Pension Frequently Asked Questions

Transcription

1 Eligibility: 1. Who is eligible to join the Pension Plan? 2. Who is not eligible to join the Pension Plan? 3. When is a temporary employee eligible to join the pension plan? 4. When is an indeterminate part-time employee eligible to join the pension plan? 5. Is a locally engaged individual eligible to join the Pension Plan? 6. Is an employer-sponsored employee eligible to join the NPF Pension Plan? Pensionable Service: 7. Can temporary employees purchase their pension waiting period after joining the pension plan? 8. How is pensionable service for Part-time employees calculated? 9. What service does the 35 year maximum pensionable service limit include? 10. Can my pensionable service with another employer be transferred into the NPF plan? Retirement: 11. What is my Normal Retirement Date? Do I have to retire then? 12. When can I get my maximum pension? 13. Can I retire before my Normal Retirement Date without penalty? 14. What is Early Retirement? 15. What is a bridge benefit? 16. What happens to my bridge benefit if I die before age 65? 17. How are my average pensionable earnings determined for calculating my monthly pension? 18. Why do I have to terminate employment when I retire? 19. When I decide to retire, when do I receive my first pension payment? 20. Who can I consult with to help me plan my retirement? Termination/Death: 21. What happens to my pension if my employment with the organization ceases? 22. What does Transfer Value mean? 23. What is a deferred pension? 24. When can I transfer my pension out of the plan? 25. When must my pension be transferred out of the plan? 26. What happens if I am the spouse of a Military member who is being posted to another location? 27. What is vesting, and when does it happen? 28. Is my pension payable to anyone else if I die? 29. What happens to my pension if I die after retirement? 30. Who processes my pension when I leave the pension plan? General: 31. How can I get a pension estimate? 32. Do I need to name a pension beneficiary? 33. Do I need to prove my marital relationship when I retire? 34. What is an indexed pension? 35. Is there a possibility that the Employer will decide to change from our current Defined Benefit to a Defined Contribution plan? 36. Is a Defined Benefit pension plan better than a Defined Contribution plan? 37. Will these changes to the Pension Text change anything for NPF retirees? 2 December 2013 Page 1

2 38. Can I contribute more than 4.5% of my earnings to the plan? 39. Why are my pension statements mailed to both me and my spouse? 40. Can I be re-hired after I retire? ELIGIBILITY: 1. Who is eligible to join the Pension Plan? 2. Who is not eligible to join the Pension Plan? 3. When is a temporary employee eligible to join the pension plan? 4. When is an indeterminate parttime employee eligible to join the pension plan? 5. Is a locally engaged individual eligible to join the Pension Plan? 6. Is an employer-sponsored employee eligible to join the NPF Pension Plan? PENSIONABLE SERVICE: 7. Can temporary employees purchase their pension waiting period after joining the pension plan? 8. How is pensionable service for Part-time employees calculated? A: Full-time indeterminate employees are eligible to join the pension plan, as are Temporary and Part-time employees who meet the eligibility criteria. Employersponsored employees outside Canada are eligible to join. A: Individuals who work on a casual basis, are locally engaged outside Canada, or are employed under a student employment program are not eligible to join the pension plan. Part-time or temporary full-time employees who have not met eligibility criteria are also not eligible to join the plan. A: A temporary employee hired to work full-time for more than 24 continuous months is both eligible and obligated to join the pension plan. A temporary employee hired to work part-time is eligible to join the pension plan if their earnings exceed 35% of the YMPE in two consecutive calendar years. A: A part-time employee is eligible to join the pension plan if their earnings exceed 35% of the YMPE in two consecutive calendar years. Enrolment is voluntary. A: A locally engaged individual is an employee who is hired to work in a location outside of Canada but is not sponsored by the organization. The employee is not eligible to join the pension plan. A: An employer-sponsored employee is a Canadian citizen who has been hired from Canada through a sponsorship agreement approved by the Canadian Commanding Officer to work in a location outside Canada. The Employee is eligible and obligated to join the pension plan. A: The pension waiting period is not eligible for purchase after enrolment in the plan. A: Pensionable service for part-time employees is prorated to the minimum hours required for full-time employment in the employee s work location and bargaining unit. For example, if the minimum hours for Full-time employment are 27 hours/week, a Part-time employee working December 2013 Page 2

