Carleton University Retirement Plan

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Types of contributions
Employee contributions, employer contributions, additional voluntary contributions such as RRSP transfers, lump sum deposits and payroll deductions, and maximum contributions.

Retirement Plan

Buying Back and Transferring your Pension
If you have continuous service with the University during which you were eligible to participate in the Plan, but did not, you may purchase all or part of your eligible past service.

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Receiving your Pension
Your normal retirement date is the first day of July nearest your 65th birthday.  You may also chose to take early retirement or postpone your retirement.

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Normal and Alternative Forms of Pension
The normal form of pension is payable for your lifetime and guaranteed for a minimum of five years.  There are many alternative forms of pension payments available.

Learn about Carleton’s post-retirement benefits, including Life Insurance, Extended Health Care, and travel benefits.

If you are currently employed by Carleton and joined the Carleton University Retirement Plan prior to July 1st last year, you can access the Carleton Retirement Planner. For assistance with this tool please refer to our  Retirement Planner User Guide.

Employee Contributions

You are required to contribute 4.37% of your earnings up to the CPP Yearly Maximum Pensionable Earnings (YMPE) plus 6% of your earnings above the YMPE. Your required contributions are credited to an account set up on your behalf, called the Money Purchase Component Account (MPC).

Effective with the first pay period following July 1, 2011, employees must contribute an additional 1.7% of earnings up to the YMPE and 2.4% above the YMPE, capped at 2% of earnings. These additional contributions will continue until the earlier of 10 years or until such time as special payments to the Plan cease. The contributions are to the Minimum Guarantee Fund (MGF).

Contributions are tax deductible.

Example:

If the YMPE is $53,600 and you earn $80,000 per annum the annual contribution total is $ 5,471.12. The calculation is as follows:

Money Purchase Component (MPC) Contribution
4.37% of $53,600 $2,342.32
6% of ($80,000-53,600) $1,584.00
Total MPC Contribution $3,926.32
Minimum Guarantee Fund (MGF) Contribution
1.7% of $53,600 $ 911.20
2.4% of ($80,000-53,600) $ 633.60
Total MGF Contribution $1,544.80
Total Contribution $5,471.12

Employer Contributions

  • The employer contributes an amount equal to your MPC contributions plus 0.25% of your pensionable earnings to your Money Purchase Component Account.
  • The employer also contributes, as required, the normal cost of the Minimum Guarantee Pension and the amortization of any unfunded liability or solvency deficit.

Additional Voluntary Contributions

You may elect to make additional voluntary contributions (AVCs) to the Carleton University Retirement Plan for the purpose of increasing your pension benefits.  At retirement,  Additional Voluntary Contributions can be withdrawn in cash, transferred to an RRSP (Registered Retirement Savings Plan) or RRIF, or left in the Plan. However, any special transferred contributions which were subject to “locking in” must remain locked-in. Cash withdrawals are subject to taxation.

Note that you may make a one-time withdrawal of your AVC balance from the Plan prior to your termination of employment or retirement. After electing to do so, you will not be eligible to make any further AVCs to the plan.

Your contribution may take the form of a RRSP transfer, a lump sum deposit or payroll deduction.  Voluntary cash contributions or payroll deductions are tax deductible.

RRSP Transfer

  • Complete “Area 1″ of the T2033 form.
  • Arrange to meet a Pension Officer to complete “Area II” of the form.
  • Send it to the Financial Institution holding the RRSP funds. Carleton University must receive the original T2033 with signatures (no copies).
  • You will receive confirmation from Pension Services when the funds have been received and deposited to your AVC account.

Lump Sum Deposits and Payroll Deduction

  • Send your request, stating your name and Banner ID to a Pension Officer.
  • The Pension Officer will inform you of the maximum amount you are eligible to contribute according to the income tax act.
  • Confirm in writing the amount that you wish to be deducted per pay or that you will be depositing by cheque and include your name and Banner ID.

Maximum Contributions

  • The sum of Employee and University required contributions to your Money Purchase Component account plus lump sum or payroll AVCs cannot exceed the Canada Revenue Agency maximum.

