Total Compensation Pension Pay and Incentives Benefits Health and Well-being. Your information booklet Defined contribution (DC)

Transcription

1 Total Compensation Pension Pay and Incentives Benefits Health and Well-being Your information booklet Defined contribution (DC) March

2 Welcome to the Canada Post pension plan Defined Contribution component Canada Post is pleased to offer a defined contribution (DC) pension plan as part of your total compensation package. Retirement may be the last thing on your mind as you start your career with Canada Post, but your DC account is a valuable asset. The benefit you receive at retirement depends on the amount of employee and employer contributions accumulated over time and the investment return. Canada Post makes a base contribution to your DC account on your behalf and will provide additional matching contributions as a percentage of your own contributions. The DC pension plan can play an important role, along with government programs, your personal savings and other income sources, in building a financially secure retirement. As a DC member you also have access to the Voluntary Savings Plan (VSP). The VSP is a Registered Retirement Savings Plan (RRSP) administered on a group basis within the Canada Post Group RSP offering with Sun Life Financial. You can choose to complement your DC pension savings and contribute 1% to 6% of your earnings through payroll deductions in the VSP. Canada Post does not contribute to your VSP. To find out more about the VSP, visit cpcpension.com > Voluntary Savings Plan (VSP). You can also find information in the Voluntary Savings Plan (VSP) brochure included with your DC pension package and as found on cpcpension.com > Voluntary Savings Plan (VSP) > Publications. The rest of this booklet only applies to the DC component of the Plan. Member responsibilities Your DC pension plan savings are an important financial asset. Your retirement income from the Plan depends on the accumulated employee and employer contributions plus the investment returns you have earned. That s why it is important to take your responsibilities as a member of the Plan seriously. As a member of the DC pension plan, you are responsible for: completing the enrolment form and allocating the funds in your DC account among the different investment options offered. As such, you are responsible for the investment decisions you make, including the investment and financial risk associated with these decisions. For more information, go to the Investments section on page 9; confirming the percentage of your pensionable earnings per pay on the enrolment form that you want to contribute to the DC pension plan; designating a beneficiary when completing the enrolment form (see Glossary for beneficiary details); reading the information provided and making use of any tools provided by Canada Post and Sun Life Financial, the service provider, with respect to the DC pension plan, and for requesting clarification of any item that you do not understand. You may wish to discuss your retirement plans and retirement planning options with a personal financial advisor. You are responsible for any costs that may be associated with seeking such advice; reviewing and making changes to your investment choices on a regular basis to ensure that they continue to be in line with your personal situation, which may change over time; and choosing your retirement income arrangement when you retire or terminate your employment with Canada Post. You may wish to discuss available retirement income arrangements with a Sun Life Financial representative or with a personal financial advisor. You are responsible for any costs that may be associated with seeking such advice.

3 This booklet This booklet will help you understand the DC pension plan and how it works. Technical terms are defined in the Glossary on page 15. Read this booklet carefully and keep it handy for future reference. For questions on Eligibility, contributions, etc. Your personal investor profile Investment options Fund performance Investment returns and risks Retirement planning Simply Contact AccessHR at ; be sure to have your employee ID number available when you call. Visit cpcpension.com Call the Sun Life Financial Customer Care Centre toll-free at Review your my Investments guide. Visit mysunlife.ca. For information on how to get your access ID and password for mysunlife.ca, refer to page 1 of the my Investments guide included in your DC pension package. This information includes a generic access ID and password that you can use to get started. The my Investments guide can also be found at cpcpension.com > Defined Contribution > Publications > Booklets and brochures. Disclaimer The official text of the Canada Post Corporation Registered Pension Plan governs the actual benefits from the Plan and is the final authority in any case of dispute. Members, former members, spouses and common-law partners may, once a year, either personally or by an agent or mandatary authorized in writing for such purposes, examine certain documents relating to the Plan. Most of these documents and other useful information can be found on cpcpension.com. Canada Post reserves the right to unilaterally change or terminate the Plan at any time. Any such action would be taken according to all applicable legislation, including the Pension Benefits Standards Act, 1985, and the Income Tax Act. Members will be informed in writing of any changes to the Plan s terms. 1

4 Contents Plan overview...3 Membership...5 Contributions...6 Investments...9 Work/life events...11 The DC pension plan and your overall retirement picture...13 Glossary