3 9. What service does the 35 year maximum pensionable service limit include? 10. Can my pensionable service with another employer be transferred into the NPF plan? RETIREMENT: 11. What is my Normal Retirement Date? Do I have to retire then? 12. When can I get my maximum pension? 13. Can I retire before my Normal Retirement Date without penalty? hours /week would accrue 0.83 yr of pensionable service every calendar year. A: The 35-year maximum includes the following types of service: a) Periods of continuous plan membership, b) Unpaid periods of absence during which you receive Long Term Disability, WCB, WSIB, or CSST benefits, c) Maternity and Parental/Paternity Leave, d) Periods of temporary lay-off from employment with right to re-call, e) Any other period of paid or unpaid absence approved by the Employer, f) Any period of past pensionable service with the Employer, and, g) A period of eligible past pensionable service transferred from a previous employer A: You will be allowed to transfer eligible past pensionable service with a previous employer to the pension plan. Only pensionable service under the Public Service Superannuation Act, the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act, or under a pension plan registered under the Federal Pension Benefits Standards Act, from another employer immediately prior to your most recent date of NPF plan membership will be eligible for transfer. A: Your Normal Retirement Date is the first day of the month following your 65 th birthday; however, you may be eligible for retirement at an earlier date if you meet certain criteria. It is not mandatory for you to retire at your Normal Retirement Date. The latest date to which you can postpone your retirement is December 1 of the year in which you reach or will reach age 71. A: You have earned your maximum or full pension when you have accrued 35 years of pensionable service. You cannot accrue more than 35 years of pensionable service. A: Yes, you have reached Pensionable Age if you have accrued at least 10 years of pensionable service and are at least 60 years of age. In this case, you can retire with the pension you have earned based on the pension formula. Your pension benefit will not be reduced due to early retirement. 14. What is Early Retirement? A: You are considered to have retired early if you retire with less than 10 years of pensionable service and are between age 55 and 65, or retire with greater than 10 years of service and are between age 50 and 60. If you 2 December 2013 Page 3

4 retire early, your pension is reduced by ¼% per month preceding Pensionable Age (the date you could have retired without reduction). 15. What is a bridge benefit? A: The bridge benefit is an additional benefit payable from your retirement date to the month after you reach age 65, inclusive. 16. What happens to my bridge benefit if I die before age 65? 17. How are my average pensionable earnings determined for calculating my monthly pension? 18. Why do I have to terminate employment when I retire? 19. When I decide to retire, when do I receive my first pension payment? 20. Who can I consult with to help me plan my retirement? A bridge benefit is payable if you meet the following eligibility requirements: retire between age 55 and 65 have at least five completed years of Pensionable Service, and age plus completed years of Pensionable Service equals at least 65. A: If you die before age 65 while in receipt of bridge benefit, the benefit will be paid up to the month of your death. Bridge benefits are payable only to you; if you die before age 65, no bridge benefits are paid to your spouse or your beneficiary. A: Your average pensionable earnings are your average earnings as a plan Member during the three highestpaid consecutive years (36 months) in the ten years before your pensionable services ceases. Your pensionable service ceases to accrue when you retire, terminate, die, or accumulate 35 years of pensionable service. If you have less than three years of pensionable earnings, then the actual average of pensionable earnings received will be used. A: Termination of employment is required in order to commence payment of retirement benefits. The Income Tax Act does not allow a member to draw a pension and accrue a pension in the same plan at the same time with the same employer. A: If you return your signed retirement forms to our Pension Administrator (Coughlin) prior to your retirement date, your monthly pension is payable on the first of the month following your termination of employment. If you return your signed retirement forms late, you will receive your monthly pension payment as soon as the paperwork can be processed and you will be paid retroactive to your retirement date (first day of the month following termination of employment). A: You should consult with anyone necessary to ensure you are comfortable with your retirement decision, starting with your spouse or partner, and possibly your local HR Office, Coughlin, and your Financial 2 December 2013 Page 4

