UNIVERSITY OF OTTAWA PENSION PLAN

Transcription

1 UNIVERSITY OF OTTAWA PENSION PLAN ACADEMIC STAFF May 1, 2013 Last update: April 9, 2013

2 Biography of Luc Lauzière, BA, BCOM University of Ottawa Luc has been employed by the University of Ottawa since 1998 and is currently the Manager, Pension Plans of the Pension Sector. Luc is perfectly bilingual. Education and Training Luc is a University of Ottawa Graduate in Administration (1986) and in Commerce with a Major in Human Resources and a Minor in Accounting (1987). Since, Luc has acquired other training certifications in Human Resources, Pension and Benefits. Professional Experience Since 1986 Luc has acquired work experience in Human Resources specifically in Pension and Benefits both in the private and public sectors. University of Ottawa Manager, Pension Plans April 2006 Present University of Ottawa Pension Officer March 1998 March 2006 LOEB Inc. (Provigo) Benefits Advisor February 1997 February 1998 LOEB Inc. (Provigo) Benefits Supervisor June 1992 January 1997 C Corp. Inc. Human Resources Coordinator Juin 1986 Mai 1992 Main Functions, Pension Sector As the Manager of the Pension Sector, Luc is responsible for all aspects related to the University of Ottawa Pension Plans, which are the University of Ottawa Defined Benefit Pension Plan and Part Time Teachers Defined Contribution Pension Plan. He is advising the pension plan members, is managing the activities of the Pension Team, is providing multiple advises on pensions issues, and is assisting members and the Faculties/Services with various requests. The main aspects of his work is to ensure good communications, finances, pension plan compliances, regulations, integrated systems, provide training, manage service and provide interpretations regarding official documents. Manager, Pension Plans

3 Day 1 Preparing for retirement Ø Dynamics of Retirement : Psychological Preparation Ø Alumni Relations and the APRUO Day 2 Ø Personal Finances: Cash Flow, RRSPs, RRIFs, Annuities Ø Financial and Estate Planning Considerations Ø Physical Activity and Ageing Descriptive

4 Ø Ø Ø Ø Ø Pension Ø Defined Benefit Pension Plan Ø Supplemental Pension Plan Ø Pension Governance Structure AGENDA Ø Non compulsory retirement Ø Required contributions (employee/employer) Ø Benefit formula Ø Date of retirement Ø Examples of calculation(6) Ø Voluntary contributions Ø Pension indexation Ø Survivor benefit options Ø Pension beneficiaries Retiring Allowance and Phased Retirement Ø Calculation University of Ottawa Collective Agreement section 40.3 Ø Phased Retirement Collective Agreement Subsection and Examples (3) Ø Notice Group Benefits Ø Insurance coverage Ø Other benefits Summary of Retirement Benefits Working Tools Ø Reference to your personal pension statement and Annual Report Ø Financial planner Agenda

5 RETIREMENT INCOME q q q q q q q q q q q q q q Canada/Québec Pension Plan (CPP/QPP) Old Age Security (OAS) Other employer pension plan(rpp) Registered Retirement Savings Plan(RRSP) Retirement Allowance Personal Savings Tax-Free Savings Accounts (TFSA) Investment Income Personal Assets Spouse s Income Fiscal Impact Employment/Business Income Other Plans Retirement Income

6 PENSION PLAN The University of Ottawa Pension Plan is a defined-benefit plan. This means that, at the time of your retirement, you will receive a pension based on a formula that takes into account the average salary of your best 60 months of earnings and the number of years of credited service you have in the Plan. -Average Salary -Contributions -Pension Service Employee and -Pension Formula Employer = = Pension Payable (Retirement) Required Funds X Actuarial Factors = Commuted Value (Death) Defined Benefit Pension Plan

7 Financial Planner

8 SUPPLEMENTAL PENSION PLAN The Supplemental Plan is to provide an amount or amounts to participating Members which, when added to the pension benefits under the Basic Plan, will provide them with benefits in excess of the maximum pension benefits imposed under the Income Tax Act subject to the terms and conditions as outlined in the Supplemental Plan. The Supplemental Pension Plan is not a registered pension plan. To be eligible your average salary will have to be above the average maximum salary of $147,678 set by the CRA and will provide a benefit up to the Plan average maximum salary of $185,947 as at January 1st, The maximum salary for the supplemental plan contributions is currently set at $192,798. Supplemental Pension Plan