5 Plan overview Type of plan Defined Contribution (DC) pension plan Contributions are defined and the retirement income you receive from the Plan depends on the contribution level you choose and the performance of your investments related to those contributions. Eligibility The following employees automatically join the DC component: MGT/XMT employees who became eligible to the Canada Post Corporation Registered Pension Plan on or after January 1, PSAC employees who became eligible to the Canada Post Corporation Registered Pension Plan on or after June 1, APOC employees who became eligible to the Canada Post Corporation Registered Pension Plan on or after March 1, CPAA employees who became eligible to the Canada Post Corporation Registered Pension Plan on or after September 1, Any employee who moves to a position that had the DC component in place on their original Plan eligibility date. Contact AccessHR to see how this applies to you. Contributions Canada Post makes a base contribution of 2% of your pensionable earnings each year. These contributions are invested in the funds you choose. You are enrolled automatically to contribute 4% of your pensionable earnings through payroll deduction. Canada Post provides additional matching contributions as a percentage of your own contributions, based on your age and years of continuous service (see the Contributions section on page 6 for more details). You may choose not to contribute or to contribute a lower percentage (1%, 2% or 3%). If you do, it will also lower Canada Post s matching contributions. For full details, refer to the Contributions section on page 6. Investments The DC pension plan offers investment options, covering a range of investment choices. You can invest your contributions, as you wish, in one or more of the options provided. For a list of funds and investment approaches offered, refer to your my Investments guide. You can also learn about the funds offered by signing in to mysunlife.ca. Withdrawals In accordance with pension legislation, your DC account balance cannot be withdrawn while you are employed by Canada Post. 3

6 Retirement or termination of employment If you have less than two years of continuous service, you will be entitled to a lump-sum payment of your DC account balance less applicable taxes, or, you can transfer your account balance to a personal RRSP. If you have more than two years of continuous service, the balance accumulated in your DC account will be treated on a locked-in basis and can only be used to provide retirement income. For full details, refer to the Work/life events section on page 11. Survivor benefits Death before retirement With less than two years of continuous service Your spouse or common-law partner will be entitled to a lump-sum payment of your DC account balance, less applicable taxes, or, he/she can also transfer your account balance to a personal RRSP. If you do not have a spouse or common-law partner at the time of your death, the money accumulated, less applicable taxes, will be paid to your beneficiary or, if you do not have a beneficiary, to your estate. With two or more years of continuous service Your spouse or common-law partner will be entitled to your DC account balance. He/she has several options, described in the Work/life events section. If you do not have a spouse or common-law partner at the time of your death, the money accumulated, less applicable taxes, will be paid to your beneficiary or, if you do not have a beneficiary, to your estate. $ Death after you retire or terminate your employment $ The benefits to your survivors in the event of your death will be made in accordance with the retirement arrangement you chose when you retired or terminated your employment. For example, if, when you retired or terminated your employment, you used your DC account balance to purchase an annuity, benefits paid at your death will depend on the type of annuity you purchased (i.e., you can choose an option that will pay survivor benefits to your spouse or common-law partner). 4

7 Membership When does my membership start? Membership is mandatory. The table below explains when you are eligible. If you are your membership begins in an indeterminate position or in a position of more than six months and a full-time employee, or part-time employee with assigned hours of at least 12 hours per week, in a position of six months or less and a full-time employee, or part-time employee with assigned hours of at least 12 hours per week, a postmaster in a corporate-owned or leased group office, a postmaster in a privately owned or leased group office, a term* employee represented by the Canadian Postmasters and Assistants Association (CPAA), *CPAA term employees are considered temporary employees as defined in the Plan. on your first day of work. on the day following six months of continuous employment. once your survey hours are at least 12 hours per week. once your survey hours are at least 12 hours per week. on the day you start a long-term replacement assignment. Once you are a member of the Plan, you will keep contributing as long as you have an assigned work week. You cannot choose to stop contributing if your assigned hours are less than 12 hours per week. Note As a part-time employee, at a minimum, your membership begins on the day that you complete two years of uninterrupted service with Canada Post and have earned 35% of the year s maximum pensionable earnings (YMPE) in each of the two preceding calendar years. Exception You are not eligible for membership after the end of the year in which you reach age 71, as stated in the income tax rules. What do I have to do when I become a member of the Plan? You must complete the enrolment form that is included with your Total Compensation at Canada Post letter. You must allocate the funds in your DC account among the different investment options offered and designate a beneficiary in the event of your death. 5

