Making the Best Choice for Your Future Survivor Pension Options

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1 Making the Best Choice for Your Future Survivor Pension Options How does the death of my pension partner affect my pension benefits? What options do I have? And what action must I take next in order to receive my benefits from the Local Authorities Pension Plan (LAPP)? These are likely some of the difficult questions you are asking yourself during what can be a stressful time. Perhaps you do not want to concern yourself with financial planning right now. But within the next 90 days you should set time aside to make your benefit choice. This information sheet will help you answer some of the pension questions you ll face in coming weeks. Take time to read the information with care. By all means contact your pension plan s employer or LAPP s pension administrator, Alberta Pensions Services Corporation (APS) at LAPP (5277) if you would like pension counselling. You cannot change your benefit choice once it has been selected and payment has been made. What are my benefit options? There are two ways in which you can receive your payment: 1 a one-time lump-sum payment, or 2 a monthly pension. 1. One-time payment You will receive the commuted value* of the benefit your pension partner earned. This amount must be placed in a Locked-In Retirement Account (LIRA). A LIRA is a special type of RRSP designed to hold locked-in pension funds. As the pension partner of a deceased member, you may convert your LIRA account into a lifetime pension benefit and begin to receive payments at any time. * Commuted value is the amount of money that must be invested today to pay for the benefit that would have been paid to your pension partner at a later date In any case, you must begin to receive payments from your LIRA before the end of the year in which you turn 71. For more information on LIRAs, see the Transfer of Pension Funds to a LIRA Information Sheet, enclosed. As well, contact your bank or trust company for further information. Income tax is not withheld on pension funds transferred to a LIRA. When you choose a one-time payment, you receive no other benefits from the pension plan. 2. Monthly Pension Options There are a number of options for you to choose from when you select a monthly pension. All options are paid for your lifetime but offer different types of death benefits payable to your beneficiary on your death. If you choose an option that provides a longer guarantee period, your monthly pension will be lower. Small pension payout If you qualify, your personalized information will show an amount as the Small Pension Payout. You only qualify if the amount of pension payable to you is lower than an amount established annually under LAPP rules. The Small Pension Payout is the value of the pension paid as a single payment. It can be paid directly to you by cheque (income tax will be withheld), or transferred to your non-locked in RRSP (income tax will not be withheld). If you choose the Small Pension Payout, you no longer have the right to receive a lifetime pension. Single Life Pension A single life pension is paid for your lifetime and stops at the time of your death. No payments will be made to a beneficiary or your estate after your death. 808LA/1 February 2010

2 Guaranteed Term Pensions A guaranteed term pension is one that is paid for your lifetime. If you die before the guaranteed period of time has expired, the pension will be paid to your beneficiary or estate until the guaranteed term ends. You can choose a five, ten or 15 year guaranteed term pension. The longer a guaranteed period, the lower your monthly pension payment. The difference between the amounts paid under each option is due to the difference in the length of the payment guarantee. Coordinating your pension with OAS If you are under 65, your pension option package may show additional options as coordination elections. Basically, the coordination election is a way for you to increase the amount of your pension before you are 65, but the pension will be decreased after age 65. The increase is based on the full amount of Old Age Security (OAS) payments available at age 65 from the federal government. If you select one of the Joint Life or Guaranteed Term Options, the coordination of your pension will stop when you die. Before age 65: If you die before you are 65, the pension will revert to the pension choice you originally selected, without any increase for coordination. After age 65: If you die after age 65, the pension reduction that began when you turned 65 will end. The pension will revert to the pension choice you originally selected, without any increase for coordination. If you qualify for the coordination election, your pension choice package will include an information sheet called Coordinating your Pension. Please read this information very carefully before you decide to coordinate your pension. Note: The reduction to the pension will continue for as long as the pension is paid to you, regardless of how many years you were paid at the increased rate. Some people find it difficult to adjust to the reduced pension after they turn 65. The pension choice form When you ve reviewed all the options and made a decision, it s time to complete the Pension Partner s Choice form, attached. Please make a copy of the completed form for your records, and return the original, along with any requested documentation to your pension partner s employer. The employer will coordinate the flow of documents to APS. Return your completed pension choice form to APS by the due date shown on the Beneficiary Options Package. Here are some guidelines for filling out the Pension Partner s Choice form: Part A Print your social insurance number, reference number, and name. Part B Based on your choice, put an X in either the monthly pension payment box or the one-time payment box. When you select the one-time payment you need to complete the Transfer Pension Partner s Benefit to a Locked-In Retirement Account (LIRA) form, enclosed. Part C Do you want to coordinate your LAPP with your Old Age Security payments? If so, mark an X in the appropriate box in this section. Remember, you must be under age 65 to be eligible for pension coordination. Also remember that the payment will be lower after 65 than before 65, and the lower pension will be paid for the rest of your life. Part D If you select a guaranteed term pension, you will need to name a beneficiary. You can name as many beneficiaries as you like. If no beneficiary is named, the pension will automatically go to your estate following your death. Part E Complete this section to show where your pension payments are to be deposited. Your financial institution can provide the bank number and bank transit number. If the payments are going into your chequing account, attach a blank cheque to the form and print the word void across it. Part F Now sign and date the form. 808LA/2 February 2010