9 Organizational Chart of responsibilities and reporting relationships Board of Governors Executive Committee Plan Sponsor and Administrator: - Governance structure - Policies (investment; funding) - Plan terms and provisions Pension Plan Committee Pension Fund Investment Committee President Administrative Committee Treasurer/Director V-P Resources Pension Fund Pension Fund Investment: - Policy recommendations - Investment Strategy - Manager selection and oversight - Performance objectives Key Advisors: Actuary; trustee/custodian; investment managers; consultants Assistant Director Treasury & Pension Fund Assistant Director Private Market Investments Treasury Analyst Associate V-P Human Resources Director, HR Shared Services Manager, Pension Plans Pension Plans Advisor Pension Plan Administration: - Member entitlements - Member communications - Pension administration - Prescribed filings Key Advisors: Actuary; trustee/custodian; regulatory authorities Pension Plans Advisor Pension Governance Structure

10 STATISTICS University of Ottawa Pension Plan Statistics as at December 31, 2012: Fund Value 1,462,376,773 $ Pension Benefits Paid 55,553,871 $ Withdrawal/Transfers 8,458,890 $ Employee Contributions Remitted 15,584,852 $ Employer Contributions Remitted 34,343,879 $ Transfer Value in the Plan 1,036,094 $ Buy-Back Value in the Plan 589,803 $ Number of Retiree 1,857 Number of Active Member 3,424 Number of Deferred Member 780 Plan Activities as at December 31, 2012: New Members 247 New Retirees (active and deferred members) 93 Deceased Retirees 34 Terminated Members 76 Deceased Active Members 1 Amortized Buy-Back 64 Withdrawals/Transfers 112 Statistics

11 NON-COMPULSORY RETIREMENT Bill 211 In June 2005, the Ontario Minister of Labour introduced Bill 211, An Act to amend the Human Rights Code and certain other Acts to end mandatory retirement. The Act received Royal Assent on December 12, 2006, to take effect one year after this date. Mandatory retirement ended on December 12, Ending mandatory retirement will not have an impact on pension benefits already earned. Employees can continue membership in pension plans and accrue benefits past age 65 subject to service or contribution caps. You can contribute to the pension plan up to November 30th in the calendar year in which you attain the age of 71. Please note that your pension benefit is payable effective the month of December of that same calendar year. Non-Compulsory Retirement

12 CONTRIBUTIONS A. Required employee contributions Reform Post-reform (Pre-2004) (Post-2003) Up to the Integration Level* 3.40% 4.25% Above the Integration Level 5.24% 6.55% B. Employer contributions 8.50% 12.19% Reform Post-reform (Pre-2004) (Post-2003) Current Integration Level $31,790 $36,698 *Integration level The University pension plan provides for a pension that differs for the portion of earnings below and above a certain threshold. The threshold of earnings is based on the maximum earnings (YMPE) covered for purposes of determining the pension payable from the Canada and Quebec Pension Plan and differs for service before and after January 1, Currently the Canada and Quebec Pension Plan set this amount at $51,100 for Required Contributions (Employee / Employer)

13 PENSION BENEFIT FORMULA-Basic Plan A. Pension calculation formula (following the reform) Average salary = 60 best months up to the maximum CRA prescribed salary of $147,678 as at January 1 st, 2013 For the Pre-2004 service the Integration Level is set at $31,790 Please note that there is no maximum pensionable service in the pension plan. Service to December 31, 2003 (Pre-2004) i) $31,790 X 1.3% X pension participation = a ii) (Average salary - $31,790) X 2% X pension participation = b Total annual pension pre-2004 (a + b) = c Benefit Formula-Basic Plan