8 Contributions When do contributions begin? Your and Canada Post s contributions will begin on the first day you are eligible to join the DC pension plan. Can I opt out of the Plan? No. Once you are hired, you will remain a member of the Plan as long as you are employed by Canada Post in an eligible position. Even if you elect not to contribute to the DC pension plan, Canada Post will make its base contributions on your behalf. If I start working less than 12 hours a week, do I stop participating in the Plan? No. Once you are a member, you will remain a member of the Plan as long as you are employed by Canada Post in an eligible position, regardless of the number of hours you work in a week. Can I transfer pension funds from my previous employment into the DC pension plan? No. Pension funds from previous employment cannot be transferred into the DC pension plan. However, you may transfer the funds into a locked-in RSP in the Voluntary Savings Plan (VSP). Contact the Sun Life Financial Customer Care Centre at for details. If I was a member of the defined benefit (DB) component and moved to the DC component, what happens to my DB funds? Your DB funds will stay in the DB component; however, your DB service (including any elective service) will be used to calculate your years of continuous service for the DC matching contribution formula. How much can I contribute and how do I make my contributions? You are enrolled automatically to contribute 4% of your pensionable earnings through payroll deductions. Canada Post will provide matching contributions as a percentage of your own contributions, based on your age and years of continuous service. You may choose not to contribute or to contribute a lower percentage (1%, 2% or 3%). Reducing your employee contributions will reduce Canada Post s matching contributions. To modify your employee contributions, complete the Defined Contribution Pension Payroll Deduction Authorization form. The change will take effect the pay period after your request is processed. You may change your employee contribution selection once every six months. How much does Canada Post contribute? Canada Post contributes 2% of your pensionable earnings on your behalf, whether or not you choose to contribute. If you do contribute, Canada Post provides additional matching contributions as a percentage of your own contributions, based on your age and years of continuous service. If the sum of your age and years of continuous service is Less than 35 Between 35 and less than 45 Canada Post contributes 2% of your pensionable earnings, plus 75% of your contribution 100% of your contribution 45 or more 125% of your contribution 6

9 Here is an example of how the contribution formula works: Mark is 30 years old when he is hired by Canada Post. Mark chooses to contribute 4% of his pensionable earnings to the Plan. Year 1 Year 3 Year 8 Mark is 30 years old and has 0 years of continuous service. Mark is now 33 years old and has 3 years of continuous service. Mark is now 38 years old and has 8 years of continuous service. Pensionable earnings $60,000 $65,000 $75,000 Sum of age and years of continuous service Canada Post s match (%) % 100% 125% Canada Post s base contribution 2% x $60,000 = $1,200 2% x $65,000 = $1,300 2% x $75,000 = $1,500 Employee optional contribution 4% x $60,000 = $2,400 4% x $65,000 = $2,600 4% x $75,000 = $3,000 Canada Post s additional match of employee s contribution 75% x $2,400 = $1, % x $2,600 = $2, % x $3,000 = $3,750 Total annual contribution Total annual contribution in % of pensionable earnings $5,400 $6,500 $8,250 9% 10% 11% 7

