your Pension Connection Your Pension Matters Working in partnership to secure your pension income
Table of Contents Introduction... 1 Website and MyPension... 2 Plan Membership... 3 Pensionable Service... 4 Purchasing Service... 5 Transferring Service... 6 Pension Eligibility... 7 Pensionable Salary... 7 Pension Formula... 8 Early-Retirement Reduction... 9 Pension Options... 9 The ATRF Advance and Reduction... 12 Termination Benefit... 14 Death Benefit before Pension Commencement... 16 Preparing for Retirement... 17 Pension Commencement... 17 Steps to Retirement... 18 Pension Payment... 19 Cost-of-Living Adjustments... 19 Employment after Pension... 19 For More Information... 20 Glossary... 21 This information kit is a summary of some of the provisions of the Plan. If there is any discrepancy between this information kit and the Plan, the provisions of the Teachers Pension Plans Act and applicable legislation will determine the entitlements and options available. June 2016
Your Pension Matters INTRODUCTION This information kit is an overview of the seminar presentation. A glossary at the back of this kit explains terms, which may be unfamiliar. You can find additional information about the Plan at the Alberta Teachers Retirement Fund (ATRF) website (www.atrf.com). About the Plan The Teachers Pension Plan is sponsored by The Alberta Teachers Association and the Alberta Government, and is administered by the ATRF Board. The Plan is a Defined Benefit pension plan established under the Teachers Pension Plans Act and Regulations. Defined Benefit means that your pension is based on a benefit formula tied to your salary and years of service. Your pension is not based on contributions or investment returns. The ATRF Board adjusts contribution rates as required following each actuarial valuation. Current teacher and government contribution rates can be found on our website. Services Provided ATRF provides a full range of services for plan members. These include: paying pensions, termination benefits and death benefits, conducting pension seminars and personal interviews, providing various information materials, providing pension and termination benefit estimates, calculating the cost to purchase pensionable service, transferring service between reciprocal pension plans, maintaining individual plan member data, dividing pensions on marriage breakdown, and managing the Plan s investments. 1
Alberta Teachers Retirement Fund Board WEBSITE AND MyPension Website The ATRF website (www.atrf.com) is an excellent source of information for teachers, retired members and employers. The Teachers section contains the following information and functions: MyPension Life Events About Your Plan Teachers Lounge Increasing Your Pension Resources Publications & Forms Funding the Plan Meet With Us MyPension Ask a Question Join Our Email List (online services) We encourage you to register for MyPension for a number of reasons. You can access your pension information at any time, submit an electronic pension application; or, update your personal information, including your beneficiary. Many teachers like to be environmentally friendly by receiving documents electronically rather than in paper form. And these are just a few reasons to register. Once you Register and Sign In to MyPension, you can: Register for Join Our Email List to receive electronic notification of your Annual Plan Member Statement, newsletters and the Annual Report Highlights Use the Secure Message Centre to post and receive electronic messages Use the pension and purchase calculators Update your personal contact and beneficiary information Apply for benefits Access your Plan Member Statement View your Contribution & Service Statement Calculate a Termination Benefit Estimate Registering for MyPension Not registered for MyPension? Follow these steps to register: 1. Click on Access MyPension on the sidebar and click on Register 2. Read and accept the MyPension agreement 3. Register with your ATRF ID Number 4. Create your MyPension User ID and Password 5. Registration is complete 2
Your Pension Matters PLAN MEMBERSHIP Maintain Your Personal Information Keep personal information up-to-date by completing an Information Update form when there is a change to your name, address, or marital status. If we have your spouse/pension partner information, we are able to provide the spousal/pension partner benefit entitlement information on your Plan Member Statement. Name Your Beneficiary If you have a spouse/pension partner, they are your primary beneficiary. Here are a few important points: Keep your beneficiary information up-to-date in the secure MyPension section, or by completing a Designating a Beneficiary form. Name an alternate beneficiary other than your spouse/pension partner. If you do not have a spouse/pension partner or a dependent minor child under the age of 18, your named beneficiary would receive the death benefit. If there is no named beneficiary, the death benefit is paid to your estate. 3