14 B. Pension calculation formula (post reform) Average salary = 60 best months (Total pension service) Pre-2004 set Integration Level of $31,790 indexed annually at a rate of 55 % of the increase in the YMPE* Service Post i) $36,698 X 1.3% X pension participation = a ii) (Average salary - $36,698) X 2% X pension participation = b Total annual pension post-2003 (a + b) = d Total Annual Pension UO (c + d) MINIMUM PENSION TEST As part of the pension plan reform, a participant to the University pension plan is entitled to a minimum pension equal to 1.5% for each pension year. (Average salary X 1.5% X pension participation) MAXIMUM CRA PENSION RULE As part of the CRA Pension rules, the maximum pension plan entitlement in a registered pension plan is $2, per year of pensionable service effective January 1 st, *Year s Maximum Pensionable Earnings (YMPE) This is the amount the government sets each year, and uses to base your contributions to (as well as your benefits from) the Canada Pension Plan or Quebec Pension Plan. In 2013, the YMPE is $51,100. Annual changes to the YMPE are based on increases in average Canadian industrial wages. Benefit Formula-Basic Plan

15 PENSION BENEFIT FORMULA-Supplemental Plan Pension calculation formula (following the reform) Average salary = 60 best months above the maximum pensionable earning set by the CRA of $147,678 as at January 1 st, 2013 and below the maximum average supplemental plan earnings set at $185,947 as at December 31, Service to December 31, 1998 (Pre-1999) i) 2013 Pre-1999 Dollar Limit = a ii) 2013 Maximum CRA Pension Rule = b Total annual pension pre-1999 (a - b) = c 2-Service post 1998 (1999 to 2003) i) $31,790 X 1.3% X pension participation = a ii) (Average salary - $31,790) X 2% X pension participation = b iii) 2013 Max. CRA Pension X pension participation = c Total annual pension post 1998 ((a + b) - c) = d 3-Service post 2003 (2004 to 2007) i) $36,698 X 1.3% X pension participation = a ii) (Average salary - $36,698) X 2% X pension participation = b iii) 2013 Max. CRA Pension X pension participation = c Total annual pension post 2003 ((a + b) - c) = e Total Annual Pension UO (Excluding 2008 to 2012) (c + d + e)* * (A pension of at least 10% of the current YMPE will be payable otherwise a lump sum actuarial value) Benefit Calculation-Supplemental Plan

16 DATE OF RETIREMENT Your normal retirement date is the 1st of July following your 65th anniversary. However, you may retire earlier. In that case: Factor 90 applies > 55 years 60 years 65 years Early Optional Normal $ $ $ Pension Benefit-Factor 90

17 PENSION CALCULATION BASIC PLAN -Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $90,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790 / $36,698 1) SERVICE PRE-2004 i) $31,790 X 1.3% X 16 = $6, ii) $58,210 X 2% X 16 = $18, $25, ) SERVICE POST-2003 i) $36,698 X 1.3% X 9 = $4, ii) $53,302 X 2% X 9 = $9, $13, Total pension UO MINIMUM PENSION TEST ($90,000 X 1.5% X 25) = $33, ) CPP/QPP maximum reduced (-32.4%) pension = $8, Total UO + CPP/QPP = $47, Benefit Calculation Basic Plan-Example 1

18 PENSION CALCULATION BASIC PLAN-Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $130,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790 / $36,698 MAX. CRA SALARY: $147,678 1) SERVICE PRE-2004 i) $31,790 X 1.3% X 16 = $6, ii) $98,210 X 2% X 16 = $31, $38, ) SERVICE POST-2003 i) $36,698 X 1.3% X 9 = $4, ii) $93,302 X 2% X 9 = $16, $21, Total pension UO MINIMUM PENSION TEST ($130,000 X 1.5% X 25) = $48, MAXIMUM CRA PENSION RULE ($2, X 25) = $67, ) CPP/QPP maximum reduced (-32.4%) pension = $8, Total UO + CPP/QPP = $67, Benefit Calculation Basic Plan-Example 2

19 PENSION CALCULATION BASIC PLAN-Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $150,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790 / $36,698 MAX. CRA SALARY: $147,678 1) SERVICE PRE-2004 i) $31,790 X 1.3% X 16 = $6, ii) $118,210 X 2% X 16 = $37, $44, ) SERVICE POST-2003 i) $36,698 X 1.3% X 9 = $4, ii) $113,302 X 2% X 9 = $20, $24, Total pension UO $69, MINIMUM PENSION TEST ($150,000 X 1.5% X 25) = $56, MAXIMUM CRA PENSION RULE ($2, X 25) = 3) CPP/QPP maximum reduced (-32.4%) pension = $8, Total UO + CPP/QPP = $75, Benefit Calculation Basic Plan-Example 3