10 Are contributions to the DC pension plan subject to a tax limit? Can I change my contribution level if I want to? Can I stop contributing through payroll deductions if I want to? Can I make lump-sum contributions to my DC account? Are my contributions tax deductible? What about Canada Post s contributions? How do contributions to the Plan grow? How long can I contribute to the Plan? Can I withdraw money from my DC account? How does the DC pension plan change my RRSP contribution room? Yes. Your contributions and Canada Post s base and matching contributions cannot exceed the limits set by the Income Tax Act. Contributions (yours and those of Canada Post) that exceed the dollar limit are covered by the Defined Contribution component of the Canada Post Corporation Supplementary Retirement Arrangement. Yes. You can change your contribution level once every six months by completing the Defined Contribution Pension Payroll Deduction Authorization form located at cpcpension.com. The change will take effect on the pay immediately following the date the change is processed. Yes. You can stop contributing at any time. If you do, Canada Post s additional matching contributions will stop as well. You will be eligible to begin contributing again six months later. The change will take effect on the pay immediately following the date the change is processed. Canada Post will continue making its base contribution on your behalf even if you are not contributing. No. Lump-sum contributions cannot be made under this plan. However, as a DC pension plan member, you may make additional contributions to the Canada Post Voluntary Savings Plan (VSP) by lump sum payment or through regular payroll deductions from 1% to 6% of your earnings. Canada Post does not contribute to your VSP. To contribute a lump sum, contact the Sun Life Financial Customer Care Centre at between 8 am and 8 pm ET. To contribute to the VSP by payroll deductions, contact AccessHR at Your contributions are tax deductible. Contributions to the Plan are deducted from your pay before your income tax is calculated, so you benefit right away. The base and matching contributions that Canada Post makes on your behalf are tax-sheltered, which means that you do not pay income tax on contributions and investment earnings until you begin to draw your retirement income. You choose how your contributions and those made by Canada Post on your behalf are invested. Refer to the my Investments guide provided in your welcome package. The guide is also available at mysunlife.ca. You can contribute to the DC pension plan until: your employment with Canada Post terminates; you move into a position that had the defined benefit (DB) component in place on your original Plan eligibility date; you reach the maximum age specified by the Income Tax Act; or your death whichever happens first. Special provisions apply in cases of disability and leaves of absence. No. You cannot withdraw money from your DC account while you are employed by Canada Post. By law, the balance in your DC account is locked in and can only be used to provide you with retirement income. All the contributions paid into your DC account in a given tax year, your contributions and Canada Post s contributions on your behalf generate a pension adjustment (PA), which is shown on your T4 slip. The PA reduces the amount that you can contribute to an RRSP in the following year. 8

11 Investments What are my investment choices? For a list of funds and investment approaches, refer to your my Investments guide. You can also learn about the funds offered by signing in to mysunlife.ca How do I know in which fund I should invest? Different funds and investment approaches may be appropriate for different points in your career, since the options range from low risk/return to higher risk/return. As a member of the DC Plan, you have access to Sun Life Financial s website, mysunlife.ca, which gives you access to tools and information to help you determine your investor profile and investment strategy. You should review your profile and investment strategy periodically as these may change in time. For instance, the funds in which you might choose to invest when you are in your twenties may not necessarily be those you would choose to invest in when you are in your fifties. The website will also give you all the information you need about the investment funds offered, including historical fund returns. Sun Life Financial is responsible for providing all the information you need to take advantage of the Plan. It is your responsibility to use this information to make informed choices. Who are the fund managers of the DC pension plan? What happens if I do not make any investment choices? Refer to your my Investments guide or go to Accounts > Investment performance on mysunlife.ca on the Plan member home page. If you do not make an investment fund decision when you are enrolled in the Plan or your contribution allocation does not add up to 100%, your contributions, if any, and those Canada Post makes on your behalf will be invested in the target-date fund nearest to your projected retirement date at age 65. You will be able to transfer those contributions to other funds at any time. When are contributions invested by Sun Life Financial? Contributions are invested on the business day they are received from Canada Post, if they are received before 2 pm; otherwise, they are invested on the next business day. How do I get information on the balance in my account, changing my investment choices, transferring among funds, and monitoring my investments? As a member of the DC pension plan, you have access to Sun Life Financial s website at mysunlife.ca for a description of investment options, fund rates of return, and details on your DC account (changing your investment options, transferring between funds, etc.). Once your DC account is set up, Sun Life Financial sends your access ID and password to your home, along with instructions on how to use the online services and the Customer Care Centre. 9

12 You can call the Sun Life Financial Customer Care Centre at , and speak with a customer service representative between 8 am and 8 pm ET. Alternatively, you can use the automated system to receive certain types of information. The system is available 24 hours a day, 7 days a week. Sun Life Financial also sends you an individual account statement twice a year, in June and December. If you prefer manual transactions, you can print the forms and call the Sun Life Financial Customer Care Centre to obtain the current mailing address. Are my investments safe under the Plan? Under the Plan, your investments are subject to market risks. Certain funds offered under the DC pension plan entail more risk than others. You need to ask yourself if you are comfortable with the level of risk that comes with your asset allocation. The online tools on Sun Life Financial s website will help you with your decisions. Segregated funds, in which your contributions are invested, are held separately from the assets of Sun Life Financial and, while fund values fluctuate, the money is always used for the members benefit. What fees are charged to my account? For as long as you are an active Plan member, you pay investment management fees and Canada Post pays fees related to the administration of the DC pension plan. Upon your termination of employment, retirement or death, if you or your spouse or common-law partner choose to leave your funds in the DC pension plan, you or your spouse or common-law partner will pay all fees related to your account from then on. You can check current fees at any time on Sun Life Financial s website. You benefit from: no administration fees (for as long as you are an active Plan member); no transfer fees; and no acquisition fees (loads). Who makes sure that the fund managers are doing a good job? Canada Post will periodically review the performance of the funds in the DC pension plan and propose changes to existing fund selections or add new funds, if required

