Leaving your job not your pension plan

Transcription

1 Leaving your job not your pension plan Termination of employment

2 Maintaining the value of your pension As a member of the CAAT Pension Plan, you re building a valuable defined benefit pension that you ll collect for life when you retire. If your career path temporarily takes you away from your CAAT Plan employer before retirement, your Plan membership will continue uninterrupted for 24 months. Is this booklet for you? Read this pamphlet if: Your employment at a CAAT Plan employer will end before you are eligible for an immediate pension. You are an Other Than Regular Full-time member and your contract has expired and may or may not be renewed. You are moving from one CAAT Plan employer to another. If you will be over age 55 or over age 50 with 20 or more years of pensionable service at your termination date, you will be eligible for an immediate pension. Please refer to our Early retirement booklet for more information. * Effective July 1, 2012

3 Termination options All CAAT Pension Plan members are entitled to a pension at retirement. If you terminate your employment with a CAAT Pension Plan employer on or after July 1, 2012, and you are not yet eligible for an immediate pension, the CAAT Plan termination options provide both flexibility and security so you can make the best choices for your retirement income. You are eligible for an immediate pension at the age of 55, or at the age of 50 if you have 20 or more years of pensionable service in the Plan. When you terminate, your membership in the CAAT Plan will be automatically extended for 24 months from the date you last made contributions to the Plan. Your termination options fall into two categories: Options available during the 24-month extended membership period (which continue to be available after 24 months is up) Options available only after the 24-month extension of membership period has ended. These options are explained in the following pages. CAAT Pension Plan P3

4 Your options during the extended membership period Move to another CAAT Plan employer If you leave one CAAT Plan employer and begin working at another, your membership transfers seamlessly to the new employer. You will make contributions based on your new salary rate, which your new employer will match, and continue to accrue service and build your pension. If you are an Other than Regular Full-time (OTRFT) member, you will not have to re-qualify and will continue to earn a pension. Transfer to a non-caat Plan employer If you begin working for an employer with a pension plan, you can transfer the pension you earned in the CAAT Plan to your new employer s plan, if that plan allows such a transfer. You can select this option at any time during the 24-month extended membership period. Of course, you can always retain your secure pension with the CAAT Plan, and enjoy inflation adjustments, when they are granted. When you are ready to retire, your benefit will be there for you. More information on transferring service can be found in the Pamphlet Transferring Service. P4 Termination of employment

5 Your options after the extended membership period Once your 24-month period of extended membership is complete, you will have the following options in addition to those on the previous page. Defer your pension At the end of your 24-month extended membership period, you will have the option to defer your pension so you can start collecting it when you reach retirement age. Your deferred pension stays in the Plan, where it earns inflation protection increases when they are granted. You can start your deferred pension at the normal retirement age of 65, or collect a reduced deferred pension any time after age 55. Details can be found on pages 9 and 10. Transfer the commuted value of your pension You will also have the option to transfer the commuted value of your benefit to a locked-in retirement fund at the end of the 24-month extended membership period. Choosing this option means waiving your entitlement to a pension from the CAAT Plan, and taking on the costs and risks involved with managing your locked-in retirement funds. More information on this option can be found on page 10. CAAT Pension Plan P5

6 Termination options vary by age Here are the options available beginning July 1, 2012 when the 24-month extension of membership takes effect. Under age 55 (and not 50 & 20) Age 50 with 20 years service Age 55 + Enrol at another CAAT Plan employer During extension During extension During extension Transfer to another pension plan During extension During extension During extension Start pension (subject to early retirement reductions) Not available During extension During extension Defer pension At end of extension At end of extension At end of extension Transfer to a locked-in RRSP At end of extension Available only until June 30, 2012 Not available P6 Termination of employment

7 What happens when you leave your job? Your Human Resources representative will provide you with the forms you ll need to complete and submit to the CAAT Pension Plan when you terminate your employment before retirement age. If you will be immediately moving to another employer that will accept a transfer of the pension you earned, make sure to advise your Human Resources representative. You will be provided with the termination forms that will have to be completed in order to process the transfer. In the event that you have no immediate employment option, or you are moving to an employer that either does not offer a pension plan or that will not accept a transfer, your membership in the CAAT Plan will be extended for 24 months. When the 24-month period of extended membership is complete, you will receive notification directly from the CAAT Pension Plan letting you know the amount of your pension entitlement and the options available to you. CAAT Pension Plan P7

8 What to expect during the 24-month period It s possible that your situation may change during the extended membership period. Whatever happens, your CAAT Plan pension will be there for you. You return to work If you return to employment with a CAAT Plan employer within the extended membership period, you will resume your contributions matched by your employer based on your new salary. When you retire, the pensionable service you accumulated in the Plan during all of your periods of active service will be combined and, with your highest average pensionable earnings, used to calculate your final pension. You change careers Your extended membership won t hold you back from pursuing other employment options. If you start a new job, you ll remain a member of the CAAT Plan during the 24- month period. If your new job offers a pension plan, you can transfer your CAAT Plan pension to that plan at any time, if they allow the transfer. You re ready to retire If you reach early retirement age during your extended membership, and wish to start your pension, you can do so by contacting the Plan directly. P8 Termination of employment