Alberta Teachers Retirement Fund Board PENSIONABLE SERVICE To earn pensionable service, you must have a valid Alberta Teaching Certificate and be under contract with an ATRF Employer. When Pensionable Service Accrues It can be earned to December 31 of the year of your 71st birthday. It accrues at no cost to you if you were disabled after September 1, 1992.* *For more information about accruing disability service go to www.atrf.com > Teachers > Life Events > Becoming Disabled Pensionable Service Does Not Accrue While you are on employer-approved leave (but leaves can be purchased). During strikes (strike time cannot be purchased). For substitute teaching service (but substitute service can be purchased). If you withdrew contributions from ATRF, the service that those contributions represented is no longer to your credit (but previously refunded service can be purchased). Your Plan Member Statement recaps your pensionable service. 4
Your Pension Matters PURCHASING SERVICE Purchasing pensionable service will increase the amount of your pension. The cost to purchase service is an actuarial calculation, which equals the value of the increase in your pension benefit. Active and Disabled Members If you are an active member or a member accruing service while disabled, and meet the eligibility requirements, you may purchase: Employer-Approved Leaves Reciprocal Transfer Shortages Previously Refunded Service Periods of Disability before September 1, 1992 Past Private School Service Substitute Service in Alberta since May 1, 1971 The Alberta Government will share the cost if you purchase: - 186-day blocks, or - any number of days at pension application. The Alberta Government will not share the cost if you purchase less than a 186-day block prior to pension application you would be responsible for the full cost. Inactive Members If you are an inactive member, the ONLY type of service you are eligible to purchase is Substitute Service (worked in Alberta since May 1, 1971). The Alberta Government will share the cost, and you may purchase: 186-day blocks, or any number of days at pension application. For more information go to www.atrf.com > Teachers > Increasing Your Pension > Purchasing Service 5
Alberta Teachers Retirement Fund Board TRANSFERRING SERVICE Reciprocal transfer agreements allow you to transfer pensionable service and funds from one participating pension plan to another. ATRF has established reciprocal transfer agreements with: All Teachers Pension Plans in Canada The Alberta Public Sector Pension Plans: Management Employees Pension Plan Public Service Pension Plan Local Authorities Pension Plan The Government of Canada Public Service Pension Plan Combining service under one plan may provide you with a higher pension. Once you apply and receive the information, you are not obligated to proceed with the transfer. There may be a shortage if the importing pension plan requires more funds than are available from the exporting pension plan. If there is a shortage, you may: pay the shortage to have all your service credited, or have the service prorated, based on the funds that have been transferred. For more information go to www.atrf.com > Teachers > Increasing Your Pension > Transferring Service 6
Your Pension Matters PENSION ELIGIBILITY Pensionable Service to be Eligible for Pension You are eligible for a pension when you have: Five years of pensionable service after August 31, 1992, or Five years of pensionable service that includes any amount of pensionable service in each of the 1991 92 and 1992 93 school years, or 10 years of pensionable service. Start of Pension Pensions are payable from the later of the first of the month following: your 55th birthday, or the termination of your last teaching contract, or the last accrual of pensionable service with ATRF, or the last substitute service purchased. PENSIONABLE SALARY Five Year Average Pensionable Salary Pension benefits are based on the average of your highest five consecutive years of pensionable salary. If you are contributing to ATRF under a part-time contract, your pensionable salary will be annualized to a Full-Time Equivalent to calculate a Five-Year Average Pensionable Salary. Contributions are not made on any salary above the maximum benefit under the Income Tax Act. The Five-Year Average Pensionable Salary must be earned in consecutive years, but not necessarily in continuous years. Example: If service break is not purchased If service break is purchased 7
