University of King's College Employee Pension Plan Booklet About the Pension Plan. The pension plan is designed to pay you a monthly income for life after you retire. You share the cost of providing this pension with the University. The following description provides a summary of your pension plan in simple terms, together with a brief overview of government retirement plans. If you have any questions about how your pension plan works, please contact the Bursar's Office.
Becoming a plan member. If you are a permanent, full-time employee you must join the plan immediately. Joining the plan is voluntary for full-time employees under age 25 and eligible part-time employees. Please complete the "Pension Plan Information" Form, and please review the ""Plan Beneficiary Requirements" information before completing the Information form. If you are a part-time employee, you may join the plan at anytime following two consecutive years in which you have earned at least 35% of the Canada Pension Plan (CPP) earnings ceiling.
Your contributions to the Canada Pension Plan (CPP) are based on the amount of your annual earnings up to the CPP earnings ceiling. The earnings ceiling is set by the government each year. In 2000, the ceiling is $37,600. Your plan contributions. You contribute to the plan every pay period by payroll deduction. Your contributions are: •
4.65% of the first $5,000 of your annual earnings
Plus • 6.15% of your annual earnings in excess of $5,000 Your contributions are deductible for income tax purposes.
Your pensionable earnings is your basic salary and excludes bonuses and other forms of special payments (ie. Overtime, honorariums, and stipends).
The University's contributions. The University contributes whatever amount is required to meet the benefit obligations of the plan. The University will pay for at least 50% of the cost of your pension benefit. If your own contributions plus interest exceed the remaining cost, these "excess contributions" will be payable to you at termination of membership.
Contribution example. Annual salary $40,000 =Pension plan contributions = $ 5,000 x 4.65% = $ 232.50 =$35,000 x 6.15% = $2,152.50 Total annual contributions $2,385.00. contributions $ 198.75
Total monthly
When you may retire. Your normal retirement date is the first day of the month following your 65th birthday. However, you may retire with a reduced pension any time after you reach age 55, provided you have been a member of the plan for at least two years. Alternatively, you may postpone your retirement to as late as the end of the year you reach age 69 by providing written notice to the University.
Past Service. If you had service with the University prior to July 1, 1981 or you were employed part time prior to joining the plan, it may be possible to purchase all or portions of this service. Please contact the Bursar's Office for more information.
Amount of your pension. To comply with the Income Tax Act, your yearly pension cannot exceed the "maximum pensionable earnings" as defined by the Income Tax Act multiplied by your years of plan membership. The maximum pension limit for defined benefit RPP's had been frozen at $1,722 per year of service since 1976, and the Federal Budget of February 18, 2003 proposed increasing this limit to $1,833 for 2004 and $2,000 for 2005, which increases the maximum persionable earnings currently at $86,111 to $91,650 in 2004 and to $100,000 in 2005. Increases in this limit after 2005 are scheduled to be at the increase in
the average industrial wage. Because the provision for defined benefit limits changes are "built into" the King's plan under section 1.18, the change in defined benefit levels will result in improved pensions for retirees whose average salary on retirement is at or above the maximum. The plan's benefit formula is the basis of your benefit. It determines the amount of pension income you will receive when you retire. Assuming you retire at age 65, the amount you will receive will be determined as follows: 2% x The average of your best 3 years' earnings x Your years of Pensionable Service The average annual earnings for your best 3 years of earnings will be used. These don't have to be earned in consecutive years. For example: If the average of your best three years of earnings at retirement is $40,000 and you had 20 years of service in the pension plan, the amount of pension you would receive is: 2% x $40,000 x 20 = $16,000 per year, in the Normal form The pension calculated by the above formula is paid to you in the "normal form". This is discussed in greater detail in a later section of this document.
If you retire early. If you retire between age 55 and 65, you may take a reduced pension immediately. Your pension is reduced because pension payments start earlier and will be paid for a longer time. The magnitude of the reduction will depend on your age when you retire. The following table indicates the amount that your pension, as calculated by the plan formula, will be reduced according to the number of years prior to age 65 that your retirement occurs: For service up to June 30, 2004. The King's Pension Committee met November 29, 2000 to consider the provision of an enhanced early retirement provision and agreed to adopt a permanent scale of lesser penalties for benefits earned up to June 30, 2000 and to extend this upgrade to June 30, 2004. See column B.
