thefactortakesintoaccountexpectedmortalityrates,yourage,maritalstatus,formofpensionselected,andtheassumedrateofreturnthatthefundwillearngoingforward.Forexample,ifyouretireatage55, adifferentannuityfactorwillbeusedtocalculateyourpensionthanifyouretireatage65,toaccountforthefactthatyourpensionmaybepaidforalonger period of time.
Beneficiary—canbeanypersonofyourchoice.Ifyouwishtonameachildas yourbeneficiary,itisadvisabletoconsultalawyerpriortodoingso.Pension lawsrequirethat,ifyouhaveaspouse,heorshewillautomaticallytakepriorityoveranynamedbeneficiarytoreceiveyourpensionbenefits.
Best average earnings—referstotheaverageofyourpensionableearningsduringyourfivehighest-paidyearsofpensionableservice.Ifyouhavebeenemployedforlessthanfiveyears,theaverageofyouractualpensionableearningsisused.
Commuted value—referstothelump-sumpresentvalueofyourpension.Inotherwords,thecommutedvalueofyourpensionisanestimateofwhatyouwouldneedtoinvestrightnowtogiveyouthepensionyouwouldreceiveifyouweretoleaveyourbenefitsintheplan.Thecalculationisbasedonanumberoffactors,suchasinterestratesandmortalityrates,andiscarriedoutaccordingtoestablished actuarialprinciplesandmethods.
Deferred pension—isapensioninwhichpaymentsstartatafuturedate,as opposedtobeingpaidasofthefirstofthemonthfollowingthedayyoustopworking for the University.
Final average YMPE (year’s maximum pensionable earnings) — is the average oftheYMPEduringthelastfiveyear’sbeforeterminationorretirement.
Joint-and-survivor percentage—isapercentageofyourpensionthatcontinuestoyoureligiblespouse,forthespouse’slifetime,ifyoudieduringretirement.InOntario,thelawrequiresthatyourspouse’spensionbeatleast60%ofthepensionthatwasbeingpaidtoyou(unlessawaiverwassignedbyyouandyourspouse).
Part 12: Glossary
36
LIF (life income fund) — is an arrangement that provides retirement income for lifefromfundsthatoriginatefromaregisteredpensionplanorLIRA.ALIFis regulatedbytheIncome Tax Act(Canada)andgovernedbyprovincialorfederal pensionbenefitslegislation.
LIRA (locked-in retirement account)—Alocked-inretirementaccount(LIRA)issimilartoaRRSPforincometaxpurposes,butissetupwithlocked-infundsthataretransferredoutofapensionplan.Financialinstitutionsacceptinglocked-infundsmustagreetoadministerthemassetoutinthePension Benefits Act (Ontario).TherangeofinvestmentsofferedinaLIRAdependsonyourfinancialinstitution,butisoftenthesamerangeasforRRSPs.
Locked-in—referstofundsthatcannotbetakenascash.Youmustusethefundstoprovideyourselfwithretirementincome.Pensionlegislationandthetermsof theplantextdeterminewhenyourpensionbenefitsbecomelocked-in.
Financialinstitutionsacceptinglocked-infundsmustagreetoadministerthem inaccordancewithapplicablepensionregulations.Locked-inmoneydoesnot havetostayinthesameaccountuntilretirement.Youmaytransferittootherpermittedlocked-inarrangementsoruseittobuyanannuityatanytime.
Incertainsituations,pensionlegislationallowslocked-infundstobe “unlocked.”Additionalinformationaboutthismaybeavailablefromyour financialinstitutionortheFinancialServicesCommissionofOntarioat:http://www.fsco.gov.on.ca/english/pensions/
Non-locked-in—referstofundsthatcanbetakenincash.Ifyouhavenon-locked-inassetsandchoosetotakeacashrefundwhenyouleavetheplan,incometaxeswillbededucted.
Normal retirement date—isthefirstofthemonthfollowingyour65thbirthday, orontheactualdateofyour65thbirthdayifyourbirthdayfallsonthefirstof a month.
Pension adjustment (PA)—isthevalueassignedtothebenefitearnedperyear inapensionplan.APAreducestheamountyoucancontributetoaRRSPinthefollowing year.
Pensionable earnings—areyourregularannualearningsreceivedfrom the University.
Pensionable service—isthecompletedyearsandmonthsofcontinuousservicewiththeUniversityduringwhichyouareacontributortotheplan,ortheformerplan,sinceJuly1,1964.Part-timeserviceisprorated.
RRSP (registered retirement savings plan) —isatax-deferredvehiclefor retirementsavings.RRSPswereestablishedtoencourageCanadianstosavefor retirementbypermittingtax-deductiblecontributionsandtax-deferredgrowth of investments.
37
Spouse—isapersontowhomyouare: •legallymarried,providedyouarenotlivingseparateandapartfrom thatperson; •notlegallymarried,butyouandthatpersonhavecohabitedcontinuously inaconjugalrelationshipforatleastthreeyears;or •notlegallymarried,butyouandthatpersonhavecohabitedinaconjugal relationshipofsomepermanence,andarejointlythenaturaloradoptive parentsofachild,asdefinedintheFamily Law Act(Ontario).
Statement of Investment Policies and Procedures—isadocumentrequiredbylegislationforallpensionplans.Itdescribestheobjectivesandoperationoftheplan.Thestatementoutlinesinvestment-relatedpoliciesandprocedures, includingassetallocationguidelines.
Variable Annuity Fund—thefundwithintheplan’strustfundintowhichassetsfromyourMoneyPurchaseAccount,AdditionalVoluntaryContributionAccount and/orSpecialTransferAccountaretransferred,ifyouelectapensionfromoneormoreoftheseaccounts.Theassetsareinvestedaccordingtotheplan’sinvestment policiesandareusedtoprovidepensionstopensionersandtheireligiblesurvivors, accordingtotheformofpensionelectedatpensioncommencement.Thevalue ofthisfundcanchangebecauseoffactorssuchasinvestmentperformanceand mortality.Assuch,theamountofmoneyavailabletopaypensionsvariesfromyeartoyearandthisresultsintheannualincreasesordecreasestopensionamounts.
YMPE (year’s maximum pensionable earnings)—isthemaximumearningsusedtodeterminecontributionsandbenefitsundertheCanadaPensionPlan.TheYMPEisadjustedeachyear.In2016,itis$54,900.