Alberta Teachers Retirement Fund Board Five Year Average YMPE The Year s Maximum Pensionable Earnings (YMPE) is the maximum amount of earnings on which contributions to the Canada Pension Plan (CPP) are based. Your Five-Year Average YMPE coincides with the same period as your Five-Year Average Pensionable Salary. CPP benefits are paid directly by the Government of Canada and are not included with your ATRF pension. PENSION FORMULA The formula for calculating your pension is based on three components: 1. Pensionable Service 2. Five-Year Average Pensionable Salary 3. Five-Year Average YMPE 1.4% x Five-Year Average YMPE x Pensionable Service after 1965 PLUS 2.0% x (Five-Year Average Pensionable Salary Five-Year Average YMPE) x Pensionable Service after 1965 PLUS 2.0% x Five-Year Average Pensionable Salary x Pensionable Service before 1966 MINUS Actuarial Reduction Short of the Index 8
Your Pension Matters EARLY-RETIREMENT REDUCTION The age-plus-service index is used to determine if you will be eligible for an unreduced pension if you apply before age 65. It is calculated by adding your age and your pensionable service at pension commencement. If your age plus pensionable service totals at least 85, you will receive an unreduced pension. An Unreduced Pension is paid if: you are age 65 or older at pension commencement (normal retirement), or your age plus years of pensionable service total 85 or more. A Reduced Pension is paid if: you are younger than age 65 and your age plus years of pensionable service do not total 85. The reduction is the lesser of 2% per year short of either age 65 or 85 index. The maximum reduction is 20%. PENSION OPTIONS There are seven pension options: four Single Life pensions and three Joint and Survivor pensions. Each pension option provides a different survivor benefit. The option you choose will affect the amount of your monthly pension. Generally, the greater the survivor benefit, the smaller the monthly pension. Only you can decide which pension option is the right one for you. You should consider factors such as your: age and your spouse/pension partner s age, health, family and financial situation, income needs and future lifestyle plans in retirement, other sources of income, and dependants needs (if applicable). If you have a spouse/pension partner at retirement, you must choose a Joint and Survivor pension and name your spouse/pension partner as your nominee. If your spouse/pension partner waives their right to a Joint and Survivor pension (by completing the statutory declaration included in your Pension Options Package), you can: choose a Single Life pension, or name a dependant as your nominee in accordance with the Income Tax Act and choose a Joint and Survivor pension. 9
Alberta Teachers Retirement Fund Board Joint and Survivor Pension Options Joint and Survivor pensions are based on two lives yours and your nominee s. The amount of pension that continues to your nominee after your death depends on the Pension Option you choose. The nominee may not be changed once the pension begins under any circumstance, including death, separation, or divorce. If the nominee is your spouse/pension partner, a pension is paid for your lifetime and for your spouse/pension partner s lifetime. If the nominee is a dependant in accordance with the Income Tax Act, the pension is paid for your lifetime and, after your death, only for as long as the nominee remains a dependant. All the Joint and Survivor Pension Options have a five-year guarantee period. If you and your nominee die before receiving 60 monthly pension payments, the remainder of the 60 payments will be paid to your beneficiary or estate. Joint Equal 100% of the pension is paid to you if your nominee dies first. 100% of the pension continues to be paid to your nominee if you die first. Joint Reducible by One Third 66 ⅔ % of the pension is paid to you if your nominee dies first. 66 ⅔ % of the pension continues to be paid to your nominee if you die first. Joint 100/60 100% of the pension is paid to you if your nominee dies first. 60% of the pension continues to be paid to your nominee if you die first. 10
Your Pension Matters Single Life Pension Options Single Life pensions are payable for your lifetime or to the end of a guarantee period, whichever is longer. The guarantee period starts from the effective date of the pension. If you die before the end of the guarantee period, the pension will continue in the same amount to your beneficiary until the end of the guarantee period. You may change your beneficiary at any time until the end of the guarantee period (unless there is a Matrimonial Property Order on file with ATRF that prevents you from making a change). Single Life, No Guarantee (payments cease on your death regardless of the number of monthly payments that have been made) Single Life, Five-Year Guarantee Single Life, 10-Year Guarantee Single Life, 15-Year Guarantee Choosing a Pension Option Use the interactive Pension Option Selection Tool on the ATRF website to help you select the pension option that is most appropriate for you. Enter information about your own retirement situation and income needs to identify which option will best meet your needs. For more information go to www.atrf.com > Teachers Lounge > Pension Option Selection Tool. 11
