WILFRID LAURIER UNIVERSITY PENSION PLAN SUMMARY

Transcription

1 WILFRID LAURIER UNIVERSITY PENSION PLAN SUMMARY This summary of the (the Plan ) has been prepared to provide you with its principal benefit features in a clear, easy to understand manner. It is important to note that this booklet is designed to provide a summary of your Plan only and in no way should it be considered the official Plan document. The University has the right to change and amend benefits in the future. Should questions of interpretation arise, the provisions of the official Plan document will apply. The complete text of the Plan can be viewed on the University s website under Human Resources. Any questions about the Plan should be directed to the University s Human Resources Department. DESCRIPTION OF THE PLAN The Plan is a Money Purchase (also referred to as Defined Contribution) plan with a Minimum Guaranteed Pension level (also referred to as a Defined Benefit). This two-part or hybrid plan design provides you with a better benefit than a more traditional plan, because it enables you to reap the rewards of the plan s investment performance, while having the security of a minimum guaranteed benefit. Your Money Purchase plan is an individual savings account into which your contributions, together with the contributions made by the University during the period of your employment with the University, have been deposited. These funds are invested on your behalf and your account is credited with the interest income on an annual basis. This account is referred to in the Plan as your Money Purchase Account. PARTICIPATION IN THE PLAN Participation in the Plan is mandatory for all full-time employees, and you will become a member of the Plan on the 1 st day of the month coincident with or following your hire date. If you are under age 30, participation is optional; however, at age 30 you must join the Plan. With the exception of CUPE and Facilities Operations Group: Mandatory enrollment for all eligible full-time employees hired after July 1, 2014 (or July 1, 2015 for members of WLUFA and Contract Academic Staff). If you are a part-time employee (including Contract Academic Staff), you may join the Plan upon the completion of two consecutive calendar years of service during which: your earnings were at least equal to 35% of the Year s Maximum Pensionable Earnings (YMPE for 2016 is $54,900) under the Canada Pension Plan; OR you worked at least 700 hours. Effective August 1, 2015, the Plan is closed to UFCW employees who are hired on or after August 1, 2015 or who are not Plan members by October 1,

2 CONTRIBUTIONS Employee Contributions As a member of the Plan, you are required to contribute, by regular payroll deduction, 7.5% of your Earnings per year up to the YMPE and 9% above YMPE (YMPE for 2016 is $54,900). With the exception of CUPE and Facilities Operations Group: Effective January 1, 2015 (or July 1, 2015 for members of WLUFA and Contract Academic Staff): member contributions will rise to 8% (from 7.5%) for earnings below the YMPE and 9.5% (from 9%) for earning above the YMPE. Effective January 1, 2016: member contributions will be 8% for earning below the YMPE and will rise to 10% (from 9.5%) for earnings above the YMPE. Earnings for the purpose of the Plan is your salary rate excluding overtime, special supplements and stipends. University Contributions The University contributes 7% of your Earnings per year. These contributions are credited to your Money Purchase Account. In addition, the University is responsible for ensuring that there are sufficient assets to provide you with the Minimum Guarantee Pension. The University s contributions to the Minimum Guarantee Pension, as required, are determined in accordance with the advice of a qualified independent actuary in accordance with government laws and regulations. Contribution Limits The total of your contributions and the University s contributions are subject to the annual contribution limits outlined in the Income Tax Act (ITA). In 2016 this limit is $26,010 or 18% of earned income, whichever is less. Additional Voluntary Contributions Subject to ITA limits, you may make additional voluntary contributions to the Plan for the purpose of increasing your pension benefits on retirement. These contributions are credited to your Additional Voluntary Contribution Account. Voluntary contributions are not matched by the University. Portability from Previous Employer (Transfers) You may transfer the value of your pension plan benefit from a former employer and/or money in other registered retirement savings arrangements to the Plan. If funds are transferred from a former employer s registered pension plan, you may be allowed to receive pensionable service credits for the funds transferred into the Plan. Application for pensionable service credits must be made within 12 months of your commencement of full-time employment at the University. The number of years of pensionable service you may be credited with depends on a number of factors such as the time period being considered and the amount of funds being transferred into the Plan. 2