13 Work/life events What happens If I retire or terminate my employment? With less than two years of continuous service You will be entitled to a lump-sum payment of your account balance, including Canada Post s contributions with related investment earnings, less applicable taxes, or, you can transfer your account balance to a personal RRSP. With two or more years of continuous service Converting your account balance into retirement income Your retirement income will depend on the balance in your DC account. The account balance accumulated in your DC account must be used to provide you with retirement income and is locked in. You can use the balance of your DC account in the following ways: purchase an annuity from an insurance company; transfer the balance to a locked-in retirement savings plan, a life income fund (LIF) or another prescribed retirement savings vehicle; transfer the balance to your new employer s registered pension plan, if permitted; or transfer the balance accumulated in your DC account with Sun Life Financial s Group Choices Plan (until the maximum age, in accordance with the Income Tax Act, at the latest). Under this option, you pay all fees related to your account from then on. Note The funds in the DC account are not locked in in case of: termination with less than two years of continuous service; or if you qualify under the small benefits rule (that is, if the total pension benefits value of your account is less than 20% of the year s maximum pensionable earnings [YMPE] amount.) If I become disabled? While you are receiving short-term disability benefits or disability insurance benefits, you continue participating in the Plan as though you were at work. If you are approved for long-term disability benefits from Canada Post, Canada Post will continue to make its base contribution of 2% on your behalf. You can also continue to contribute to the Plan. If you choose to contribute, you must make your contributions on your return to work or, at the discretion of Canada Post, during your absence. Also, if you choose to contribute, Canada Post will continue to match your contributions based on your age and years of continuous service. Contributions will be calculated based on your pensionable earnings on the date you became disabled. In the event of my death? Death before retirement or termination of employment With less than two years of continuous service Your spouse or common-law partner will be entitled to a lump-sum payment of your account balance, including Canada Post s contributions with related investment earnings, less applicable taxes, or, he/she can transfer your account balance to a personal RRSP. If you do not have a spouse or common-law partner at the time of your death, the money accumulated, less applicable taxes, will be paid to your beneficiary or, if you do not have a beneficiary, to your estate. 11

14 In the event of my death? (cont d) With two or more years of continuous service If you have a spouse or common-law partner, he/she will be entitled to your account balance, including Canada Post s contributions with related investment earnings. He/she has several options, including: transfering the money to a locked-in retirement savings plan, a life income fund (LIF), or another prescribed retirement savings vehicle; purchasing an annuity from an insurance company; transfering the money in the Plan to the Sun Life Financial Group Choices Plan (until the maximum retirement age, in accordance with legislation, at the latest). Under this option, your spouse or common-law partner pays all fees related to your account from then on; or choosing a combination of these options. If you do not have a spouse or common-law partner at the time of your death, the money accumulated, less applicable taxes, will be paid to your beneficiary or, if you do not have a beneficiary, to your estate. Death after retirement or termination of employment Once you retire or terminate your employment, the benefits paid to your survivors in the event of your death will be made in accordance with the retirement arrangement you chose when you retired. For example, if at retirement or termination of employment, you used your DC account balance to purchase an annuity, benefits paid at your death will depend on the type of annuity you purchased (i.e., you can choose an annuity that will pay survivor benefits to your spouse or common-law partner). If I take a leave of absence? While you are on a legislated leave of absence, Canada Post will continue to make its base contribution of 2% on your behalf. You can continue to contribute to the Plan for the minimum period provided for by legislation. If you choose to contribute, you must make your contributions on your return to work or, at the discretion of Canada Post, during your absence. If you choose to contribute, Canada Post will continue to match your contributions based on your age and years of continuous service. Contributions will be calculated based on your pensionable earnings on the date you start your leave. For any other type of leave (non-legislated leave or unauthorized leave) of absence, you cannot continue contributing to the Plan. Canada Post will not provide a base contribution or any matching contributions. Legislated leaves of absence are defined leaves found under federal labour legislation. They include maternity, parental, adoption, compassionate care and disability / sick leave. Non-legislated leaves are leaves of absence offered by Canada Post that are not found under federal labour legislation and include, but are not limited to, care and nurturing, spousal relocation, elder care, military, education and personal leave. Unauthorized leaves include strike, lock-out, suspension or any other unauthorized leave of absence. 12

