The Provincial Judges and Masters in Chambers Registered and Unregistered Pension Plans. Members Handbook

Transcription

1 The Provincial Judges and Masters in Chambers Registered and Unregistered Pension Plans Members Handbook Revised September 2012

2 Using the Handbook This handbook provides a basic overview of the Provincial Judges and Masters in Chambers Registered and Unregistered Pension Plans. Words in bold are defined in the glossary on page 15. This handbook does not apply to part-time benefits. For information about part-time benefits, please contact the Office of the Chief Judge of the Provincial Court of Alberta. For a complete description of the Provincial Judges and Masters in Chambers (Registered) Pension Plan ( the Plan ) and the Provincial Judges and Masters in Chambers (Unregistered) Pension Plan ( Unregistered Plan ), please refer to: Provincial Courts Act, Revised Statutes of Alberta 2000, Chapter P-31; Court of Queen s Bench Act, Revised Statutes of Alberta 2000, Chapter C-31; Financial Administration Act, Revised Statutes of Alberta 2000, Chapter F-12; and Provincial Judges and Masters in Chambers Registered and Unregistered Pension Plans regulation, (AR 196/2001), as amended. This handbook provides general information only. Should anything in this handbook conflict with the governing legislation, the legislation shall apply. Inquiries can be directed to: Alberta Pensions Services Corporation (APS) 5103 Windermere Blvd. SW Edmonton, AB T6W 0S9 Phone: (toll-free in Canada) Fax: memberservices@apsc.ca This handbook is also available in PDF format at 2 J u d g e s M e m b e r s H a n d b o o k

3 Table of Contents INTRODUCTION...4 JOINING THE PLAN...5 CONTRIBUTIONS...5 Interest on Contributions... 5 PENSIONABLE SERVICE...6 Leaves of Absence... 6 RETIREMENT BENEFITS...7 Unreduced Pension... 7 Reduced Pension... 7 Your Pension Application... 7 The Pension Formula... 8 Maximum Benefit Accrual Date Cost-of-Living Adjustments PENSION CHOICES Normal Form Pension Partner Protection Optional Forms LEAVING THE PLAN BEFORE RETIREMENT DISABILITY BENEFITS DEATH BEFORE RETIREMENT REVIEW OF ADMINISTRATIVE DECISIONS GLOSSARY J u d g e s M e m b e r s H a n d b o o k

4 INTRODUCTION The Provincial Judges and Masters in Chambers Registered and Unregistered Pension Plans (in combination, referred to as the Judges Pension Plan or the Plan ) were established in 2001 with provisions retroactive to April 1, The Plan incorporates the pension recommendations arising from the 1998, 2000, 2006 and 2009 Judicial Compensation Commissions. The registered part of the Plan provides benefits up to the maximum allowed for registered pension plans under federal tax rules. The Plan s registration number under the Income Tax Act is The unregistered part of the Plan provides benefits in excess of those limits. The Plan replaced the Provincial Judges and Masters in Chambers Pension Plan which was established September 1, Prior to September 1988, judges and masters in chambers were contributing members of the Public Service Management Pension Plan. Actuarial valuations of the Plan are conducted at least every three years. The Plan is financed by contributions and investment earnings. The Government of Alberta guarantees payment of benefits under the Plan. The Provincial Judges and Masters in Chambers (Registered) Pension Plan Fund was established to fund the registered part of the Plan, and the Retirement Compensation Arrangement (RCA) Fund and Reserve Fund have been established to fund the unregistered part of the Plan. The President of Treasury Board and Minister of Finance (referred to as the Minister ) is the legal trustee for the Judges Plan, and the Ministry of Treasury Board and Finance ( the Ministry ) is responsible for management of the Judges Plan. On behalf of the Minister, Alberta Pensions Services Corporation (APS) is responsible for the Plan administration. Investment of the funds is managed by Alberta Investment Management Corporation (AIMCo). The Plan is audited annually by the Auditor General of Alberta. Established in 2002, the Judges Pension Plan Advisory Committee provides advice to the Minister on administration of the Plan. If you have questions about the information contained in this handbook, please contact the Plan s administrator, APS. 4 J u d g e s M e m b e r s H a n d b o o k