Alberta Teachers Retirement Fund Board THE ATRF ADVANCE AND REDUCTION ATRF Advance If you retire before age 64, you can choose to receive an optional advance with your monthly ATRF pension. This will level out your ATRF and Canada Pension Plan (CPP) payments before and after age 65. The advance is a payment from the Plan that must be repaid with interest. The amount of your advance is based on what ATRF estimates your CPP pension will be at age 65 by using the service you have under ATRF. This amount may differ from the amount stated by CPP. The advance is paid for your lifetime as a supplement to your ATRF monthly pension. ATRF Reduction The reduction, or repayment, begins at age 65. Your total monthly pension payment from ATRF is reduced for your lifetime regardless of when you start to receive your CPP pension, or whether the federal government changes eligibility requirements, benefits available or tax rules. What You Need To Know If you want the advance, you must choose it when you choose your Pension Option you cannot choose to add it after your pension has been granted. The ATRF Advance and Reduction cannot be changed or cancelled once your pension payments begin. The ATRF Advance and Reduction is calculated to be cost-neutral, resulting in no monetary benefit or cost to ATRF. If you live longer than the age used in our assumptions, the total amount of your reductions will exceed the total of the advances paid to you. Advances are considered income and are taxed accordingly. Choosing an advance will not affect your CPP pension, which is paid directly from the federal government. Cost-of-living adjustments are applied annually to the advance from pension commencement, and to the reduction starting at age 65. The advance, and any responsibility for repayment, stops at your death. 12
Your Pension Matters ATRF Advance Charts The following charts illustrate the effect of the ATRF Advance on your total pension income. You take the advance at age 55 and an unreduced CPP benefit at age 65 You do not take the advance and take an unreduced CPP benefit at age 65 You take the advance at age 55 and a reduced CPP benefit at age 60 You do not take the advance and take a reduced CPP benefit at age 60 13
Alberta Teachers Retirement Fund Board TERMINATION BENEFIT If you resign from your contract, or your contract is terminated, your active participation in the Plan ceases and you must decide what to do with your ATRF benefit. Your benefit choices depend on your age and whether you are eligible for an immediate pension, a deferred pension, or no pension. You may choose to leave your funds on deposit. Rules to Withdraw Funds Partial withdrawals are not permitted. Withdrawals are not permitted once you are eligible for a pension and are over age 55. Withdrawals are permitted only once in any 12-month period. Not Enough Service to Be Eligible For Pension The benefit is equal to your contributions with interest and may be: transferred directly to a Registered Retirement Savings Plan (RRSP), with no income tax deducted, or paid to you in cash, with income tax deducted. Enough Service to Be Eligible For Pension If you are entitled to a deferred pension, and are under age 55, the benefit is different for pensionable service before and after September 1, 1992. The benefit payable for pensionable service before September 1, 1992 is equal to your contributions with interest and may be: transferred directly to a Registered Retirement Savings Plan (RRSP), with no income tax deducted, or paid to you in cash, with income tax deducted. The benefit payable for pensionable service after August 31, 1992 is the greater of: your contributions with interest, or the commuted value* of your pension. *The commuted value is a lump-sum amount, which in today s dollars, equals the value of your future pension payments. This benefit must be transferred directly to a Locked-In Retirement Account (LIRA) up to the maximum permitted in accordance with the Income Tax Act. 14
Your Pension Matters Summary of Choices upon Termination Choice Not Enough Service to be Eligible for Pension Enough Service to be Eligible for Pension Leave Funds on Deposit Make a different choice at a later date Interest is earned on your contributions Withdraw Funds Receive your contributions with interest Cash or transfer to RRSP Make a different choice at a later date Cost-of-living adjustments accrued Pre-September 1992 service: o Return of contributions with interest o Cash or transfer to RRSP Post-August 1992 service: o Greater of contributions with interest or commuted value o Transfer to LIRA Eligible before age 55 only Transfer Pension Teachers pension plans in all provinces Teachers pension plans in all provinces Alberta Public Sector pension Alberta Public Sector pension plans plans Government of Canada Public Government of Canada Service Pension Plan Public Service Pension Plan Defer Pension Not applicable Apply after age 55 15