3 If funds are transferred from another registered retirement savings arrangement there is no option to receive pensionable service credits under the Plan. Please contact Human Resources for more information. RETIREMENT Normal Retirement The normal retirement date in the Plan is the first day of the month coincident with, or next following your 65th birthday. Deferred Retirement With the elimination of mandatory retirement, effective December 12, 2006, you have the option to continue active employment past the age of 65. However, as per ITA regulations, you must begin to collect your pension no later than the end of the calendar year in which you reach age 71. If you continue active employment past age 65, you may: stop making contributions to the Plan, stop accruing pensionable service and choose to start receiving your pension; OR continue to make contributions to the Plan and, by so doing, receive University contributions and additional pensionable service for the period worked. Early Retirement You may retire on the first day of any month following the attainment of age 55. Options at Retirement A member may elect to: A B receive a monthly retirement pension from the pension fund OR have the value of the retirement pension transferred, on a locked-in basis, to: I. a prescribed registered retirement savings arrangement, or II. another registered pension plan (if that plan allows transfers in), or III. purchase a life annuity from an insurance company licensed in Canada. PENSION BENEFITS At Normal Retirement Pension benefits commence on the first of the month following retirement and are paid in monthly instalments. Under the normal form of pension, benefits are paid as long as you live, but are guaranteed for a minimum of 60 monthly payments from the date of retirement, in amounts equal to the greater of (a) or (b), as follows: 3

4 (a) (b) Money Purchase Pension (variable) This pension is calculated from the total balance in your Money Purchase Account at the time of retirement, based on annuity factors determined based on interest rates linked to the long-term Canada Bond rates. Minimum Guarantee Pension (defined) The amount of the Minimum Guarantee Pension benefit is calculated using the following formula: For example: 1.37% of the average of your best five years earnings up to the average Year s Maximum Pensionable Earnings (YMPE) under the Canada Pension Plan, plus 2% of the excess of the average of your best five years earnings over the average Year s Maximum Pensionable Earnings (YMPE), Multiplied by years of pensionable service. NOTE: This benefit amount cannot exceed the current ITA maximum ($2, for 2016) per year multiplied by the years of pensionable service. Normal retirement date = January 1, 2016 Average best five years earnings = $90,000 Average YMPE = $51,100 Years of pensionable service = 20 years Total balance in Money Purchase Account = $450,000 Money Purchase Pension Annual Pension based on the total balance in your Money Purchase Account / annuity factor* Minimum Guarantee Pension Annual Pension based on Minimum Guarantee Pension formula = $30,971 per year = $29,561 per year * determined based on interest rates linked to the long-term Canada Bond rates. Annual Pension is $30,971 per year (the greater of the Money Purchase Pension and the Minimum Guaranteed Pension) 4

5 Pension from any Additional Voluntary Contributions In addition to the above benefit, you would receive a pension benefit calculated from the total balance in your Additional Voluntary Contributions Account, if any, based on annuity factors determined based on interest rates linked to long-term Canada Bond rates. At Early Retirement Pension benefits at early retirement are calculated in the same manner as at normal retirement. However, the Minimum Guarantee Pension benefit will be based on service and earnings at the early retirement date and is reduced to reflect the fact that you are retiring early and will be receiving this income over a longer period of time. The plan reduced the minimum guarantee pension benefit as follows: For any service accrued prior to January 1, 2013 the minimum guarantee pension benefit is reduced by 1.5% per year for those who retire after age 60 and by 2.5% per year for those who retire between ages For any service accrued on and after January 1, 2013, the minimum guarantee pension benefit is reduced by 3% per year if retirement is between ages 60 and 65, and an additional reduction of 5% per year for each year between ages Employees who elect early retirement and have service accrued before and after January 1, 2013 will receive a blended reduction rate. For example: Early retirement date = January 1, 2016 Age at early retirement date= 60 Average best five years earnings = $85,000 Average YMPE = $51,100 Years of pensionable service = 20 years Total balance in Money Purchase Account = $450,000 Money Purchase Pension Annual Pension based on the total balance in your Money Purchase Account / annuity factor* = $27,246 per year * determined based on interest rates linked to the long-term Canada Bond rates. Minimum Guarantee Pension Annual Pension based on Minimum Guarantee Pension formula $29,561 per year Total Reduction of 8.63% (1.5% per year prior to January 1, 2013 and 3% per year after January 1, 2013, multiplied by 5 years before age 65) = $27,011 per year The Annual Pension is $27,246 per year (the greater of the Money Purchase Pension and the Minimum Guarantee Pension) 5

