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Mohawk College

Mohawk College. College Presentation June 10, 2009. Agenda. Pension Basics Building my pension Leaving my job My retirement My pension Survivor Benefits More information. Pension Basics Facts about CAAT Pension Plan. Established June 1, 1967 Multi-employer Pension Plan

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Mohawk College

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  1. Mohawk College College Presentation June 10, 2009

  2. Agenda Pension Basics Building my pension Leaving my job My retirement My pension Survivor Benefits More information

  3. Pension BasicsFacts about CAAT Pension Plan • Established June 1, 1967 • Multi-employer Pension Plan • 24 Colleges, 18,900 members, 10,925 pensioners • Defined benefit plan

  4. Pension BasicsFacts about CAAT Pension Plan • Jointly sponsored with a Board of Trustees and Sponsors’ Committee, which means equal representation for colleges and employees Colleges Ontario Board of Trustees OPSEU Sponsors’ Committee OCASA

  5. Pension BasicsHow the plan is funded • The Plan’s assets are made up of contributions and investment returns • Members and employers contribute equally from each pay • Funding is approximately 80% investment returns and 20% contributions like most plans

  6. Pension BasicsHow the plan is funded

  7. Building my pension When am I eligible to join? How much do I contribute? Can I increase my pension?

  8. Building my pensionWhen am I eligible to join? • Full-time employee Join the plan when you are hired • Part time (OTRFT) employee Can join after 24 months of continuous service

  9. Building my pension When am I eligible to join? How much do I contribute? Can I increase my pension?

  10. Building my pensionHow much do I contribute? • The CAAT Plan is integrated with CPP – it recognizes YBE and YMPE for pension contributions and the benefit calculation • Year’s Basic Exemption (YBE) is $3,500 • Year’s Maximum Pensionable Earnings (YMPE) is changed annually • 2009 YMPE is $46,300

  11. Building my pensionContribution Rates Beyond 2010 to be determined based on funding

  12. Greg’s salary in 2009 is $42,110 The 2009 YMPE is $46,300 and the YBE is $3,500. Greg’s contributions to the CAAT Plan are: 11.1% x $3,500 = $389 + 9.3% x $38,610 = $3,591 Greg’s contributions in 2009 = $3,980 His College's contributions = $3,980 Total contributions = $7,960 ($42,110 - $3,500 = $38,610) Building my pensionContribution Example

  13. Mary’s salary in 2009 is $81,600 The 2009 YMPE is $46,300 and the YBE is $3,500. Mary’s contributions to the CAAT Plan are: 11.1% x $3,500 = $389 + 9.3% x $42,800* = $3,980 + 11.1% x $35,300* = $3,918 Mary’s contributions in 2009 = $8,287 Her College's contributions = $8,287 Total contributions = $16,574 *($46,300 - $3,500 = $42,800; $81,600 - $46,300 = $35,300) Building my pensionContribution Example

  14. Building my pension When am I eligible to join? How much do I contribute? Can I increase my pension?

  15. Building my pensionCan I increase my pension? • If you have unpaid leaves, or eligible service, buying this additional service can increase your pension and allow you to retire earlier, with a smaller reduction, or even an unreduced pension. • You can purchase eligible leaves or service any time up to termination or retirement. • General rule: the longer you wait, the more it costs

  16. Building my pensionCan I increase my pension? Eligible Service • Pregnancy/parental or adoption leave • Unpaid leave of absence • Pre-enrolment - worked full-time on a contract basis before joining the plan as a full-time employee • If you previously worked at a college, left and took your contributions or commuted value with you

  17. Building my pension • Join the plan when you are hired full time • Part time - complete 24 months of continuous service • You and your college contribute equally • Purchase any eligible additional service to increase your pension and retire sooner

  18. Leaving my job What happens if I leave my job before I can retire?

  19. Leaving my jobTermination Benefits Non-vested(you have less than 2 years of membership or service) • You will receive a refund of your contributions + interest

  20. Leaving my jobTermination Benefits Vested(more than 2 years of membership or service) You can choose between: • Commuted value (until age 55) • Deferred pension (start at age 65; Early deferred with a 5% reduction) • Transfer to your new employer’s pension plan