Buying Back Pension Service

If you have continuous service with the University during which you were eligible to participate in the Plan, but did not (example: If you did not join the retirement plan prior to age 30), you may purchase all or part of your eligible past service subject to Income Tax Act limits.

The actual cost will depend on your salary and age at the time the service is purchased.

A Pension Officer can advise you whether or not you are eligible to make past service contributions. Past service contributions are credited to your Defined Benefit Contribution Account and increase your pension at retirement. These contributions are tax deductible and subject to Income Tax Act limits.

To Request a Buyback Cost Estimate

  • Send your request, stating your name, Banner ID and the period in question, to a Pension Officer.
  • The Pension Officer will send you a summary verifying the cost, the buyback period and income tax implications.
  • Consult a financial advisor prior to making an election.

To Purchase Past Service

Confirm in writing the amount to be deducted per pay or to be deposited by cheque and include your name and Banner ID.

If you are transferring an RRSP to purchase the service:

  • Complete “Area 1″ of the T2033 form.
  • Arrange to meet the Pension Officer to complete “Area II” of the form.
  • Send the T2033 to the Financial Institution holding the RRSP funds. Advise your Financial Institution that Carleton University must receive the T2033 with original signatures (no copies).
  • You will receive confirmation from Pension Services when the funds have been received and deposited.

Pension Portability

You may transfer any pension contributions made by you and by your previous employer to the University pension plan. Transfers apply either where the University has a reciprocal agreement with your previous employer or under the portability provisions of the Carleton University Retirement Plan.

If you do transfer contributions, you may request, within twelve months of becoming a member, that your period of credited service be increased.

Receiving your Pension

Your normal retirement date is the first day of July nearest your 65th birthday.

You will receive your pension benefit, commencing at the end of the month of your retirement and payable in monthly installments for your remaining lifetime, in an amount equal to the greater of your Money Purchase Pension or Minimum Guarantee Pension plus your Pension from Voluntary Contributions (if applicable).

Pensions are directly deposited into the account that you specify at retirement.

Money Purchase Pension

This pension is calculated from the total balance to your credit in your Money Purchase Component Account, based on the actuarial tables in force for plan purposes at that time.

Minimum Guarantee Pension

The amount of your Minimum Guarantee pension benefit will be calculated using the following formula:

Minimum Guarantee pension =
Years of Credited Service
× [The Sum of 1.29% of the average of your highest 5 years’ earnings up to the 5-year average of the YMPE
+ 2% of the average of your highest 5 years’ earnings in excess of the 5-year average of the YMPE]

Assumptions

  • Average of 5 Years’ Earnings = $80,000
  • Average of 5 Years’ YMPE = $50,482
  • Credited Service = 35 Years

Calculation

Minimum Guarantee Pension = 35 × [(1.29% × $50,482) + 2% × ($80,000 −50,482) = $43,455.22

Early Retirement

Early retirement is permitted any time after you reach 55 or ten years prior to normal retirement.

If you retire early, you will receive a pension in an amount equal to the greater of your Money Purchase Pension or your Minimum Guarantee Pension plus your Pension from Voluntary Contributions (if applicable). Pensions at early retirement are reduced to reflect the fact that you are retiring before your Normal Retirement Date. The amount of your Money Purchase Pension will be less than at normal retirement because you and the University would have contributed for a fewer number of years. Therefore, your account would have had less time to grow in value, and you will collect your pension for a longer period than if you retired later.

The Minimum Guarantee Pension will be based on your earnings and participation to your early retirement date and reduced as follows:

  • For early retirements after July 1, 2012, the Minimum Guarantee pension will be reduced by the actuarial equivalent factors which will range between 5% and 7% per year prior to your Normal Retirement Date. These factors will apply to current members born after 1957 and to new members joining on or after July 1, 2012.
  • For plan members who were eligible to retire on July 1, 2012 (i.e. age 55 or within 10 years of your normal retirement date), the Minimum Guarantee pension will be reduced by one-quarter of one percent for each month of early retirement prior to your Normal Retirement Date. This applies regardless of the date on which you actually choose to retire.

