Retirement Eligibility and Options for General Members

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1 Municipal Employees Pension Plan MEPP In-Depth Introduction This bulletin provides information about your options at retirement. When you retire, you can: receive a pension from the Municipal Employees Pension Plan (MEPP); or transfer the value of your pension out of the Plan. Your Plan The Municipal Employees Pension Plan (MEPP) is a defined benefit pension plan administered by the Public Employees Benefits Agency (PEBA) with over 20,000 members and pensioners and 700 participating employers. MEPP is a healthy and well-managed plan, with a long history of exceptional financial health. Defined benefit plans provide a pension benefit based on a formula. MEPP s pension formula uses your highest average salary (HAS), your pensionable service and the accrual rate in effect during your years of service. MEPP was designed to provide pension benefits to members who leave the work force for retirement. The Plan also provides benefits in the event of death, disability and termination of employment. If you have a spouse when you retire, your spouse is your joint pensioner. S/he will be able to continue collecting a portion of your monthly pension after your death. Eligibility Retirement Dates You are eligible to retire and receive a pension with no reduction if: your age plus your eligibility service equals at least 80; or you reach 65 years of age. January 2011

2 You are eligible to retire and receive a reduced pension if you: reach 55 years of age; and have at least 15 years of eligibility service. Working Past Age 65 Age 65 is MEPP s normal retirement age. If you work past age 65, you must: contribute to the Plan while you are working; and start receiving your pension by the end of the calendar year in which you turn 71 years of age. Retirement Options When you retire you must choose between receiving a pension from MEPP or transferring the value of your MEPP pension out of the Plan. Small Pensions MEPP will not pay pensions that are below a minimum amount. If your pension is less than this minimum, you can receive the value of the pension as a taxable payment less tax or transfer it to an RRSP. MEPP will inform you in writing if your pension is below the minimum payable amount. Receiving a Pension from MEPP You may receive pension payments from MEPP. A pension from MEPP has two parts: a lifetime pension payable for your lifetime; and a bridge benefit payable to age 65. See MEPP In-Depth... on Pension Calculations for information about calculating your lifetime pension, bridge benefit and early retirement reduction. Lifetime Pension Your lifetime pension is the retirement benefit paid for your lifetime. MEPP calculates this benefit using a formula based on your highest average salary (HAS), your pensionable service and the accrual rates in effect during your years of service. Bridge Benefit If you retire before age 65 you will receive a bridge benefit in addition to your lifetime pension. The last payment of the bridge benefit is made the month you turn age 65. Starting Your Pension Contact PEBA and request a pension estimate at least six months before the date you want to retire. This will give you time to make informed decisions about your retirement. PEBA will provide you with a written estimate that explains your pension options. You will also receive an Application for Pension Benefits and a Retirement Declaration. If you wish to receive your pension payments from MEPP, you must decide which pension option you want, then return the completed pension application and any required documentation. You can request a pension estimate by telephoning PEBA, or sending a request by FAX or . See page 6 for contact information. Applying for Your Pension PEBA requires from six weeks to two months notice to start paying your pension. The earlier you contact PEBA, the more time you will have to consider your retirement options. Page 2 of 6

3 You may submit your pension application several months before the date you plan to retire. PEBA will start your pension on your retirement date. When you apply for pension you must: complete and submit an Application for Pension Benefits form; submit a Retirement Declaration signed by you and your employer; complete and submit federal and provincial TD1 forms; review your beneficiary designation and update it if required using a Designation of Beneficiary form; and provide PEBA with any additional information/documentation requested. The forms required for your pension application are available on the PEBA website at gov.sk.ca. To reach the MEPP home page, click on the MEPP tab once you are on the PEBA website. Forms are also available by contacting PEBA. See page 6 for contact information. You must apply for pension and PEBA must receive your application and any required documents before the first day of the month in which you wish to retire. The earlier you contact PEBA, the more time you will have to consider your retirement options. Your Pension Payments Payment of Your Pension You will receive your pension payments by direct deposit on the 25 th of each month. If the 25 th falls on a weekend or statutory holiday, pension benefits will be payable on the preceding business day. If there is a delay in receiving your final information at PEBA, your first payment might be several days after the 25 th. Pension Benefits are Taxable Income tax is withheld from regular pension payments and remitted to Canada Revenue Agency (CRA) on your behalf. Transferring the Value of Your Pension Out of the Plan If you terminate and you are eligible to retire, you may transfer the value of your pension out of the Plan. The value of your pension is called the commuted value (CV). The CV is the amount of money required, on the date of transfer, to pay your earned pension benefits. You may transfer the CV of your pension to a Locked-in Retirement Account (LIRA) or to a prescribed Registered Retirement Income Fund (prescribed RRIF). After you transfer the value of your pension out, you cannot transfer money back into the Plan. Your Transfer Options Maximum Transfer Amount The Income Tax Act (Canada) sets a maximum amount that you can move from a pension plan to a LIRA or prescribed RRIF. This is called the maximum transfer amount. The amount of the CV that is greater than the maximum transfer amount is taxable. If you transfer the maximum transfer amount from the Plan, you can receive the taxable amount as either: a single taxable payment; or an immediate temporary pension from MEPP. Page 3 of 6