20 PENSION CALCULATION SUPPLEMENTAL PLAN-Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $150,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790/$36,698 MAX PRE-1999: $2, MAX CRA SALARY: $147,678 MAX CRA: $2, MAX AVERAGE SALARY: $185,947 1) SERVICE PRE-1999 i) ($2, $2,696.67) X 12 = $0.00 2) SERVICE POST-1998 (From 1999 to 2003) i) $31,790 X 1.3% X 5 = $2, ii) $118,210 X 2% X 5 = $11, $13, iii) $2, X 5 = $13, $ ) SERVICE POST-2003 (From 2004 to 2007) i) $36,698 X 1.3% X 4 = $1, ii) $113,302 X 2% X 4 = $9, $10, iii) $2, X 4 = $10, $ Total annual pension UO (Excluding 2008 to 2012) Benefit Calculation Supplemental Plan-Example 3

21 PENSION CALCULATION BASIC PLAN-Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $160,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790 / $36,698 MAX. CRA SALARY: $147,678 1) SERVICE PRE-2004 i) $31,790 X 1.3% X 16 = $6, ii) $128,210 X 2% X 16 = $41, $47, ) SERVICE POST-2003 i) $36,698 X 1.3% X 9 = $4, ii) $123,302 X 2% X 9 = $22, $26, Total pension UO $74, MINIMUM PENSION TEST ($160,000 X 1.5% X 25) = $60, MAXIMUM CRA PENSION RULE ($2, X 25) = 3) CPP/QPP maximum reduced (-32.4%) pension = $8, Total UO + CPP/QPP = $75, Benefit Calculation Basic Plan-Example 4

22 PENSION CALCULATION SUPPLEMENTAL PLAN-Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $160,000 SERVICE: 25 years INTEGRATION LEVEL: $31,790/$36,698 MAX PRE-1999: $2, MAX CRA SALARY: $147,678 MAX CRA: $2, MAX AVERAGE SALARY: $185,947 1) SERVICE PRE-1999 i) ($2, $2,696.67) X 12 = $0.00 2) SERVICE POST-1998 (From 1999 to 2003) i) $31,790 X 1.3% X 5 = $2, ii) $128,210 X 2% X 5 = $12, $14, iii) $2, X 5 = $13, $1, ) SERVICE POST-2003 (From 2004 to 2007) i) $36,698 X 1.3% X 4 = $1, ii) $123,302 X 2% X 4 = $9, $11, iii) $2, X 4 = $10, $ Total annual pension UO (Excluding 2008 to 2012) Benefit Calculation Supplemental Plan-Example 4

23 PENSION CALCULATION -Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $80,000 SERVICE: 10 years INTEGRATION LEVEL: $31,790 / $36,698 1) SERVICE PRE-2004 i) $31,790 X 1.3% X 1 = $ ii) $48,210 X 2% X 1 = $ $1, ) SERVICE POST-2003 i) $36,698 X 1.3% X 9 = $4, ii) $43,302 X 2% X 9 = $7, $12, Total pension UO MINIMUM PENSION TEST ($80,000 X 1.5% X 10) = $12, ) CPP/QPP maximum reduced (-32.4%) pension = $8, Total UO + CPP/QPP = $21, Benefit Calculation-Example 5

24 PENSION CALCULATION -Service to December 31, 2012 AGE: 60 years AVERAGE SALARY: $100,000 SERVICE: 15 years INTEGRATION LEVEL: $31,790 / $36,698 1) SERVICE PRE-2004 i) $31,790 X 1.3% X 6 = $2, ii) $68,210 X 2% X 6 = $8, $10, ) SERVICE POST-2003 i) $36,698 X 1.3% X 9 = $4, ii) $63,302 X 2% X 9 = $11, $15, Total pension UO MINIMUM PENSION TEST ($100,000 X 1.5% X 15) = $22, ) CPP/QPP maximum reduced (-32.4%) pension = $8, Total UO + CPP/QPP = $34, Benefit Calculation-Example 6