15 The DC pension plan and your overall retirement picture The sources of retirement income When you retire, your retirement income will come from three sources: employer-sponsored pension plans; government-sponsored pension plans; and your personal savings. Employersponsored pension plans Governmentsponsored pension plans Your personal savings The Canada Post Defined Contribution pension plan Other employer pension plans in which you participated Canada/Quebec Pension Plan (CPP/QPP) Old Age Security (OAS) Registered savings: Registered Retirement Savings Plan (RRSP) Tax-free Savings Account (TFSA) Equity in home Non-registered investments Employer-sponsored pension plans and personal savings Employer-sponsored pension plans provide employees with retirement income to supplement their revenue from the government-sponsored plans. These pension plans come in a variety of forms, such as the Canada Post DC pension plan. Currently, only about one third of Canadian workers participate in an employer-sponsored pension plan. Personal savings include registered savings instruments such as personal Registered Retirement Savings Plans (RRSP), Tax-free Savings Accounts (TFSA) and other types of savings, such as equity in your home and non-registered investments. Government-sponsored pension plans Under current legislation, when you retire, you will be entitled to receive pension benefits from the Canada/Quebec Pension Plan (CPP/QPP) and you may be entitled to pension benefits from the Old Age Security (OAS) program. Canada Pension Plan/ Quebec Pension Plan (CPP/QPP) The CPP/QPP is a compulsory public pension plan. It provides workers and their families with basic financial protection in the event of retirement, death or disability. The CPP/QPP provides a basic retirement income. It replaces approximately 25% of the employment earnings on which you made contributions if you retire at age 65. CPP/QPP is paid monthly until death and is adjusted each January 1 to reflect increases in the cost of living. The CPP/QPP pension is taxable income. The amount of your retirement pension from the CPP/QPP depends on: the age at which you retire; the number of years during which you contributed to the CPP/QPP; and the employment earnings on which you made contributions. To learn more about the retirement pension under the CPP, consult the Service Canada website or, for the QPP, consult the Régie des rentes du Québec website. 13

16 Federal Old Age Security Program (OAS) and Guaranteed Income Supplement (GIS) The OAS program offers, among other things, the OAS pension and the Guaranteed Income Supplement (GIS). The OAS pension is a flat-rate pension you will receive once you reach age 65, provided you meet certain residency requirements. It is paid monthly until death and is indexed on the basis of the cost of living four times a year (January, April, July and October). If your total retirement income reaches a certain level, the pension is reduced. Above a certain income level, you are no longer eligible for the OAS program. The OAS pension is taxable income. The GIS provides additional income to persons with low income who live in Canada. The GIS is added to the Old Age Security pension and is not taxable. For further information on these benefits, consult the Service Canada website. Planning for your retirement To retire comfortably, your retirement income may not need to be the same as your pre-retirement earnings. For example, some expenses you have during your working career may decrease or disappear at retirement (such as taxes and mortgages), while other expenses may increase (such as those related to travel and leisure). The proportion of your pre-retirement earnings that you will need at retirement varies according to your personal situation: your age and earnings at retirement, and personal factors, such as what you plan to do during retirement and other personal preferences. Many financial planners believe that you will need approximately 60% to 80% of pre-retirement earnings to maintain the same lifestyle after you retire. For example, if your gross yearly employment earnings before you retire are $80,000 per year and you estimate you will need 70% of your pre-retirement earnings in order to maintain the standard of living you desire during retirement, you will need a total retirement income of $56,000 per year. Once you have determined the post-retirement income level you will need, estimate how much you expect to receive from all your sources of income: CPP/QPP and OAS, the DC pension plan, any other employer-sponsored pension plans in which you have participated, and your personal savings. Any shortfall between the retirement income from all these sources and your total desired retirement income level must be made up from personal savings. $ Remember that retirement income from plans, such as the DC pension plan, personal RRSPs and a TFSA, depends on the performance of the investments you have selected and level of contributions you make. This is important to keep in mind when you estimate future retirement income from these plans. $ 14