A
B
C
Full Years
Revised Adjustment
Adjustment Factor for
Prior to Exact Age 65
Factor for service up to and including June 30, 2004.
Service after June 30, 2004.
10
0.76
0.725
9
0.80
0.745
8
0.84
0.765
7
0.88
0.785
6
0.92
0.805
5
0.95
0.825
4
0.98
0.860
3
1.00
0.895
2
1.00
0.930
1
1.00
0.965
For service after June 30, 2004. After June 30, 2004 without further amendments the factors will revert back to those provided under the earlier pension provisions, see Column C.
Normal Form of Pension. Normal form for single members: If, on the date of your retirement, you do not have a spouse, all benefits earned up to June 30, 2002 (whether or not you retire before or after that date) will be paid to you in monthly installments for as long as you live. If you die before you receive 120 monthly payments, your beneficiary or estate will be entitled to receive the value of the remaining balance of the first 120 payments. Normal form for married members: If, on the date of your retirement, you have a spouse, all benefits earned up to June 30, 2002 (whether or not you retire before or after that date) will be paid in monthly installments for as long as you live. Should you die before your spouse, your spouse will receive a monthly pension equal to 66 and 2/3% of the pension you were receiving prior
to your death. If your death occurs before 60 installments have been paid, the pension payable to your spouse will remain at 100% until 60 payments have been made in total. Benefits earned after June 30, 2002. Whether you are married or single, all benefits earned after June 30, 2002 will be paid for your lifetime. Should you die before 84 monthly installments have been made, your beneficiary or estate will receive the value of the remaining installments. Your spouse: Your spouse is a person who is either - legally married to you; or - not married to you but has lived with you in a conjugal relationship for at least three years and is not married to any other person. If you have a same-sex partner, your partner is considered a spouse for the purposes of rights and entitlements under this plan.
Pension payment option. If you have a spouse with whom you are living when your pension begins, you must elect a form which pays a survivor's pension on your death. By law, this spouse's pension must equal at least 60% of your pension at retirement. The spouse's pension is paid for the lifetime of your spouse and is not affected by remarriage. If you do not wish to provide a continuing pension for your spouse, both you and your spouse must sign a waiver before you retire. Instead of the normal form of pension, you may elect to have your pension paid on a different basis assuming a spousal waiver is completed, if necessary. For example, you may elect a lifetime pension with a minimum guaranteed period of only five years. Your monthly pension will either increase or decrease by electing a different form, depending on the different form chosen.
Indexation of Pension payments. Your pension will be indexed every January 1st (with the exception of the January 1st immediately following your retirement), if investment returns are sufficient. The annual increase will not exceed the rate of inflation.
If you leave the University before Retirement
Your Service
Your plan benefits and payment options
Under two years of plan membership
Refund of contributions with interest paid as: • a taxable cash payment, OR • tax-free transfer to an RRSP. (a) Pension payable at age 65 or a reduced pension starting between ages 55 and 65, OR (b) Transfer the greater of: - the cash value of your pension plus "excess contributions", if any.
At least two years of plan membership
or - twice your required contributions plus interest. to an RRSP (subject to "locking-in" requirements), to your new employer's pension plan if that plan permits transfers, or to a life insurance company for purchase of an annuity payable no earlier than age 55.
The cash value of your pension benefits is sometimes known as the "commuted" or "transfer" value. The cash value is the value today of the lifetime pension you are entitled to at age 65, or your earliest eligible retirement date, if you leave your benefits in the pension plan. Some pension benefits are "locked in". This means they cannot be taken in cash. A locked in RRSP may only be used to provide an income at retirement or a death benefit if you die before retirement. Your excess contributions are your required contributions made to the plan, plus credited interest, that are in excess of 50% of the cash value of your pension.
If you die before retirement. If you die prior to retirement, the death benefit received by your designated beneficiary will be determined by the amount of service you have with the University and whether your beneficiary is your spouse.