25 VOLUNTARY CONTRIBUTIONS For pre-1988 service, $200 per year of pensionable earning prior to 1988 (excluding buy-back and transferred service) Payable at termination, death, retirement or for pension service buy-back RRSP transfer or cash/taxable option Estimated value of voluntary contributions 25 years of service at December 31, 2012: $ No initial amount 30 years of service at December 31, 2012: $6, Initial amount of $1, years of service at December 31, 2012: $13, Initial amount of $2,000 Voluntary Contributions

26 PENSION INDEXATION A) Three steps indexation formula based on inflation from previous year (Consumer Price Index (CPI)-September to October) 1. Full indexation if inflation is less than 2% 2. 2% automatic indexation if inflation is between 2% and 3% 3. Inflation minus 1% if inflation is between 3% and 8% (Max 8%) B) Special Ad Hoc indexation Annual revisits of percentage not accorded in 2 & 3 Pension Indexation

27 SURVIVOR PENSION BENEFIT TO THE SPOUSE AND GUARANTEE PERIODS Standard Option Ø 5 years guarantee / 60% Survivor benefit to the spouse Therefore, if your death occurs on or before the guarantee period; - and you are survived by your spouse, he/she will receive your full monthly pension until the end of the 5 years guarantee and then it will reduce to 60% for his/her lifetime. - and there is no surviving spouse, a lump sum representing the value of the remaining guaranteed monthly payments becomes payable to your Estate. Should your death occur after the guarantee period; - and your spouse survives you, his/her monthly benefit will be 60% of your benefit for her lifetime. - and there is no surviving spouse, the pension payments cease; there is no death benefit payable to the estate Optional Options because the guarantee period is expired. Ø Ø Ø Ø 0 years guarantee / 60% Survivor benefit 10 years guarantee / 60% Survivor benefit 15 years guarantee / 60% Survivor benefit 100% lifetime with years guarantee periods -Reduction of approx. 15% for the 100% survivor benefit -Reduction of approx. 2% for a 10 years guarantee period -Reduction of approx. 5% for a 15 years guarantee period Note: There is only one choice at retirement. Survivor Pension Benefit

28 PENSION BENEFICIARIES Pre-retirement (Pension Benefit Value payable): 1) Spouse The person married to you by a religious or civil ceremony or with whom you have been living in a relationship that resembles a marriage for at least one year and whom you have designated in writing to the University as your spouse. Based on pension plan text, waiver of spousal benefit allowed before retirement. 2) Designation or Estate Post-retirement (Survivor Benefit payable based on choice): 1) Spouse Same as above. Based on pension plan text, no waiver of spousal benefit allowed at retirement. 2) Children Your eligible dependent children as per the provisions of the plan are your natural or adopted children under 19 at retirement whom you support and/or who is under age 27 and a full time student in a recognized education institution and/or is physically or mentally disabled. Pension Beneficiaries

29 RETIRING ALLOWANCE Ø To be eligible before age 60, the factor 90 (age plus pension service) must be reached. Retirement Allowance Formula $800 X UO Service pro-rated X 5 maximum factor Please refer to your collective agreement Subsection : A member who has attained the age of 60, or whose age plus actual Credited Service is equal to 90 or more, and retires prior to the normal retirement date set out in the University of Ottawa Pension Plan, provided she does not retire prior to the completion of her scheduled teaching duties in a given term, is entitled to compensation for long service, to be referred to as severance pay, equal to $800 times the number of years (or parts thereof) of regular full-time service with the employer times the number of years (or parts thereof) remaining between the actual date of retirement and the normal retirement date for the member, this last number not to exceed 5. Revenue Canada Agency tax sheltering policy (Under paragraph 60(j.1) of the Income Tax Act) $ 2,000 for each year of service (pre-1996) may be transferred to an RRSP plus $1,500 for each non-contributory year of service Retiring Allowance