5 TERMINATION/DEATH: 21. What happens to my pension if my employment with the organization ceases? Advisor. A: If you leave your employment prior to your Early Retirement Date and have two or more years of plan membership, you may elect one of the following options: Leave your pension benefits with the Pension Plan until retirement (deferred pension) OR Transfer the value of your pension benefit to a locked-in RRSP or life income fund OR Transfer the value of your pension benefit on a locked-in basis to another registered Pension Plan OR Use the transfer value of your pension to purchase an immediate or deferred life annuity from an insurance company. If you have been a Member for less than two years, the options above are not required to be locked-in, or you may elect to receive a cash lump sum payment, less withholding tax. 22. What does Transfer Value mean? A: When an employee terminates, they are given options for the Transfer Value of their accrued pension benefit. Transfer Value refers to the amount of money that would need to be invested today to provide sufficient funds to pay your accrued pension benefit when you retire. In short, it is how much your future pension benefits are worth today. Transfer value takes into account: benefit payable (how much pension the employee has accrued), mortality rates (how long that benefit would likely be paid to the employee and eligible spouse), bond interest rate (how much the employee could earn on the invested money), and, age (how long the employee has to earn investment returns on the money before the benefit becomes payable). 23. What is a Deferred Pension? A: A Deferred Pension is an earned pension benefits that have been left in the Pension Plan when the Member terminates employment. 24. When can I transfer my pension out of the plan? A: Your pension can only be transferred out of the plan if your employment terminates. Your available options for transferring or removing your pension will depend on age and the amount of pensionable service. If you terminated and left your pension in the pension plan 2 December 2013 Page 5

6 25. When must my pension be transferred out of the plan? 26. What happens if I am the spouse of a Military member who is being posted to another location? 27. What is vesting, and when does it happen? 28. Is my pension payable to anyone else if I die? 29. What happens to my pension if I die after retirement? 30. Who processes my pension when I leave the pension plan? (deferred pension), the removal of your deferred pension is subject to the Employer s approval. A: If, on termination, the transfer value of your pension is less than 20% of the Q/CPP YMPE, then you do not have the option of leaving your pension funds in the plan. A: A military spouse has the option to request a relocation leave which allows you to look for work at the new base without having to terminate employment and plan membership. Should you choose, you can continue to pay pension contributions while on relocation leave in order to continue accruing pensionable service. If you do not request relocation leave, then your employment and plan membership would terminate. A: Vesting is the entitlement of an employee to the value of their accrued pension, including contributions made on the employee s behalf by an employer. NPF pension benefits vest immediately on the date of pension enrolment. This means that, if an employee leaves the plan, they are entitled to receive the value of their pension benefit, not just a refund of their contributions. A: If you die prior to retirement, the pension benefit payable and to whom it is paid will depend on your age, years of pensionable service and marital status at time of death. If you die after retirement, pension benefits are paid to your spouse/partner or beneficiary according to the form of pension you chose at retirement. A: If you die after retirement, pension benefits are paid to your Spouse or Beneficiary according to the form of pension you chose at retirement. A: Your local HR Office notifies the Pension and Benefits Group at HQ, who notifies the Pension Administrator (Coughlin). Coughlin will send you pension options within thirty (30) days of termination. Completed option forms must be returned to Coughlin within 90 days. GENERAL: 31. How can I get a pension estimate? A: The pension estimator is available online at any time to get a pension estimate based on the normal (15-year guarantee) form of pension. If you are within six (6) months of your confirmed retirement date, a request can be made by completing the Retirement Form and submit to Pension & Benefit Office. The Pension Administrator will send you a pension estimate which will assume continued earnings and pensionable service up to the date of retirement. 32. Do I need to name a pension beneficiary? A: You should. However, your legal spouse has pension entitlements under law, regardless of whether or not you 2 December 2013 Page 6