5 JOINING THE PLAN The Plan is a defined benefit pension plan, which means you will receive a pension based on your salary and years of pensionable service. All full-time, salaried provincial court judges and masters in chambers in Alberta are automatically enrolled in the Plan. Those members receiving benefits from the Long-Term Disability Income Continuance Plan remain members of the Plan and continue to accrue pensionable service. Supernumerary judges, part-time judges, ad hoc masters, half-time masters, and part-time masters in chambers are not eligible to participate in the Plan. CONTRIBUTIONS April 1, 1998 March 31, 2000: April 1, 2000 present: 9% of salary 7% of salary Your contributions are: tax deductible and made through payroll deduction; not made after attaining the maximum benefit accrual date ; and not payable while you are receiving benefits from the Long-Term Disability Income Continuance Plan, except in respect of salary earned under a rehabilitation employment program to return as a judge. Alberta Justice and Solicitor General pays the remaining cost of the Plan. Interest on Contributions Effective April 1, 1998, interest is applied to your contributions annually at the five-year personal fixed-term chartered bank deposit rates (CANSIM Series B14045). The amount of contributions does not affect the level of pension, but it could affect the amount of a payout received upon leaving the Plan prior to age J u d g e s M e m b e r s H a n d b o o k

6 PENSIONABLE SERVICE For years after March 31, 1998, pensionable service refers to the period of contributing to the Plan. It includes years in which you receive benefits from the Long-Term Disability Income Continuance Plan. Service which was pensionable under the pension plan in effect before April 1, 1998 also counts as pensionable service under this Plan. Pensionable service does not increase after you have attained your maximum benefit accrual date. See page 10 for more information. Leaves of Absence If you take a leave without salary or with partial salary, you can add that period of leave to your pensionable service. You must have complied with the terms of the leave and returned to active judicial service as a full-time salaried judge or master in chambers, or have received benefits from the Long-Term Disability Income Continuance Plan after returning from the leave. Regular member contributions are required for the first year of leave. Twice the amount of regular contributions is required for the second year of leave. You can have a maximum of two years of leave credited under the Plan during your tenure as a judge or master in chambers. Contact the Plan s Administrator, APS, for more information about making contributions while on leave without salary. 6 J u d g e s M e m b e r s H a n d b o o k

7 RETIREMENT BENEFITS You must cease active membership in the pension plan in order to commence your pension. If you decide to become a part-time judge, you will receive your pension benefit (as outlined below) on your retirement date. For further information on becoming a part-time judge, please contact the Office of the Chief Judge of the Provincial Court of Alberta. Unreduced Pension You can retire with an unreduced pension as early as age 60 if your age plus years of pensionable service totals at least 80. For example, if you are 60 with 20 years of pensionable service you are eligible to retire with an unreduced pension ( = 80). The same would apply to a 61-year-old with 19 years of pensionable service, a 62-year-old with 18 years of pensionable service and so on. Should you retire any time after the end of the calendar year in which you reach age 71, you will receive an unreduced pension. This applies even if you do not have five years of pensionable service to your credit. Reduced Pension You can retire with a reduced pension at age 55 if you have at least five years of pensionable service. Your pension will be reduced by three per cent for each year you fall short of having reached age 60, or where your age plus your years of pensionable service do not yet equal the number 80, whichever is greater. This reduction applies only to pensionable service after March 31, There is no reduction for pensionable service before March 31, Your Pension Application Your pension application should be submitted three months before your retirement date. Send it to Alberta Justice and Solicitor General, who will then forward it to the Plan s administrator, APS. 7 J u d g e s M e m b e r s H a n d b o o k

8 The Pension Formula The annual pension payable on your retirement (before any reduction for early retirement, if applicable) is equal to: [(2% x A) + (2.67% x B) + (3% x C)] X highest average salary (three-year average), where A = Your years of pensionable service before April 1, 1998, B = Your years of pensionable service from April 1, 1998 to March 31, 2000; and C = Your years of pensionable service after March 31, Example: Unreduced Pension A judge retires on April 1, 2012 at age 60 with 23 years of pensionable service: Three-year highest average salary ( ) $254,183 Years of pensionable service A Before April 1, B From April 1, 1998 to March 31, C After March 31, Years before member reaches age 60, or the difference between the number 80 and the member s age plus years of pensionable service; whichever is greater 0 Early retirement reduction None Annual pension in normal form $254,183 X 2% X 9.0 = 45, $254,183 X 2.67% X 2.0 = 13, $254,183 X 3% X 12.0 = 91, $150, J u d g e s M e m b e r s H a n d b o o k