4 Single Taxable Payment PEBA must withhold tax on any taxable payments made to you. CRA requires income tax be withheld on taxable payments at the following rates: Amount of Payment Tax Rate Up to and including $5,000 10% $5,001 to $15,000 20% Over $15,000 30% Please Note: The amount withheld is based on the amount of the payment - not on your total income. You could still have more tax to pay when you file your annual income tax return. Temporary Pension You may choose to receive the taxable amount in temporary monthly payments instead of receiving the full amount in one payment, if: you are eligible to retire; and less than 65 years of age. Your temporary pension would be the amount of your lifetime pension plus the bridge benefit. This is the amount that you would have been eligible to receive if you retired on the date the transfer was made. A temporary pension: starts immediately when you remove the maximum transfer amount from the Plan; cannot be paid beyond the end of the month in which you turn age 65; and is calculated based on the full taxable amount. The number of payments depends on the total taxable amount and the length of time until you turn 65. If the taxable amount is higher than the cost of the number of payments until you reach age 65, you will receive: temporary pension payments until you reach age 65; and the balance as an immediate taxable payment. If the taxable amount is lower than the cost of the number of payments until you reach age 65, your temporary pension payments will end before you reach age 65 years of age. When you transfer your CV from the Plan, PEBA determines whether the CV exceeds the maximum transfer amount. If you have CV over the maximum transfer amount, PEBA calculates the number of payments this taxable amount will purchase. Requesting a Transfer If you apply to transfer the CV of your pension out of the Plan you must: submit a Retirement Declaration signed by you and your employer; complete and submit a federal T2151 form; provide PEBA with a completed spousal waiver if required*; and provide PEBA with any additional information/documentation requested. * If you have a spouse, you cannot move the value of your pension to a prescribed RRIF unless your spouse completes a Spousal Waiver of Retirement Benefits. For more information about this waiver, see MEPP In-Depth... Spousal Waiver of Benefits at Retirement. Page 4 of 6

5 The forms required with your request to transfer are available on the PEBA website at gov.sk.ca. To reach the MEPP home page, click on the MEPP tab once you are on the PEBA website. Forms are also availble by contacting PEBA. See page 6 for contact information. Other Retirement Income We encourage you to seek independent financial advice about the role of the Plan in your personal financial situation. Your benefit from MEPP is only one source of retirement income. Other sources could include: Federal retirement income programs; Canada Pension Plan (CPP); Old Age Security (OAS); and Personal savings. Call or (TTY) or visit for information about federal programs. The Meaning of Retirement You have retired and are eligible to receive a pension or a lump-sum payout of the value of your pension when you: are eligible to retire; have terminated employment with a MEPP employer and have no intention of returning to work with a MEPP employer in any significant capacity; and have not committed to or discussed returning to work for your employer after retirement. See MEPP In-Depth... Employment After Retirement for more information. This bulletin is available on the PEBA website at gov.sk.ca. To reach the MEPP home page, click on the MEPP tab once you are on the PEBA website. Glossary Accrual Rate - The percentage of your highest average salary that you receive for each year of pensionable service. It is used to calculate your pension allowance. Defined Benefit Pension Plan - A pension plan that provides a benefit based on a formula. Designated Beneficiary - Any individual or entity, other than your spouse, named by you to receive your death benefit if you die. Highest Average Salary - The average of your highest three years of salary while contributing to the Plan. Pension - Regular monthly payments from a pension plan to a person who has retired. Pensionable Service - Service used in a pension calculation to determine a member s pension benefit. Spousal Waiver of Retirement Benefits - A waiver that permits your spouse to waive his or her right to a joint pension. Your spouse must seek independent legal advice to complete this form. At the time you retire there can be no arrangement in place for continued employment that would otherwise require you to contribute to the Plan. Page 5 of 4

6 MEPP Administration The Municipal Employees Pension Commission is responsible for the Plan s administration, communication and investment activities. The mission of the Commission is: To oversee and direct the administration of the Plan and manage the assets in the best interests of the members. As trustee of the Municipal Employees Pension Fund, the Commission is responsible for safeguarding and investing the Fund monies. PEBA conducts day-to-day administration of the Plan under contract with the Commission. The contract with PEBA sets service standards for the tasks PEBA performs for the Commission. You may telephone, send a fax or and request copies of published materials from PEBA at: The Municipal Employees Pension Plan Public Employees Benefits Agency Hamilton Street REGINA SK S4P 4W3 Phone: (306) (in Regina) Toll-free: Fax: (306) mepp@peba.gov.sk.ca The information in this bulletin does not replace or supersede The Municipal Employees Pension Act or The Pension Benefits Act, 1992 or related regulations. In the case of error or discrepancy, the terms of the Acts and regulations apply. MEPP is registered with Canada Revenue Agency under the Income Tax Act (Canada) and governed by these federal and provincial acts and their related regulations: The Income Tax Act (Canada); The Pension Benefits Act, 1992; and The Municipal Employees Pension Act. For More Information Plan information is available from a number of sources including: MEPP In-Depth bulletins; MEPP Matters, the Plan newsletter; MEPP Member Booklets; member presentations; and the Municipal Employees Pension Commission Annual Report. These published materials are available from the PEBA website at To reach the MEPP home page, click on the MEPP tab once you are on the PEBA website. Page 6 of 6