6 ANNUAL PENSION INDEXING Pension benefit amounts are adjusted each January 1st following your date of retirement. Both the Money Purchase Pension and any pension benefit calculated from your Additional Voluntary Account are adjusted, either positively or negatively, based on the average rate of interest earned by the Plan fund during the most recent four year period, less the Money Purchase conversion interest rate used to calculate the initial pension benefit. Effective January 1, 2005 the post-retirement indexing average formula includes the fund earnings rates only for years after retirement. The Minimum Guarantee Pension is adjusted based on the increase in the Consumer Price Index for the previous year, or 4% whichever is less. Effective January 1, 2013, the Minimum Guaranteed Pension Benefit will be adjusted annually by an amount equal to 50 per cent of the increase in the Consumer Price Index (CPI) for the previous year, to a maximum adjustment of 4 per cent. Since the change applies only to service accrued from January 1, 2013 forward, employees who retire with service accrued before this date will receive a blended adjustment rate. NORMAL AND OPTIONAL FORMS OF PENSION BENEFITS The normal form of pension benefit provided under the Plan is one which continues for your remaining lifetime, but is guaranteed for a minimum of 60 monthly payments following your date of retirement. However, if you have a spouse on the date that the first pension benefit instalment is payable, the pension benefit form will be a joint and survivor pension. The joint and survivor pension will have a reduced monthly benefit during your remaining lifetime, with at least 60% of the reduced amount being continued to your surviving spouse after your death, and for the duration of your spouse s remaining lifetime. The joint and survivor pension form may be waived only by notice, in writing, signed by both you and your spouse, within the twelve-month period prior to retirement. In addition to the normal form of pension there are several alternative forms of pension payments available. You may choose one of these other forms: Life: an increased monthly pension benefit which is payable for your remaining lifetime only. Life, Guaranteed 10 years: a reduced monthly pension benefit which is payable for your remaining lifetime, but is guaranteed for a minimum of 120 months following date of retirement, in any event. Life, Guaranteed 15 years: a reduced monthly pension benefit which is payable for your remaining lifetime, but is guaranteed for a minimum of 180 months following date of retirement, in any event. 6

7 Joint and Survivor: a reduced monthly pension benefit, payable for your remaining lifetime with at least 60%, but not more than 100% of the reduced amount, being continued after your death, during the lifetime of your surviving spouse. Joint and Survivor with Guarantee Period: a reduced monthly pension benefit, payable for your remaining lifetime with at least 60%, but not more than 100% of the reduced amount, being continued after your death, during the lifetime of your surviving spouse; but guaranteed for a period of 60, 120, or 180 months following date of retirement, in any event. Note: Written notice of your option choice must be received by the University s Human Resources Department prior to your actual retirement date. Once you select your option it cannot be changed after you have retired. TERMINATION OF EMPLOYMENT If you terminate employment prior to retirement you may: 1. Leave your contributions in the Plan fund. The balance of your Money Purchase Account will continue to accumulate fund investment earnings to provide you with a pension at your normal retirement date. The Minimum Guarantee Pension calculation will also continue to apply. 2. Transfer the full amount in your Money Purchase Account, plus the value, if any, of the Minimum Guaranteed Pension that is in excess of your Money Purchase Account accumulated contributions, to: A prescribed registered retirement savings arrangement, or Another registered pension plan (if that plan allows such transfers in),or A life insurance company to purchase a deferred annuity This transfer would be on a locked-in basis, which means it could only be used to provide an income for your life. In some circumstances you may be eligible for a cash refund of part of your value. Please note, if your pension payable at your normal retirement date is less than 4% of the Year s Maximum Pensionable Earnings (YMPE) in the year of termination of employment, or the commuted value is less than 20% of the YMPE in the year termination of employment, you will not be eligible for option #1 above. Your options would be to transfer on a non-locked-in basis, the full amount in your Money Purchase Account, plus the value, if any, of the Minimum Guaranteed Pension that is in excess of your Money Purchase Account accumulated contributions, or receive a lump sum cash payment, less applicable tax. Any Additional Voluntary Contributions can be withdrawn in cash, transferred to another plan or left in the Plan Fund, however, any special transferred contributions which were subject to "locking-in" will remain subject to that condition. 7