9 Example: Reduced Pension A judge retires on April 1, 2012 at age 55 with 14 years of pensionable service. Three-year highest average salary ( ) $254,183 Years of pensionable service A Before April 1, 1998 * 0 B From April 1, 1998 to March 31, C After March 31, Years before member reaches age 60, or the difference between the number 80 and the member s age plus years of pensionable service; whichever is greater 11 Early retirement reduction (3% x 11) 33% *Per legislation, the reduction is not applicable to service earned before April 1, In the example, the period of service here represented by A (in this case, 0) is calculated separately at the full rate and then combined with B and C, which are both subject to the early retirement reduction rate. Annual pension in normal form $254,183 X 2% X 0 = 0* $254,183 X 2.67% X 2.0 = 13, $254,183 X 3% X 12.0 = 91, , $105, X 67% = 70, $70, J u d g e s M e m b e r s H a n d b o o k

10 Maximum Benefit Accrual Date Benefit accrual percentage is determined by the following formula: (2% x A) + (2.67% x B) + (3% x C), where: A = Your years of pensionable service before April 1, 1998, B = Your years of pensionable service from April 1, 1998 to March 31, 2000; and C = Your years of pensionable service after March 31, An individual s maximum benefit accrual date is achieved when the benefit accrual percentage equals 70 per cent. When this happens, you stop contributing and do not accrue further pensionable service. Example: Using the pensionable service periods from the example on the previous page: A Service before April 1, B From April 1, 1998 to March 31, C After March 31, % X 0 = 0% 2.67% X 2.0 = 5.34% 3% X 12.0 = 36% 41% This individual has not yet reached their maximum benefit accrual date. Cost-of-Living Adjustments After your pension payments begin, annual cost-of-living adjustments (60 per cent of the increase in Alberta s Consumer Price Index for those who terminated prior to March 31, 2009 and 100 per cent for those who terminated after March 31, 2009) will be applied to your pension. This increase will also be applied to a deferred pension for the years your contributions are left in the Plan. 10 J u d g e s M e m b e r s H a n d b o o k

11 PENSION CHOICES 1) Normal Form of Pension If you have a pension partner on your retirement date, a pension is paid to you for your lifetime. If you die before your pension partner, your pension partner will receive 75 per cent of the pension you received for life (pension partner normal form). If you do not have a pension partner on your retirement date, a pension is paid for your lifetime (normal form without a pension partner). Pension Partner Protection If you have a pension partner on your retirement date, you must select the pension partner normal form of pension, or a joint life pension with your pension partner as the nominee. See page 12 for a description of the optional forms of pension payment. This pension partner protection provision does not apply if: a) Your pension partner signs the designated waiver form within 90 days of the date your pension starts, or b) there is a Matrimonial Property Order (MPO) regarding your pension, or c) you are legally married but sign a statutory declaration at retirement stating: you have been separated from your legal spouse for at least three years; and your legal spouse is not financially dependent on you; and you are not aware of any MPO or similar order affecting your pension; and to your knowledge, your legal spouse will not be claiming an interest in your pension. 11 J u d g e s M e m b e r s H a n d b o o k

12 2) Optional Forms of Pension The pension formula under the Plan provides a pension payable in the normal form (see Normal Form of Pension section on previous page). However, several different forms of pension are available to suit your personal circumstances, and these optional forms are described below. (If you have a pension partner at retirement, see Pension Partner Protection section, also on previous page.) Optional forms of pension have the same actuarial value as the single normal form of pension. The monthly pension amount varies from option to option because of the different guarantees and death benefits available under these different options. A conversion to another form of pension is based on the single normal form if the pension partner protection provision does not apply to the pensioner. Otherwise, the conversion is based on the pension partner normal form. a) Joint Life Pensions A joint life pension is paid as long as either you or your nominee (usually your pension partner) continues to live. If you choose a joint life not-reduced pension, when you die your nominee will be paid the same amount you were paid for as long as he or she lives. If you choose a joint life reduced-by-one-third pension, the pension to the survivor will be reduced by one-third after your death or the death of your nominee. You can also select a five-year guaranteed term with a joint life pension. If both you and your nominee die before the term is over, your pension is paid to the beneficiary for the remainder of the five-year term. The monthly payment is determined by your age and the age of your nominee. A nominee must be a person allowed by the tax rules to receive survivor benefits after your death. Benefits are payable only for the eligible period allowed under the tax rules. The Plan s administrator, APS, can give you more information about who qualifies as your nominee and restrictions on payment. b) Guaranteed Term Pensions A guaranteed term pension is paid for your lifetime. If you die before the end of the guaranteed term of five, 10 or 15 years, the pension is paid to your beneficiary or estate for the remainder of the guaranteed term. 12 J u d g e s M e m b e r s H a n d b o o k