17 Glossary Annuity A monthly payment you purchase from an insurance company. The amount of the monthly payment is determined by the amount in your account, annuity prices at that date, and the type of annuity you choose. You can choose to buy an annuity with features such as cost-of-living increases, bridge pension until age 65 or benefits for your survivors. However, these features will increase the cost of your annuity. Assigned hours The regular guaranteed weekly hours of work associated with a position. Available hours For CPAA employees in Revenue Group Offices, the difference between survey hours and the hours per week that the employee is required by Canada Post to be available to provide postal service. Beneficiary A designated person or group who may be entitled to receive survivor benefits. Common-law partner A person who is cohabiting with you in a conjugal relationship, having so cohabited for a period of at least one year. Continuous service Uninterrupted period of employment with Canada Post from the last date of hire. Full-time employee A person employed by Canada Post and assigned weekly hours of work of 30 hours or more; or in more than one part-time position, where the combined assigned hours for both positions is 30 hours per week or more. Life income fund (LIF) An investment that provides retirement income. When you reach age 71, the Income Tax Act no longer permits you to keep your retirement savings in an RRSP. You can turn your RRSP into a life income fund. This fund requires you to take out a minimum amount of money, up to a certain maximum. You must use any remaining balance to buy an annuity once you reach age 80. Locked-in retirement savings plan This is an investment account that holds funds that must be used to provide retirement income. The money can grow tax free until you reach the maximum retirement age specified by legislation. This may be useful if you don t need or want to draw upon your retirement savings immediately after retiring. Locking in Rules that restrict access to money transferred from a pension plan to a personal account in order to ensure the funds provide retirement income. 15

18 Long-term replacement assignment Long-term replacement assignment means any of: a single predetermined work assignment that commences on or after January 1, 2016 under the collective agreement with CPAA, has a duration of more than six months, and has assigned hours of work of at least twelve hours a week; and any subsequent assignments thereto of the same employee of more than 20 consecutive shifts in a single position where the assigned hours are at least 12 hours per week; or an assignment for a period of more than 20 consecutive shifts that commences on or after January 1, 2016 under the collective agreement with CPAA, has assigned hours of at least 12 hours per week for the duration of the assignment, and which, through one or more consecutive extensions of the assignment each of more than 20 consecutive shifts, is lengthened to be greater than six months in duration of uninterrupted employment in a single position; and any subsequent assignments thereto of the same employee of more than 20 consecutive shifts in a single position where the assigned hours are at least 12 hours per week. For greater clarity, the long-term replacement assignment in this situation shall begin on the day following the accumulation of six months of uninterrupted employment in the extended assignment. This six-month period is referred to as the qualifying assignment period. Part-time employee A person employed by Canada Post to work on a less-than-full-time basis, who is engaged to work for a total of at least 12 assigned hours per week, but is not a temporary employee. Pension adjustment (PA) An amount calculated each calendar year under the federal Income Tax Act that is used to determine an individual s maximum annual RRSP contribution room. The adjustment reduces the allowable annual RRSP contribution room by taking into account the assumed value of any pension benefits earned or contributions made under a registered pension plan during the previous year. For DC plans, the PA is the total of all employer and employee contributions for the year. Pensionable earnings Your basic pay and other allowances paid for the performance of your regular duties, including corporate team incentive payments/corporate achievement payments, CPAA administration allowance, CPAA field support allowance, bilingual bonus, compression allowance, rest period allowance, lead hand differential and market premium. Excluded are special remuneration, individual incentive compensation, overtime, gratuities, pay for regular hours worked exceeding your assigned hours (except members of PSAC and CPAA), and other compensation or allowances not specifically identified. For postmasters in a privately owned or leased group office, the pensionable earnings calculation is based on regular pay for survey hours and one third of available hours; for postmasters in a corporate-owned or leased group office (level 2-6), the pensionable earnings calculation is based on regular pay for survey hours. Spouse Your spouse is the person who is married to you or is party to a void or null marriage with you. If, at the time when a determination is necessary, a member has a spouse from whom they are separated and a common-law partner with whom they are cohabiting, a reference to spouse or common-law partner means the common-law partner. 16

19 Survey hours The weekly hours of work determined by Canada Post s work content measurement system to be the hours required in a Revenue Group Office to perform the duties of the position. Temporary employee A person employed on a temporary and/or call-in basis and who has no assigned hours. 17

20