Alberta Teachers Retirement Fund Board DEATH BENEFIT BEFORE PENSION COMMENCEMENT The Plan provides a benefit if you die before your pension begins based on the following priority: spouse/pension partner, dependent minor children, if you have no spouse/pension partner, named beneficiary, if you have no spouse/pension partner or dependent minor children, otherwise, estate. Death Before Entitled to a Pension If you die before you have enough pensionable service to be eligible for a pension, your beneficiary (as determined by the priority list above) will receive your contributions with interest, plus the value of any actuarial purchase of service. Death After Entitled to a Pension If you die after you have enough pensionable service to be eligible for a pension, your surviving spouse/pension partner will receive a pension equal to the amount he or she would have received if you had elected a Joint Equal pension with 100% continuing to your spouse/pension partner for life. (The survivor s pension amount may be less than the Joint Equal pension amount in order to comply with the Income Tax Act.) If you are under contract at the time of your death, your spouse/pension partner will receive an immediate pension, regardless of your age. If you are not under contract, and are less than 55 years of age, your spouse/pension partner will receive a pension from the first of the month following what would have been your 55 th birthday. If you are not under contract, and 55 or more years of age, your spouse/pension partner will receive a pension from the first of the month following your date of death. If you have no spouse/pension partner but you have dependent minor children, your dependent minor children will receive double your contributions with interest plus the value of any actuarial service purchased. If you have no spouse/pension partner or dependent minor children, your designated beneficiary or estate will receive your contributions with interest plus the value of any actuarial service purchased. 16
Your Pension Matters PREPARING FOR RETIREMENT Making Your Retirement Decision Your decision to retire is a personal decision that only you can make. Many factors will influence your decision to retire. Age Income needs Retirement/transition incentives Working part-time Health Job satisfaction Future plans Other Considerations You are responsible to apply: to continue your extended health benefits by contacting your employer s Human Resources or health benefits provider, and for Canada Pension Plan (CPP) and Old Age Security (OAS) benefits from the Government of Canada. PENSION COMMENCEMENT Pensions are payable from the later of the first of the month following: your 55 th birthday, or the termination of your last teaching contract with an ATRF employer, or your last pensionable service with ATRF, or December 31 st of the year you turn age 71. 17
Alberta Teachers Retirement Fund Board STEPS TO RETIREMENT STEP 1 Submit Your Resignation Provide a letter of resignation to your employer Apply for extended health benefits with employer or other health benefit provider STEP 2 Apply for Your Pension Complete and mail Employee Termination Notice or Pension Application to ATRF or submit online via MyPension Complete and mail Spousal/Pension Partner Status Declaration to ATRF Provide original or certified copy of documents to ATRF: o Your birth certificate, valid Canadian passport, or Certificate of Canadian Citizenship o Spouse/pension partner s birth certificate, valid Canadian passport, or Certificate of Canadian Citizenship o Marriage certificate STEP 3 Wait for Your Pension Options Package You will receive acknowledgement that ATRF received your application for processing Review the pension options in this kit Use the interactive Choosing Your Pension Option Tool on the ATRF website located in the Teachers Lounge STEP 4 Complete and Return Forms in Your Pension Options Package to ATRF Pension Election Federal Personal Tax Credits Return Provincial Personal Tax Credits Return Notification of Banking Information Spousal/Pension Partner Waiver, if applicable STEP 5 Receive Your Pension Payment Complete and return the Retired Member Questionnaire to ATRF Confirm your pension payment was deposited with your financial institution 18