30 Summary PHASED RETIREMENT (See Fact Sheet) The new Transition to retirement benefit is available to APUO members who wish to have a reduced workload in the last years before their normal retirement date. This is available to members who are eligible to receive the benefit detailed under subsection (the normal retirement date is defined as July 1st following age 65). The program allows members to bring their regular salary up to their nominal salary using portions of the severance payment that would be payable to them under During the transition period, members accumulate full pension credits as per the provision of the Pension Plan by contributing up to the level of their nominal salary. This commitment to retire is irrevocable at the termination of the transition period once the agreement has been signed. Eligibility (Section 40.3) Subsection Severance Pay of APUO Collective Agreement Refer to previous slide. Reduced Workload and the Pension Plan The transition to retirement will be administered as per article 30 of the collective agreement subject to the University of Ottawa Pension Plan By-Law and maximum pension credit limits as referred to in paragraph The reduced workload will not be greater than 50% and will not extend more than three years as set under paragraph The members and the employer will continue to contribute up to 100% of the member s nominal salary. Severance Pay Calculation and Communication The severance pay benefit will be calculated by the pension sector as of the start date of the transition period applied pursuant to paragraphs and Once requested by the member, the value of the severance pay will be transmitted to the dean of the faculty. Exclusions Subsections and of the collective agreement do not apply to this benefit. Employee Notice, Dean s Approval and Adjustment The member will request participation in the transition program in writing to the dean, with the required information stipulated under subsection , including the salary to be received for each year of the transition period and the proposed workload. This agreement will become irrevocable once the reduced workload agreement has been signed pursuant to paragraph A member may choose to retire prior to the end of the transition period with the applicable balance payable. The annual supplemental amount may be adjusted at the option of the member once per academic year, as per The pension sector shall be advised of any annual change to the workload or the amounts. Documentation and Payroll Setup Following approval from the Dean, the member will have to complete pension form 17 (Request for Payment of Severance Pay - Transition to Retirement) in order to proceed with the appropriate pension service and salary payment. The same process will be required for future modifications. Please communicate with the pension sector for more information. Phased Retirement

31 PHASED RETIREMENT PENSION CALCULATION APUO Example 1 AGE: 60 years NOMINAL SALARY: $140,000 UO SERVICE: 30 years FUTURE PENSION SERVICE: 33 years REDUCED WORKLOAD: 50% TOTAL PAYABLE SALARY: 75% TRANSITION DATE: July 1 st, 2013 RETIREMENT DATE: July 1 st, ) Severance calculation as at July 1 st, 2013 at age 60 Calculation is determined by the Pension Sector at the transition date i)$800 X 30 years UO service X 5 years before normal age of retirement = $120,000 2) Calculation of severance payable (Objective: 75% of total salary) i)annual maximum receivable as per nominal salary: 75% X $140,000 = $105,000 ii)annual payable as per reduced workload: 50% X $140,000 = $70,000 Annual Severance distribution = $35,000 The amount of $35,000 will be payable each year as a salary for a period of 3 years prior to retirement for a total of $105,000 and the objective will be reach. 3) Calculation of balance due at retirement, if applicable i)severance calculation in (1) minus annual distribution: $120,000 - $105,000=$15,000 The difference at the end of the transition period will be transferable/payable at retirement and could be tax exempt as a retirement allowance, under paragraph 60(j.1) of the Income Tax Act (ITA). 4) Pension Benefit calculation as at July 1 st, 2016 at age 63 Calculation is determined by the Pension Sector and is a projected estimate at retirement as per the pension plan provisions. 5) Confirmation with the member Form 17 Pension to be completed for communication and confirmation of amounts payable by payroll. Phased Retirement Calculation- Example 1

32 PHASED RETIREMENT PENSION CALCULATION APUO Example 2 AGE: 63 years NOMINAL SALARY: $140,000 UO SERVICE: 32 years FUTURE PENSION SERVICE: 34 years REDUCED WORKLOAD: 60% TOTAL PAYABLE SALARY: 85% TRANSITION DATE: July 1 st, 2016 RETIREMENT DATE: July 1 st, ) Severance calculation as at July 1 st, 2016 at age 63 Calculation is determined by the Pension Sector at the transition date i)$800 X 32 years UO service X 2 years before normal age of retirement = $51,200 2) Calculation of severance payable (Objective: 85% of total salary) i)annual maximum receivable as per nominal salary: 85% X $140,000 = $119,000 ii)annual payable as per reduced workload: 60% X $140,000 = $84,000 Annual Severance distribution = $35,000 The amount of $35,000 will be payable for one year as a salary prior to retirement for a total of $35,000 and the objective of 85% will not be reach for the second year as expected. 3) Calculation of balance due at retirement, if applicable i)severance calculation in (1) minus annual distribution: $51,200 - $51,200 = $00.00 The difference at the end of the transition period will be transferable/payable at retirement and could be tax exempt as a retirement allowance, under paragraph 60(j.1) of the Income Tax Act (ITA). 4) Pension Benefit calculation as at July 1 st, 2018 at age 65 Calculation is determined by the Pension Sector and is a projected estimate at retirement as per the pension plan provisions. 5) Confirmation with the member Form 17 Pension to be completed for communication and confirmation of amounts payable by payroll. Phased Retirement Calculation- Example 2