3 Method of payment If you live in Canada, the pension payments are deposited into your account with your financial institution. Direct deposit works just like it sounds: your monthly pension payment is deposited directly into your account with a financial institution in Canada. Most chartered banks, trust companies, credit unions and Alberta Treasury Branches offer direct deposit as one of their services. You should make sure that your financial institution can receive the payment. You will be sent an opening statement containing information usually found on a cheque stub. If there is a change in the amount of your payment, or in your banking arrangements, you will be sent a statement showing the change. If you do not live in Canada, your cheque will be mailed each month. The cheque can be delayed during postal disruptions or if you do not give APS your new address as soon as it changes. Your tax status The receipt of a monthly pension benefit may affect your personal income tax situation. Fill out the enclosed TD1 Personal Tax Credit Return form. Address Changes If you move, let us know your new address. This will help us to keep you up to date and so you can avoid unnecessary delays in filing your income tax. Return all completed forms to your pension partner s former employer or send them to: LAPP c/o Alberta Pensions Services Corporation 5103 Windermere Blvd. SW Edmonton, AB T6W 0S9 Alberta Pensions Services Corporation (APS) proudly serves LAPP and provides responsive and focused member service on behalf of the Plan. Feel free to contact APS through the Member Services Centre if you have questions or need assistance with completing the forms. Phone: LAPP (5277) memberservices@lapp.ca Websites: and This information package provides general information only. Should anything in the package conflict with governing legislation, the latter shall apply. 808LA/3 February 2010

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5 Pension Partner s Choice PID: FOR OFFICE USE ONLY Use this form to assist with processing a benefit for the purpose of making a pension choice. Once completed, take a copy for your records and return the original completed form to: LAPP c/o Alberta Pensions Services Corporation (APS), 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. part a) pension partner information LAPP plan pension partner s social insurance number member s social insurance number pension partner s name title first name middle name last name 1=Mr. 2-Mrs. 3=Ms. 4=Miss part b) payment option Place a checkmark in the box next to your choice. I choose the following monthly pension: If you choose to receive a monthly pension, please complete the rest of this form. name of option I choose a one-time payment. In choosing a one-time payment, I fully understand I give up the right to a monthly pension and no further benefits will be paid to me by LAPP. Please proceed to part f) AND complete: The Release by Surviving Partner Not Taking Pension LA301 form The Transfer of Pension Partner s Benefit to a Locked-in-Retirement Account LA35 form or the Transfer of Pension Partner s Benefit to a Registered Retirement Savings Plan LA33S form, to complete a transfer of the commuted value of your benefit, if applicable. part c) pension coordination (complete only if you have chosen a monthly pension and are eligible for coordination as provided in your Pension Options Package): I have read the attached information on coordination and I understand that if I choose the coordination option, my pension income from LAPP will be lower after age 65 than it was before age 65. I also understand that any changes to the Canada Pension Plan benefits, as well as any of my other future income sources, may affect my future total pension income. Place a checkmark in the box next to your choice. I do not wish to coordinate my pension. I wish to coordinate my pension. I acknowledge that my monthly LAPP pension will change as follows: Total monthly LAPP payment from pension effective date until age 65 (from line (E) of calculation) $ Total monthly LAPP payment after age 65 (from line (F) of calculation) $ Total decrease in monthly payment after age 65 (from line (D) of calculation) $ Amounts in the above fields can be calculated on the sample coordination sheet found in your information package. part d) designation of beneficiary (complete only if you selected a monthly pension option with a guaranteed term) The percentage of the benefit for all beneficiaries MUST TOTAL or this form will not be valid. I hereby designate: first name middle name last name relationship % of benefit full address first name middle name last name relationship % of benefit full address Personal information on this form is collected under the authority of section 9.2 of the Alberta Public Sector Pension Plans Act and section 33 of the Alberta Freedom of Information and Protection of Privacy Act for the purpose of making a pension choice. If you have any questions regarding the collection of this information, please contact the Member Services Centre (MSC) at LAPP (5277), or please write to the MSC, c/o 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. LA27_03_2010