13 LEAVING THE PLAN BEFORE RETIREMENT If you cease active membership in the Plan with fewer than five years of pensionable service, you will receive a refund of your member contributions with interest. If you transfer your entitlement to a Registered Retirement Savings Plan, income tax will not be withheld. If you have at least five years of pensionable service and are not yet age 55, you are entitled to receive a deferred pension commencing at age 55 or later. DISABILITY BENEFITS If you are disabled and are not eligible for benefits from the Long-Term Disability Income Continuance Plan, you may be eligible for disability benefits from the Plan. DEATH BEFORE RETIREMENT If you have a pension partner and die before retirement, your pension partner is automatically your beneficiary. If you do not have a pension partner, benefits are paid to your beneficiary or estate. If you die with less than five years of pensionable service, your pension partner or other eligible beneficiary will receive an amount equal to your member contributions with interest. If you die with five or more years of pensionable service and have no surviving pension partner, your member contributions with interest are payable to your beneficiary. However, if you reached age 55, a benefit would be paid to your beneficiary or estate as if you had retired and chosen a guaranteed-term pension with a term of 10 years. If you die with five or more years of service and are survived by your pension partner, your pension partner will receive a pension for his or her lifetime equal to 75 per cent of the benefit you accrued up to your date of death. The early retirement reduction does not apply. 13 J u d g e s M e m b e r s H a n d b o o k

14 REVIEW OF ADMINISTRATIVE DECISIONS A person, aggrieved by a decision arising out of the administration of the Plan, may appeal that decision by serving the Minister with a notice of appeal within 30 days of being notified in writing of the decision appealed against. The notice of appeal must specify the decision appealed against and the grounds of appeal. Within 30 days of being served, a three-member appeal board will be appointed to hear the appeal. The appeal board may confirm, vary or vacate the decision. The appeal board, appointed by the Minister, consists of: one member nominated by the Minister of Justice and Solicitor General, one member nominated by the Alberta Provincial Judge s Association; and one member appointed on the joint nomination of the two members noted above. 14 J u d g e s M e m b e r s H a n d b o o k

15 GLOSSARY Beneficiary This is the person(s) you name to receive either a benefit if you die before retirement or the remainder of a guaranteed term should you die after retirement. If you do not name a beneficiary and you do not have a pension partner, your estate is your beneficiary. Highest Average Salary The average of the member s annual salaries in the three consecutive years of service over which his or her salaries were the highest, namely: a) his or her pensionable service; and b) any further service that would be pensionable but only for that occurring after the maximum benefit accrual date. Maximum Benefit Accrual Date The date a member attains a maximum benefit accrual percentage of 70 per cent. Nominee The person you name to receive your joint life pension if you die first during the period you are receiving retirement benefits. Under the tax rules, a nominee must be the member s spouse, former spouse or dependent child at the time of death*. * For this purpose, spouse is as defined in the Income Tax Act. 15 J u d g e s M e m b e r s H a n d b o o k

16 Pension Partner A pension partner is a person who, at the relevant time, is: someone to whom you are married and from whom you are not judicially or otherwise separated; or someone to whom you are married and from whom you are judicially or otherwise separated and who is wholly or substantially dependent on you; or if no such person exists, someone with whom you have been living in a conjugal relationship: a) for a continuous period of no less than three years and during that period, was held out in the community by you as being in that conjugal relationship; or b) of some permanence, if there is a child of the relationship by birth or adoption, and during that relationship, was held out in the community by you as being in that conjugal relationship; or if no such person exists, someone to whom you are married and from whom you are judicially or otherwise separated but who is not wholly or substantially dependent on you. Pensionable Service The years of service during which you contribute to the pension plan or for which you have received pension credits. Salary The applicable annual salary is set out under the Provincial Court Judges and Masters in Chambers Compensation regulation, (AR 176/98), as amended or any predecessor of that regulation. For members receiving long-term disability benefits or those who are on a leave without salary, it is the pay amount that was received during regular active full-time judicial service immediately before becoming disabled or having gone on the leave. Schedule 2, Section 8 of the Compensation regulation provides that judges or masters in chambers on Long-Term Disability Income Continuance Plan receive 70 per cent of the current monthly salary set under that regulation. 16 J u d g e s M e m b e r s H a n d b o o k