9 A detailed look at your options after 24 months Once your extended membership period has ended, you gain two new options to defer your pension or to transfer the commuted value of your pension out of the Plan. Only you can decide which option is best for you. Be sure to consider your options carefully before making your selection. These options are explained further in the booklet Making Choices: Deferred Pension or Commuted Value. Deferring your pension Your deferred pension is the amount of pension you earned in the Plan during your active membership, up to the date you terminated your employment. Your deferred pension stays in the Plan, where it earns inflation protection increases when they are granted. You can begin to collect your deferred pension between the ages of 55 and 71. If you start your deferred pension before you turn 65, which is the normal retirement age in the Plan, your pension will be reduced by 5% for each year your early retirement date precedes age 65. This reduction reflects that you will be collecting it for a longer period than a member who retires at age 65. CAAT Pension Plan P9

10 Making choices A deferred pension has its benefits When you opt for a deferred pension, you ll receive these advantages: A reliable stream of monthly pension payments, for life. You don t have to worry about complex investments, market downturns, or outliving your pension. Monthly bridge benefit payments until age 65 if you start your deferred pension early. Inflation protection to partially offset the impact of inflation. A lifetime pension payable to your surviving spouse. Transferring the commuted value The other option is to transfer the commuted value of your pension out of the Plan and into a locked-in retirement fund. The commuted value is what your pension is worth in a lump sum based on current interest rates. To be eligible for a commuted value transfer you must terminate your employment 24 months before turning 55, or 24 months before you turn 50 with 20 years of service. A commuted value is locked in the funds must be transferred to a locked-in RRSP and used for your retirement income. Funds cannot normally be withdrawn from a locked-in RRSP before age 55, and all funds must be withdrawn or converted to an annuity by age 71. Once you have transferred your commuted value, you waive any entitlement to a CAAT Plan pension and you will be entirely responsible for the costs and risks associated with managing your retirement funds. P10 Termination of employment

11 A few examples: Joe Joe is 44 years old and worked in an Other Than Regular Full-time capacity for CAAT Plan Employer A for five years. After satisfying the eligibility period, he joined the Plan as an OTRFT member. While a member, Joe earned 2.5 years of pensionable service in the Plan. Joe terminates his employment with Employer A but remains a member of the CAAT Pension Plan during the 24-month extension of membership period. Both Joe and his employer stop making contributions to the Plan. Twelve months after leaving his job, while still within the 24-month extension of membership period, Joe is hired in an OTRFT capacity at CAAT Plan Employer B. Joe resumes his contributions to the CAAT Plan based on his new salary rate, and his new employer starts making matching contributions on his behalf. When Joe decides to retire at age 60 he will have earned 10 years of pensionable service (2.5 years with Employer A and 7.5 years with Employer B) in the CAAT Pension Plan. Joe has enjoyed the seamless continuation of his CAAT Plan membership and a combined retirement income from his employment with both employers. CAAT Pension Plan P11

12 Jane Jane is 52 years old and has 19 years of service when she terminates her employment. Jane hasn t decided if she wants to transfer her commuted value out of the Plan or defer her pension to start it later when she retires. During her 24-month period of extended membership, Jane has the opportunity to take some time to consider her options. When her 24-month extension of membership period is over, Jane will be 54 years old. She can still choose to take her commuted value, because she will be under 55 and will have less than 20 years of pensionable service at the end of the 24-month extension of membership. A few months before Jane s 24-month extended membership period ends, she is hired by an employer outside the Ontario College system and has the opportunity to transfer the value of her CAAT Pension to her new employer s pension plan. Jane decides to take advantage of this opportunity and contacts the CAAT Plan to begin the process of transferring the value of her pension benefits to the new pension plan. P12 Termination of employment

13 Sylvain Sylvain quits his job with a CAAT Plan employer at the age of 54. His new employer does not have a pension plan, but with 19 years of pensionable service in the CAAT Plan, Sylvain knows that he has already earned a valuable pension for life. When Sylvain turns 55 during the 24-month period of extended membership, he gains the option to start an early reduced pension immediately. If he chooses this early start, his pension would be reduced by 3% per year for each year he is away from his earliest unreduced retirement date. (These provisions are outlined in our Early Retirement pamphlet.) If he defers his pension at the end of the 24-month period but decides to start it before age 65, it would be reduced by 5% per year for each year he is away from age 65. Sylvain opts to take advantage of his extended membership and starts his pension immediately. Whichever option he chooses, Sylvain will receive a steady stream of monthly pension payments from the CAAT Plan for life, that includes bridge benefit payments until he turns 65, inflation protection increases when they are granted, and survivor benefits. CAAT Pension Plan P13

14 Your termination options at a glance An extended membership is advantageous if you leave your CAAT employer without the prospect of immediate employment. You can take the time to review and understand your options before making significant decisions that could have an impact on your retirement finances. Extending your membership gives you time to make fully informed decisions about your pension. Unfortunately, leaving a job can sometimes be stressful, and having the time to review your options is valuable. If you die during the 24-month extended membership period, survivor benefits are available for your surviving spouse or your beneficiaries if you do not have a spouse. You ll be able to take advantage of the Plan s portability options and transfer your pension benefit to your new employer s pension plan if it will accept such transfer. Other Than Regular Full-time (OTRFT) members who start working at another CAAT Plan employer will be able to join the Plan right away. You won t have to re-qualify. This can have a significant impact on your ultimate pension income from the Plan. P14 Termination of employment

15 Ready to go While CAAT Plan termination options remain flexible so you can make the right choice for you, they also offer security and the time to make a well-informed decision. For more information, contact us.

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