Early Retirement Supplement

If, as at July 1, 2003, you were a member of the Retirement Plan and you were age 45 or older, you will be able to receive an Early Retirement Supplement if you have ten years of continuous service with the University immediately prior to the date of your early retirement. This supplement is a temporary pension payable from the date of retirement to your death or attainment age 65. The annual amount of the supplement is calculated as follows:

Early Retirement Supplement =
$5,176.32  × your years of pensionable service to a maximum of 20 ÷ 20

Postponed Retirement

You may remain in the service of the University following your normal retirement date, however you may in no event postpone the commencement of your pension beyond December 1 of the year in which you reach age 71.

If you postpone retirement, you have a choice of continuing your required contributions or stopping contributions. At actual retirement, you will receive a pension in an amount equal to the greater of your Money Purchase Pension or your Minimum Guarantee Pension plus your Pension from Voluntary Contributions (if applicable).

The amount of your minimum pension will depend on whether or not you continued to contribute to the plan after normal retirement. If you continued to contribute, your Minimum Guarantee Pension will be based on your participation in the plan and earnings up to your actual retirement date.

Other benefits such as Life Insurance and Long Term Disability may reduce or cease at your NRD. Also, after NRD, you will no longer have the option to transfer your pension out of the plan.

Pension from Voluntary Contributions

You will receive an additional amount of pension, commencing at the end of the month of your retirement and payable in monthly instalments for your remaining lifetime.

Instalments are provided from the balance in your Additional Voluntary Contributions (AVC) Fund and based on the actuarial tables in force for plan purposes at the time.

Additional Voluntary Contributions can be withdrawn in cash, transferred to an RRSP or RRIF, or left in the Plan. However, any special transferred contributions which were subject to “locking in” must remain locked-in. Cash withdrawals are subject to taxation.

Normal Form of Pension

The normal form of pension is payable for your lifetime and guaranteed for a minimum of five years. If you die after your retirement but before receiving 60 monthly payments, the balance of the guaranteed payments will be paid to your beneficiary.

There are many alternative forms of pension payments available. You may choose one of these other forms by giving written notice to the University any time prior to the commencement of your pension. The following are some examples of these alternatives.

Life Guaranteed – 10 or 15 Years

This pension is payable for your lifetime, except that a minimum of 120 or 180 monthly payments are guaranteed. Because more payments are guaranteed, the amount of pension under this form will be less than the amount of a normal pension.

Life Only

This pension is payable for your lifetime and stops on your month of death regardless of the number of payments that have been made.

Joint Life Survivorship

This form of pension is payable for your lifetime with all or part of your benefit continuing to your surviving spouse after your death.

The amount of monthly pension under this option is less than the normal form because the pension is paid over the lifetimes of two people, and it may vary considerably from the basic pension depending on the age of your spouse.

Definition of Spouse and Legislation

Pension legislation guarantees survivor benefits to spouses of members of the Retirement Plan. Survivor benefits include the pre-retirement death benefit and the joint and survivor pension of at least 60% of the member’s pension should the member predecease the spouse. The definition of spouse in the legislation is as follows:

“Spouse” means a person of the same or the opposite sex, who at the date of determination:
a. is married to the member and is not living apart from the member, or
b. is not married to the member but has been living with the member in a conjugal relationship:

  • continuously for a period of not less than three years, or
  • in a relationship of some permanence, if they are the natural or adoptive parents of a child.

A member who has a spouse at retirement must receive the pension in a form, which continues at least 60 percent of the initial amount to the surviving spouse. The amount of the initial pension will be actuarially adjusted so that its value is the same as the value of the pension under the normal form.

If both spouses agree in writing using the prescribed form within 12 months immediately preceding the pension commencement, the pension may be paid in another form.

Adjustment of Pension after Retirement

After you retire, your pension will be adjusted each year based on the average investment experience of the Fund for that year and the 3 preceding years less 6%. The investment experience for any pre-retirement year that is included in the formula is deemed to be 6%. Adjustments can produce a reduction as well as an increase in your pension. However, the portion of your pension that relates to pre-July 1, 2003 pension credits and contributions will not reduce.