Contributions and Admissible Salary What happens for absences? Progressive Retirement vs. Gradual Retirement Collecting QPP Long-term Disability

Transcription

1 June 12, 2012

2 Contributions and Admissible Salary What happens for absences? Progressive Retirement vs. Gradual Retirement Collecting QPP Long-term Disability Insurance Premiums Pension Benefits Salary vs. Pension Income

3 QPP Quebec Pension Plan RREGOP Régime de retraite des employés du gouvernement et des organismes publics CARRA Commission administrative des régimes de retraite et d assurances Caisse de dépôt

4 Current rate of contribution to RREGOP is 8.94%. Your contributions are coordinated with your contributions to QPP so you do not pay 8.94% on your whole salary. Your admissible salary is reduced by 33% of the maximum admissible salary subject to QPP ($50,100 in 2012).

5 Ex. 1 For 2012, as a full-time employee at $45,000 annual salary you will pay: ($45,000 - $16,533) x 8.94% = $ Were this not coordinated with QPP you would pay $45,000 x 8.94% = $4023.

6 Regular salary including retroactive payments The following amounts are NOT admissible: Overtime Shift premiums Responsibility premiums Compensation for insurance Interest paid on retroactive payments

7 Disability (short-term and long-term) The first three years of disability are credited for pension purposes.

8 The 21-week maternity leave with pay provided for in the collective agreements is fully credited for pension purposes.

9 The 5-day paternity leave with pay provided for in the collective agreements is fully credited for pension purposes. The additional 5-week paid paternity leave under RQAP is also now fully credited (since June 10, 2010) and does not need to be bought back.

10 The 5-day adoption leave with pay provided for in the collective agreements is fully credited for pension purposes.

11 Whether an employee receives compensation from CSST for disability or for preventive withdrawal during pregnancy or breastfeeding, these leaves are covered for pension purposes and the employee is exempt from contributions to a maximum of three years.

12 Employees participating in a sabbatical leave plan get credit for a full year for pension purposes for each year of the plan but only pay contributions on the salary actually received.

13 Employees on a voluntary workload reduction (up to 20% leave) contribute to their pension plan as if they were working full time and so they do not need to buy back the service for pension purposes.

14 Leaves of 30 consecutive calendar days or less Part-time leaves of 20% or less Employee contributes to pension plan for these absences No buy-back necessary

15 May be bought back for pension Cost = 200% within 6 months of return After 6 months cost depends on age and salary

16 Part-time leave / credit pension full-time Eligibility = employee within 5 years of retirement Length = minimum 1 year to 5 years maximum Must retire at end of Plan

17 Eligibility = 65 to 69 years old Receive CARRA pension Work part-time with restriction on maximum salary Fully retire on December 30 th when 69

18 QPP 2012 maximum benefit = $986.67/mo. Age 65 Age 60 to 65: Reduced workload by at least 20% Benefit reduced by 0.5%/month anticipation For example at age 60 = $690.67/mo. Or, at age 70 = $ /mo.

19 Benefits normally stop at 65 years of age Premiums normally stop at 63 years of age Premiums can stop sooner for employee with an agreement to retire within 2 years

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27 You will now be receiving an annual statement, generally around June for the period ending December 30, 18 months earlier currently June 2012 for December 2010

28 You can request an estimate for specific retirement dates of between 4 and 14 months in the future. Multiple dates will be accepted if they are not too close together Takes about 4 months Apply to retire at least three (3) months in advance of retirement date

29 Service (calcul) x 2% x avg. best 5 yrs. Salary Without penalty: 60 years old OR 35 years service regardless of age With penalty: 55 years old

30 Ex. 2 Employee who is 60 years old, has 30 years of service for calculation purposes and whose average salary of the best five years is $50,000: 30 years x 2% x $50,000 = $30,000 / year At age 65 this amount will be reduced by QPP benefit.

31 Ex. 3 Employee who is 65 years old, has 33 years service and whose average salary is $50,000: 33 years x 2% x $50,000 = $33,000 less QPP benefit

32 Ex. 4 Employee who turns 59 years old on September 30, 2012 and has 32 years of service on December 31, 2012, the day of his retirement, and whose average salary is $50,000: 32 years x 2% x $50,000 = $32,000 before penalty Penalty = $32,000 x 0.333% x 9 mos = ~$959 Annual pension = $31,041 CARRA will give option to pay off penalty. At age 65 this will be reduced by QPP benefit.

33 At 65 pension is reduced: 0.7% x years of service for calculation x average max. adm. salary for last 5 years

34 Ex. 5 Employee retires at 60 in 2012 with 30 years of service and average salary of $50,000 = $30,000 pension until 65 Reduction = 0.7% x 30 x (50, , , , ,900)/5 = 0.7% x 30 x $47,360 = $9, After 65 $30,000 - $9, = $20, age 65 in 2012 = $ x 12 = $11,840)

35 6 months before your 65 th birthday Current max. benefit = $540.12/mo. (indexed quarterly) Subject to claw back through taxes Guaranteed Income Supplement = $732.36/mo. (indexed quarterly) for low income earners (<=$16,368)

36 Salary OAS QPP RREGOP 0 Age

37 Salary OAS QPP RREGOP 0 Age

38 Possible under certain conditions Slightly different from Gradual Retirement