Your Pension Matters PENSION PAYMENT Payments are retroactive to the first eligible date. Payments are made by direct deposit on the third last banking day of the month. Income tax is deducted before the pension is deposited. COST-OF-LIVING ADJUSTMENTS Cost-of-living adjustments (COLA) are effective each January and are applied to your ATRF pension (including the ATRF Advance and Reduction, if you chose to take the advance) before income tax is deducted. For the pension payable on pensionable service to December 31, 1992, COLA is calculated at 60% of the change from year to year in the Alberta Consumer Price Index. For the pension payable on pensionable service from January 1, 1993, the COLA is calculated at 70% of the change from year to year in the Alberta Consumer Price Index. EMPLOYMENT AFTER PENSION ATRF retired members can be employed for up to 0.6 of a school year with an ATRF employer without affecting their pensions. If you are employed for more than 0.6 of a year with one or more ATRF employers, your monthly pension is reduced by the amount of salary earned in each month after the 0.6 of a year is reached. Working as a substitute teacher and other types of employment do not affect ATRF pensions. If you return to work for an ATRF employer, you must inform the employer that you are receiving an ATRF pension so that pension contributions are not deducted from your salary. 19
Alberta Teachers Retirement Fund Board FOR MORE INFORMATION Website Visit our website at www.atrf.com to download information kits, forms or the Plan Member Guide; and, to register for MyPension. ATRF Alberta Teachers Retirement Fund Board 600 Barnett House 11010 142 Street NW Edmonton AB T5N 2R1 Telephone 780-451-4166 Toll free 1-800-661-9582 Fax 780-452-3547 Website www.atrf.com Email member@atrf.com Information Kits Available Benefits at Termination Accruing Pensionable Service While Disabled Purchasing Service Steps to Retirement Your Pension Matters 20
Your Pension Matters GLOSSARY Accrue Accrue means to accumulate over a period of time. For example, service accrues with each month worked. Actuarial Purchase The actuarial cost to purchase pensionable service equals the increase in pension benefit as calculated on the date of application. The purchase is cost neutral, resulting in no subsidized cost to you or the Plan. Canada Pension Plan (CPP) The Canada Pension Plan is a retirement pension program administered by Service Canada that provides a monthly benefit to eligible Canadians. It operates throughout Canada, except in Quebec, where the Quebec Pension Plan (QPP) provides similar benefits. Certified Copy A clear photocopy of an original document (such as a birth or marriage certificate, Certificate of Canadian Citizenship, or valid Canadian Passport) that has been certified by one of the following person(s): employees of ATRF, payroll personnel of your employer, notary public, lawyers, bank managers, police officers, doctors, MPs, MLAs, justices of the peace, judges and officers of the Canadian Embassy. Commuted Value A commuted value is the lump sum of money that is set aside today, at current market interest rates, to provide your future pension payments. Defined Benefit Plan A pension plan that provides a pension based on a formula that uses salary and years of service. Dependent Minor Child A child of the deceased who, immediately before the deceased's death, was a minor, under 18 years of age, and who was dependent on the deceased for support. 21
Alberta Teachers Retirement Fund Board Living Separate and Apart Persons are living separate and apart if either of them has the intention to live separate and apart from the other, or, if, they had been living separate and apart, the separation was interrupted or ended by reason only that either of them became incapable of continuing to live separate and apart or of forming or having the intention to continue to live apart of that person s own volition, and the separation would probably have continued if that person had not become so incapable. Locked In Retirement Account (LIRA) LIRAs are restricted Registered Retirement Savings Plans (RRSPs) that require funds be used to provide income on or after age 50 but, at the latest, by the end of the calendar year in which you turn age 71. Most financial institutions offer LIRAs. Income tax will not be deducted from the direct transfer to a LIRA and it will not affect your RRSP deduction room. Old Age Security (OAS) The Old Age Security is a basic federal income security program administered by Service Canada for eligible Canadians who are age 65 and older. Pension Partner A person who, at the relevant time, was married to that member and had not been living separate and apart from that member for three or more consecutive years, or a person who, as at and up to the relevant time, had lived with that member in a conjugal relationship for a continuous period of at least three years and was, during that period, held out by that member in the community in which they lived as being in that conjugal relationship. Vested You have enough pensionable service to be eligible to receive a pension benefit from the Teachers Pension Plan. 22
Alberta Teachers Retirement Fund Board 600 Barnett House 11010 142 ST NW Edmonton AB T5N 2R1 Telephone 780 451 4166 Toll free 1 800 661 9582 Fax 780 452 3547 Website www.atrf.com Email member@atrf.com ATRF delivers high quality customer service in the most efficient and effective manner