8 DEATH BENEFIT If you die before retirement, your beneficiary will receive a lump sum equal to the full amount in your Money Purchase Account and your Additional Voluntary Contribution Account plus the value, if any, of the Minimum Guarantee Pension for the period after December 31, 1986 that exceeds the balance in your Money Purchase Account. Beneficiary Information If at the relevant time, you have a qualifying spouse as defined by the Plan in accordance with applicable pension legislation, your spouse will automatically receive any death benefit payable under the pension plan in priority over any designated beneficiary, for any contributions made, and benefit earned, since January 1, Note: It is your responsibility to keep the University s Human Resources Department informed of changes to your marital status and beneficiary designation. For the purpose of the Plan, spouse means: the person who is married to you and is not living separate and apart from you, OR the person you are living with for not less than one (1) year, or in a relationship of some permanence if together you are the parents of a child. COMMON QUESTIONS AND ANSWERS Q: Who administers the Plan? A: Wilfrid Laurier University is the Plan Administrator. Wilfrid Laurier University retains AON Hewitt to assist in administering the Plan. Q. Who is the Plan Actuary? A. AON Hewitt is the Plan Actuary. Q. Who manages the Plan s investments? A: All contributions made to the Plan are paid into the Plan s fund. The investment manager for the Plan fund is Proteus Performance. The custodian of the assets in the Plan fund is CIBC Mellon. Q. Who audits the Plan s fund? A. The Plan Auditor is KPMG. 8

9 Q: What happens to my pension if I go on leave? A: Depending on the type of leave you are taking, you may still have your period of service during the leave counted as pensionable service. For example, if you are on a maternity or parental leave of absence and you have elected to make your contributions while on leave, you will continue to receive pensionable service and the University contributions up to the legislated limits. You should discuss what your contribution options are and what will happen to your pensionable service with the Human Resources Department before taking your leave. Q. What happens if I become disabled? If you are disabled (as defined by the Plan) and receiving salary continuance benefits under an insured plan contributed to or sponsored by the University you will not be required to contribute during such period of absence. Your required contributions plus the University contributions will be made by the University based on your Earnings at the time of disability. You will also continue to receive pensionable service. Q: What happens to my pension if my marriage or common-law relationship ends? A: Under provincial property law, pension benefits may be considered part of the family assets. If your marriage or common-law relationship ends, you and your former spouse may choose to divide your pension benefit entitlements as part of the settlement, if permitted by provincial property law. The amount to be divided is determined by the applicable provincial legislation and any court order or domestic contract entered into. If you have a court order or domestic contract, it is your responsibility to notify the University promptly. Q: Can I still have an RRSP, even though I am in the Plan? A: Yes! Planning for a financially secure retirement demands a number of personal and group retirement savings vehicles, including your Wilfrid Laurier University Pension Plan and personal RRSPs. You should be aware, however, that since changes to the ITA in 1990, the benefits you earn in your registered pension plan reduce the amount that you can deposit to an RRSP on a tax-sheltered basis. This reduction is based on the calculation of a Pension Adjustment (PA) that the University reports on your T4 slip each year. You will receive a notice each year from Canada Revenue Agency advising you of your RRSP contribution room for the next year. See your Human Resources Department or a trusted financial advisor, for more information. 9

10 Also, when you terminate from the, a Pension Adjustment Reversal (PAR) might be reported on your behalf. A PAR restores RRSP room in the event that the sum of the PAs reported on your behalf exceeds the value of the pension benefit paid to you or transferred on your behalf, which is in respect of service on or after January 1, Q: Can I borrow against my Plan? A: The Plan has been established only to provide you with a pension at retirement. You cannot assign your rights to it as collateral for a loan. On the other hand, it is important to note that your pension plan benefits are exempt from the claims of creditors, to the maximum extent provided by law. Q: Will I receive a pension from the government? A: In addition to your Plan, you may be eligible for Old Age Security and Canada Pension Plan benefits at retirement. The Plan is registered with the Canada Revenue Agency and the Financial Services Commission of Ontario under Registration Number