33 PHASED RETIREMENT PENSION CALCULATION APUO Example 3 AGE: 60 years NOMINAL SALARY: $140,000 UO SERVICE: 25 years FUTURE PENSION SERVICE: 28 years REDUCED WORKLOAD: 50% TOTAL PAYABLE SALARY: 75% TRANSITION DATE: July 1 st, 2013 RETIREMENT DATE: July 1 st, ) Severance calculation as at July 1 st, 2013 at age 60 Calculation is determined by the Pension Sector at the transition date i)$800 X 25 years UO service X 5 years before normal age of retirement = $100,000 2) Calculation of severance payable (Objective: 75% of total salary) i)annual maximum receivable as per nominal salary: 75% X $140,000 = $105,000 ii)annual payable as per reduced workload: 50% X $140,000 = $70,000 Annual Severance distribution = $35,000 The amount of $35,000 will be payable each year as a salary for a period of 3 years prior to retirement for a maximum of $100,000 and the objective of 75% will not be reach at the end of the third year. 3) Calculation of balance due at retirement, if applicable i)severance calculation in (1) minus annual distribution: $100,000 - $100,000=$00.00 The difference at the end of the transition period will be transferable/payable at retirement and could be tax exempt as a retirement allowance, under paragraph 60(j.1) of the Income Tax Act (ITA). 4) Pension Benefit calculation as at July 1 st, 2016 at age 63 Calculation is determined by the Pension Sector and is a projected estimate at retirement as per the pension plan provisions. 5) Confirmation with the member Form 17 Pension to be completed for communication and confirmation of amounts payable by payroll. Phased Retirement Calculation- Example 3

34 RETIRING ALLOWANCE You are planning to retire soon? A unionized professor or language professor may resign from his or her position as of June 30th of any year, provided that he or she notify the Dean in writing, usually not later than February 15th preceding the resignation. A unionized librarian or consultant may resign from his or her position at any time, provided he or she notify the employer in writing at least 30 calendar days prior to departure. Contact Human Resources. They will assist you in completing the required forms and explain the steps to follow to apply for a pension from the government plans. Please note that Human Resources will need three months to process your retirement file. Retiring Allowance

35 GROUP BENEFITS A) Group Insurance (monthly premium May 1st, 2013 before provincial tax) Single Family Hospital insurance (Semi-private/Private) $4.36-$6.14 $8.24-$13.43 Health care plan * $78.16 $ Dental insurance* $21.70 $65.48 The monthly premiums are paid by the retiree. *Coverage for health care and dental plan in effect until June 30 following your 65th birthday. After 65 of age, the following programs are available (Booklets are available) : MROO, (Municipal Retirees Organization of Ontario) Follow-me (Manulife Financial) RTIP-OTIP (Retired Teachers Insurance Plan of Ontario) Group Benefits

36 B) Life Insurance Employee became insured: GROUP BENEFITS Prior to May 1, 1971 Ø 50% of salary at retirement (Max $100,000 of coverage) On or after May 1, 1971 but prior to July 1, 1976 Ø 2.5% of salary at retirement per year of service max 20 years (Min $2,000 Max $100,000) On or after July 1, 1976 Ø 10 years service or less = $2,000 Ø more than 10 years of service = 10% of salary at retirement (Min $2,000 Max $5,000) -The monthly premiums to maintain the life insurance coverage are at the University s cost and is a taxable benefit for the retiree, a taxation slip will be issued. -Any transfer of pension service is not recognized under the hire date C) Health Care Spending Account (Manulife Financial in effect since May 1 st, 2001) Annual Health Care Spending Account of $1,250 as at January 1 st, 2011 (Contract 80448) Group Benefits