7 33. Do I need to prove my marital relationship when I retire? name them as a pension beneficiary. Spousal entitlements may be modified by provincial property law in cases of divorce, annulment or separation. Please refer to the definition of spouse found in your pension booklet. If you do not have a spouse, then any pension benefits at time of death would be payable to your named Beneficiary or Estate. A: Spousal pension entitlements are determined at time of retirement depending on the form of pension you choose and your marital status. You will be required to complete a marital status declaration form at time of retirement. 34. What is an indexed pension? A: An indexed pension provides the retiree with a monthly income which is increased by some portion of the Consumer Price Index (CPI) to account for increases in the cost of living. The NPF pension plan does not have an automatic indexation provision, other than partial indexation applied to deferred pensions. Historically, indexing has been applied to NPF pensions on an ad hoc basis when the cost of doing so will not drive the plan into a deficit funding position. 35. Is there a possibility that the Employer will decide to change from our current Defined Benefit to a Defined Contribution plan? 36. Is a Defined Benefit pension plan better than a Defined Contribution plan? A: The Employer, as Plan Sponsor, has the right to continue, change or terminate the pension plan offered to employees. However, although it is possible for the employer to change the type of pension plan offered to employees, your Employer is currently not contemplating moving from the existing defined benefit plan to a defined contribution plan. A: There are risks to different parties in both plans. In a Defined Contribution pension plan, the employer s contributions are set at a specific level and not determined by the funding status of the plan s obligations. The employee s contributions are also fixed. The employee s pension benefit is determined by the amount of employee and employer contributions and investment returns accumulated up to the retirement date. The employee in a defined contribution plan typically has control over investment decisions; however, the plan sponsor retains a significant degree of responsibility over investment of plan assets, including the selection of investment options and administrative providers, and is responsible for ensuring employees understand their options. In short, contributions are fixed; benefits are subject to investment returns. In a Defined Benefit pension plan, the employee s pension benefit is determined by the benefit formula specified in the plan text. The employee s contributions 2 December 2013 Page 7

8 37. Will the changes to the Pension Text change anything for NPF retirees? 38. Can I contribute more than 4.5% of my earnings to the plan? 39. Why are my pension statements mailed to both me and my spouse? are set, although they are subject to change depending on the plan s funding policy. The employer is responsible for making required contributions, plus any special deficit payments to make up for funding shortfalls, based on regular assessments of the plan s funding status. Therefore, although the employee s contribution rate is subject to change, the employer is ultimately responsible for payment of the pension benefit promised by the defined benefit formula, and bears the overall funding risk in a defined benefit plan. A: The pension modernization changes should have no impact on existing retirees. However, some changes may impact former members who currently have a deferred pension with the NPF Pension Plan. A: An employee is required to contribute 4.5% of their pensionable earnings, up to the Quebec/Canada Pension Plan Yearly Maximum Pension Earnings (YMPE), and 6% of Pensionable Earnings that are in excess of the YMPE. An employee is not able to contribute more to the NPF pension plan; however, they can invest money in personal RRSPs and TFSAs up to the limits allowed by the Canada Revenue Agency. A: The Employer is legislatively required to do so under section 28.1 B) of the federal Pension Benefits Standards Act. 40. Can I be re-hired after I retire? A: It is possible to be rehired after a minimum of a 3 months break in service between re-employment. In this case, your monthly pension would continue to be paid and you would not be eligible to re-join the pension plan. Note: These questions have been prepared to help you better understand your Pension Plan. They do not create or confer any contractual or other rights. In the event of any variation between the information below and the official Pension Plan text, the latter will prevail. 2 December 2013 Page 8