6 Pension Partner s Choice PID: FOR OFFICE USE ONLY first name middle name last name relationship % of benefit full address first name middle name last name relationship % of benefit full address total % as my beneficiary(ies) under the Local Authorities Pension Plan in the event of my death prior to the expiry of the guaranteed term. If one or more of these beneficiaries dies before me, I would like to: divide the share equally among the remaining beneficiaries. apply the beneficiaries share to my estate. part e) banking information Please attach a VOID CHEQUE to this choice form so your pension can be deposited directly into your Canadian bank account. Contact your banking institution if you need help obtaining a void cheque or to obtain a personalized deposit slip. bank name bank number (3 digits) branch transit number (5 digits) account number (7-9 digits) address line one address line two city province postal code area code phone number extension part f) pension partner authorization By signing this form, I select my pension or one-time payment under the Local Authorities Pension Plan. I understand that my choice is irrevocable once pension payments begin or funds have been transferred, if applicable. I authorize Alberta Pensions Services Corporation (APS), LAPP s pension administrator, to deposit my pension payments into my account at the financial institution indicated on this form. signature of authorized person phone number Make a copy of this form for your records. Forward the original form to: LAPP c/o Alberta Pensions Services Corporation (APS) 5103 Windermere Blvd. SW Edmonton, AB T6W 0S9 Personal information on this form is collected under the authority of section 9.2 of the Alberta Public Sector Pension Plans Act and section 33 of the Alberta Freedom of Information and Protection of Privacy Act for the purpose of making a pension choice. If you have any questions regarding the collection of this information, please contact the Member Services Centre (MSC) at LAPP (5277), or please write to the MSC, c/o 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. LA27_03_2010

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8 Transfer of Pension Partner s LAPP Funds to a Registered Retirement Savings Account (RRSP) FOR OFFICE USE ONLY PID: pension partner information Use this form to transfer your funds to an RRSP. Once completed, take a copy for your records and return the original completed form to: LAPP c/o Alberta Pensions Services Corporation (APS), 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. LAPP plan social insurance number title first name middle name last name 1=Mr. 2-Mrs. 3=Ms. 4=Miss address line one address line two city province postal code area code phone number extension transferor Local Authorities Pension Plan plan rpp registration number completed by financial institution name of financial institution or bank address line one address line two city province postal code area code phone number extension pension partner authorization When you choose to transfer your funds to an RRSP, you are no longer entitled to benefits under LAPP and no further benefits are payable to you. By signing this form, I authorize Alberta Pensions Services Corporation (APS), LAPP s pension administrator, to transfer my non-locked-in funds with interest to my Registered Retirement Savings Account at the financial institution indicated on this form. I understand I cannot change my choice once the funds are deposited with the financial institution. signature date Make a copy of this form. Forward the original form to: LAPP c/o Alberta Pensions Services Corporation (APS) 5103 Windermere Blvd. SW Edmonton, AB T6W 0S9 Personal information on this form is collected under the authority of section 9.2 of the Alberta Public Sector Pension Plans Act and section 33 of the Alberta Freedom of Information and Protection of Privacy Act for the purpose of transferring the pension partners funds to an RRSP. If you have any questions regarding the collection of this information, please contact the Member Services Centre (MSC) at LAPP (5277), or please write to the MSC, c/o 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. LA33S_03_2010

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10 Transfer of Pension Partner s Funds to a Locked-In Retirement Account (LIRA) FOR OFFICE USE ONLY PID: Use this form to assist with processing a benefit for the purpose of transferring pension partner funds to a LIRA. Once completed, take a copy for your records and return the original completed form to: LAPP c/o Alberta Pensions Services Corporation (APS), 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. part a) pension partner information LAPP plan social insurance number title first name middle name last name 1=Mr. 2-Mrs. 3=Ms. 4=Miss address line one address line two city province postal code part b) completed by financial institution locked-in retirement account certification name of company eligible to accept locked-in funds LIRA fund name address line one address line two city province postal code area code phone number extension I certify that this financial institution is entitle to offer and issue LIRA as prescribed under Alberta s Employment Pension Plans Act (EPPA). This financial institution agrees to deposit funds received into a LIRA that meets the conditions set out in Section 30 of EPPA regulations. signature of financial institute representative printed name part c) pension partner authorization When you choose to transfer your contribution payout to a LIRA, you no longer have pensionable service to your credit under LAPP and no further benefits are payable to you. signature date Make a copy of this form. Forward the original form to: LAPP c/o Alberta Pensions Services Corporation (APS) 5103 Windermere Blvd. SW Edmonton, AB T6W 0S9 Personal information on this form is collected under the authority of section 9.2 of the Alberta Public Sector Pension Plans Act and section 33 of the Alberta Freedom of Information and Protection of Privacy Act for the purpose of transferring pension partner funds to an RRSP. If you have any questions regarding the collection of this information, please contact the Member Services Centre (MSC) at LAPP (5277), or please write to the MSC, c/o 5103 Windermere Blvd. SW, Edmonton, AB T6W 0S9. LA35_03_2010