Increase your service with a transfer

Transcription

1 Increase your service with a transfer Transferring pension service

2 A valuable option Did you work for an employer with a Canadian registered pension plan before working in the college system? If so, you may be able to transfer your previously earned pension into the CAAT Plan, enabling you to retire sooner on a larger pension. Is this booklet for you? If you ve ever worked for a non-caat employer that had a registered pension plan, you might be able to transfer the value into the CAAT Plan. If you have a break in service, or previously worked for a collegerelated employer, please refer to the Service Purchase pamphlet Getting more out of your pension.

3 Making a valuable benefit even more valuable Your defined benefit pension from the CAAT Plan is the cornerstone of your retirement income. It will provide you with a lifetime of monthly pension payments after you retire. When you start working in the Ontario college system, you have many opportunities. Deciding what to do with any pension you earned at a previous employer is one of those opportunities. One valuable option is to transfer your pension credits from your previous employer s pension plan to the CAAT Pension Plan. This ability to transfer your pension between employers known as portability allows you to build a larger pension, paid from a single source at retirement, and could even help you to retire earlier on an unreduced pension. Service transfers can be an important tool for enhancing your pension benefit. You should explore every opportunity you have to make the most of your pension. Members of the CAAT Plan can transfer in service from any Canadian registered pension plan including Defined Contribution plans. CAAT Pension Plan P3

4 Your transfer will help build your pension Your transfer will give you additional pensionable service in the CAAT Plan, which will be included in your pension calculation when you retire. The more service you have in the Plan, the higher your pension will be. Transferring in service from your previous employer s pension plan could also put you closer to the Plan s unreduced early retirement milestones. These milestones are based on a combination of age and service: you are eligible for an early unreduced pension when your age + service = 85, or when you are at least 60 years old with at least 20 years of service. The additional service could help you meet these milestones sooner. If you to retire with a reduced pension, the additional service from a transfer could help lessen the rate that your pension is reduced. Even if you ve been a Plan member for years, you may still be able to transfer pension service from a previous employer into the CAAT Plan to consolidate your retirement income into one source, rather than multiple sources. P4 Transferring Pension Service

5 Pensionable service Your pensionable service is the number of months you are a member of the CAAT Plan, including any transferred in service and service purchases. Pensionable service is used in the Plan s pension formula the more pensionable service you have in the Plan, the higher your pension will be. CAAT Pension Plan P5

6 What service can you transfer? Whatever pensionable service you accumulated in Canada, you ll be able to make a transfer into the CAAT Plan. Transferring into the CAAT Plan from a previous employer Any previously pensionable service with an employer offering a Canadian registered pension plan qualifies. If you join the CAAT Plan after working for such an employer, you can transfer your pension credits from that employer into the CAAT Plan. Transferring out of the CAAT Plan to a non-college-related employer If you are leaving the college system to start a job with another employer that has a Canadian registered pension plan, it may be possible for you to transfer your CAAT Plan pension credits to the new plan, if that plan permits. Moving from one college employer to another Called an intergroup transfer, this seamless change allows you to retain your membership in the Plan and continue building your pension without interruption. P6 Transferring Pension Service

7 $ Did you know? Every pension plan has different benefits and provisions, and it is possible that you will need to make an additional payment to have service in the CAAT Plan equivalent to your service in your previous plan. In this case, you will have the choice of buying the additional service. When you transfer in service, you can t end up with more pensionable service in the CAAT Plan than you had in the previous plan. CAAT Pension Plan P7

8 How is service transferred? In the CAAT Pension Plan, all transfers are completed under the Pension Benefits Act (PBA transfer). These PBA transfers do not have time limits you can initiate a transfer at any time. As of October 1, 2013, the Plan will no longer maintain reciprocal transfer agreements. If you wish to complete a transfer under one of the following transfer agreements you must initiate it before October 1, 2013: Major Ontario Pension Plans (MOPPs), Government of Canada, Pension Plan for the employees of OPSEU, Province of Quebec (CARRA). P8 Transferring Pension Service

9 Tax Rules Your transfer will be subject to the limits imposed by the Income Tax Act (ITA). The ITA only permits the transfer of pre-1992 service with another Canadian registered pension plan if the funds in respect of that service are still in the previous plan. If you have already transferred the funds for pre-1992 service to a Locked-in Retirement Account (LIRA), it will not be eligible for purchase. The transfer of post-1991 service is permitted regardless of whether it s been transferred to a LIRA or is still in the previous pension plan. The rules surrounding transfers and the tax implications can be complicated. If you require additional tax-related details please contact a financial advisor or Canada Revenue Agency directly. CAAT Pension Plan P9

10 How to get started If you ve just been hired, be sure to let your new employer know if you have service to transfer. They ll help you get the transfer process started. If you worked for an employer with a Canadian registered pension plan other than the plans listed on page 8, you can also use our online ACE tool the Actuarial Cost Estimator - to get an estimate of the cost of your transfer. If you want to proceed, the ACE tool also gives you access to the form you ll need to get the required data from your previous employer. Don t delay! The cost of a service transfer is based on factors such as your age and earnings at the time you make your request. The cost may increase the longer you wait. Transfers can take some time to complete up to a year in some cases. It s wise to discuss any possible scenarios with your Human Resources department at the first opportunity, so the process can get under way. Once a transfer has been completed and any required funds have been paid, service from your transfer will appear on your Annual Statement in the following year. P10 Transferring Pension Service

11 Maximize your benefit Planning for your retirement should be an important part of your working life. Being a member of the CAAT Plan helps make that planning easier, by ensuring you have a solid foundation on which to build your retirement income. Visit our website at click on Members, then Actuarial Cost Estimator to use the ACE Tool. We suggest you seek independent financial advice, particularly around the tax implications of any transfer.

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