Less than 2 years of service: Beneficiary is your spouse: Your surviving spouse is entitled to receive a refund of your contributions to the plan plus any transfer-in contributions, with interest to the date of death. This benefit may be paid as a taxable cash payment or transferred tax-free to an RRSP. Beneficiary other than your spouse: Your beneficiary is entitled to receive a refund of your contributions to the plan plus any transfer-in contributions, with interest to the date of death. This benefit is paid in the form of a taxable cash payment. 2 or more years of service: Beneficiary is your spouse: Your surviving spouse is entitled to receive a refund of twice your contributions to the plan, with interest to the date of death. Any transfer-in contributions must also be refunded. For service after 1987, the death benefit must be at least 60% of the cash value of the pension. This benefit may be paid as a taxable cash payment or transferred tax-free to an RRSP. or Your spouse may use the lump sum death benefit amount to instead provid an immediate or deferred (as late as age 69) monthly pension. Beneficiary other than your spouse: Your beneficiary is entitled to receive a refund of twice your contributions to the plan plus any transfer-in contributions, with interest to the date of death. This benefit is paid in the form of a taxable cash payment. If you have a spouse at the time of death, the death benefit will be paid to your spouse, unless you have designated a beneficiary other than your spouse. If another beneficiary is designated, the death benefit for service up to January 1, 1988 will be paid to your designated beneficiary and the death benefit for service after 1987 will be subject to a priority claim of your spouse.
If you become disabled. If you become eligible for benefits under the University's Long Term Disability plan, the LTD plan provides for the continuation of contributions to the Pension plan on your
behalf as you continue to receive LTD benefits. The contributions paid into the plan on behalf of a disabled member will be adjusted according to the indexation of the LTD benefits. At retirement, disability benefits cease and a pension becomes payable, which is based on the entire period of contributions (including the portion under the LTD plan) and the best three years of salary or deemed salary attained by the disabled member.
If you separate or divorce. The value of the pension you earn during your marriage is included by law in your shared family assets. This means that if you separate or divorce before retirement, the laws may require the value of your pension to be taken into account when dividing the family assets. If you separate or divorce after retirement, your pension may be split according to the settlement, and the laws of Nova Scotia.
If the plan is discontinued. The University expects to continue the plan indefinitely, but reserves the right to change or discontinue the plan at any time. However, any pension you have already earned is fully protected.
Pension statements. Once each year, you will receive a statement showing your pension benefits earned to date. If you should leave the University, or retire from the plan, you will be provided with a statement indicating your benefit amounts and options under the plan.
Government benefits. Canada Pension Plan (CPP) All employees in Canada (excluding Quebec) between the ages of 18 and 65 are required to contribute to the Canada Pension Plan. These contributions are based on your annual earnings up to the CPP earnings ceiling. Your contributions are matched by your employer. The pension you receive from the CPP is based on the amount you have contributed during your working years. If you take a long break from employment or earn less than the CPP earnings ceiling, you may get less than the maximum pension. In 2000, the maximum monthly CPP pension is $762.92. You may apply for your CPP pension any time between the ages of 60 and 70. Your CPP pension will be reduced by 6% for each
year you are under age 65 and increased by 6% for each year you are over age 65. Once your CPP pension begins, it is increased on the first of each year if the Consumer Price Index goes up. Full information on your personal contributions and earnings history is available from your local office of Health and Welfare Canada. Old Age Security (OAS) Old age Security benefits are paid for by the federal government from general tax revenues. OAS pays you a monthly pension from age 65. How much you get depends on how long you have lived in Canada when you apply. In October 2000, the maximum OAS monthly pension is $429. Once your OAS pension begins, payments are increased every three months if the consumer price index goes up. OAS application forms are available from your local post office. You should submit your application six months before your 65th birthday.
Note: This is a summary of the main provisions of the Pension Plan for Employees of the University of King's College. A complete description is given in the legal documents governing the plan. If there is a difference between the information given in this description and the documents, the legal documents will govern. Key Terms. Canada Pension Plan earnings ceiling Your contributions to the Canada Pension Plan (CPP) are based on the amount of your annual earnings up to the CPP earnings ceiling. The earnings ceiling is set by the government each year. Cash value The cash value of your pension benefits is sometimes known as the "commuted" or "transfer" value. The cash value is the value today of the pension you are entitled to at age 65 if you leave your benefits in the pension plan. Locked-in benefits Some pension benefits are "locked in". This means they cannot be taken in cash. A locked in RRSP may only be used to provide an income at retirement or a death benefit if you die before retirement. Pensionable earnings
Your Basic earnings from the University, excluding bonuses and other forms of special payments such as overtime, honorariums, and stipends. Spouse This is a person who is either (a) legally married to you; or (b) not married to you but has lived with you in a conjugal relationship (opposite sex or same-sex partner) for at least three years and not married to another.
Revised March 10, 2003.