37 OTHER BENEFITS 1) Tuition fee exemption for employees and eligible dependants Refer to Section of Collective Agreement 2) Library services 3) Sports services 4) services Other Benefits

38 SUMMARY OF GROUP BENEFITS AT RETIREMENT ü Pension(s) payable from the University of Ottawa Pension Plan ü Pension payable from the Canada/Québec Pension Plan ü Voluntary contributions ü Retiring allowance ü Life insurance ü Medical insurance health/dental/hospitalization ü Health Care Spending Account ü Other benefits Summary of retirement benefits

39 THE UNIVERSITY OF OTTAWA RETIREMENT PENSION PLAN PROJECTED OPTIONAL RETIREMENT Estimation of projected retirement benefits Name: Retiree Employee Number: Projected Retirement Date: 2009 Age at Retirement Date: years old Date of Employment: 1985 Seniority Date: 1985 Current Salary: $85, Credited service for Pension: years (includes buyback of past service) Employment Service: years Estimated projected monthly pension from UO pension plan, before statutory deductions $3, The calculation of your pension is based on the pension formula in force at January 1, The projection shown above assumes that you will participate in the pension plan at 100% until your Projected Retirement Date. This projection is based on your current salary and does not take into account any future salary increases. For service credited since January 1, 2004, the calculations are based on the current Yearly Maximum Pensionable Earnings (YMPE) under Canada Pension Plan (CPP). The current actuarial factors have been used to determine the actuarial reduction, if applicable. The actuarial factors are subject to change monthly. Estimated monthly benefit from Canada Pension Plan Current Maximum benefit at age 65 is $908.75/mth for 2009 Current Maximum benefit at age 60 is $636.13/mth for 2009 $ For more information on CPP benefit, you may contact Human Resources Development Canada, Income Security Programs at or visit the website at Registration: Supplementary Pension Plan - Early Retirement Allowance - Lump sum Formula: $ * * As per your Collective Agreement; Lump Sum or Monthly Pension $28, transferable to an RRSP under paragraph 60(j.1) of the Income Tax Act (ITA) $70, excess retirement allowance, subject to income tax $98, total retirement allowance The early retirement allowance has been calculated based on the provision in effect at the time of calculation. Voluntary Contributions - Lump sum $ transferable to an RRSP under subsections 147.3(1) -(7) of the ITA The interest rate for the current year has been used to project the value of your voluntary contributions at retirement..../2 Life Insurance - premium paid by UO - taxable benefit to member Supplementary Health Insurance At member's expense: premiums are deducted from monthly pension Current monthly rate: End Date: This option is available only if you are covered for Supplementary Health Insurance on your retirement Dental Insurance Terms/Grants/GFT are not eligible At member's expense: premiums are deducted from monthly pension Current monthly rate: End Date: This option is available only if you are covered for Dental Insurance on your retirement Hospital Room Insurance At member's expense: premiums are deducted from monthly pension Current monthly rate: This option is available only if you are covered for Hospital Room Insurance on your retirement Health Care Spending Account (HCSA) Terms/Grants/GFT are not eligible This benefit is prorated for first year of retirement Eligible Medical Expenses as per Canada Revenue Agency $5, Family coverage $ per month June 30, 2014 Family coverage $66.36 per month - Basic $42.62 per month - Optional June 30, 2014 Family coverage $21.49 per month - Private room $13.20 per month - Semi-private room End date not applicable $1, per year PLEASE NOTE THAT ALL INSURANCE RATES ARE SUBJECT TO CHANGE AS THE PREMIUMS ARE REVIEWED EVERY YEAR. Other Benefits available to you: Tuition Fee Exemption: For you, your spouse and your eligible dependents under the age of 26, until you reach the age of 70 Use of Libraries Access to Sports Services account 01 April 2009 Example of Summary

40 Personal Statement and Annual Report

41 HR Web Site:

42 Fact Sheet Series

43 Financial Planner

44 Financial Planner

45 QUESTIONS