  21. Leaving my jobTermination Benefits Age Service (years) Entitlements Under 65 Less than 2 Refund of contributions + interest Under 55 Between 2 and 20 Deferred pension or commuted value transfer 55 - 65 More than 2 Immediate early pension or deferred pension 50 - 54 More than 20 Immediate early pension or deferred pension or commuted value transfer (until 2013)

  22. My retirement How we calculate your pension Sources of retirement income Retiring Early Unreduced Pension Reduced Pension Retiring at age 65 Working past age 65

  23. AYMPE: Average Year’s Maximum Pensionable Earnings Average YMPE for the year of retirement and 4 preceding years. My retirementHow we calculate your pension HAPE: Highest Average Pensionable Earnings Sum of your earnings for the 60 consecutive months of pensionable service during which earnings were highest, divided by 5

  24. Bridge Benefit: An extra pension payable from early retirement to age 65 My retirementHow we calculate your pension

  25. My retirementCAAT Pension Plan Pensions • Paid to you for the rest of your life • Paid to your surviving spouse for his or her life after your death • Includes a death benefit for children under 18 • You and your survivors will never receive less than 60 months of pension payments • Includes some inflation protection (indexation) • Paid every month

  26. Age 60 Age 65 Early Retirement My retirementSources of Retirement Income Lifetime pension Age 65 Bridge Benefit CPP pension (reduced) OAS pension Your personal savings

  27. My retirementGovernment Pensions – CPP • Maximum CPP in 2009 : $10,905 ($908 / month) • Can start at age 60 • Reduction for early CPP • .5%/month you are under age 65 or 6%/year • You must apply for CPP 6 months before you want the payments to start

  28. My retirement How we calculate your pension Sources of retirement income Retiring Early Unreduced Pension Reduced Pension Retiring at age 65 Working past age 65

  29. My retirementEarly Unreduced Pension When am I eligible? • 85 Factoryour age plus service equals 85 or more or • 60/20 RuleYou are age 60 or more and have 20 years of pensionable service

  30. My retirementEarly Unreduced Pension Stuart is ready to retire in 2009. He’s 62 and has 20 years of service at retirement. Stuart is eligible for the 60/20 Rule

  31. My retirementEarly Unreduced Pension Stuart’s pension is calculated like this:

  32. My retirementEarly Unreduced Pension Because he is under 65, Stuart will receive a Bridge Benefit until he turns 65.

  33. My retirementBridge Benefit Stops When he turns 65, Stuart’s Bridge Benefit will stop. Total benefit to age 65 $22,000 At age 65 the bridge stops - $ 6,107 (with indexation) Lifetime benefit $15,893 Remember Stuart can apply for CPP as early as age 60 and OAS at age 65

  34. My retirementEarly Reduced Pension When am I eligible? You are eligible to retire on an immediate reduced pension on or after reaching the earlier of: • age 55 with at least 2 years of pensionable service or Plan membership, or • age 50 with at least 20 years of pensionable service

  35. My retirementEarly Reduced Pension • Remember, the reduction is permanent • Calculated as 3% multiplied by the number of years and part years remaining before the earliest point that member would qualify for an unreduced pension: • 85 Factor or • 60/20 Rule or • age 65

  36. My retirementEarly Reduced Pension Norah is ready to retire in 2009. She is 53 and has 26 years of service. Her age plus service 53 + 26 = 79 Norah does not qualify for the 85 Factor or 60/20 Rule. Her pension will be reduced using the reduction factor of 3%

  37. My retirementEarly Reduced Pension Norah’s reduction factor is lowest of Age 6565 - 53 = 12 yrs x 3% = 36% reduction 60/20 Rule60 - 53 = 7 yrs x 3% = 21% reduction 85 Factor(85 - 79)/2 = 3 yrs x 3% = 9% reduction

  38. My retirementEarly Reduced Pension Norah’s pension calculation includes a reduction of 9%

  39. My retirementEarly Reduced Pension Because she is under 65, Norah will receive a Bridge Benefit until she is 65. It will be reduced by the same amount as her early reduced pension.

  40. My retirement How we calculate your pension Sources of retirement income Retiring Early Unreduced Pension Reduced Pension Retiring at age 65 Working past age 65

  41. My retirementRetiring at age 65 Normal Retirement Date • Last day of the month in which you turn 65

  42. My retirementNormal Retirement Pension Mark joined the plan on February 1, 1981 His normal retirement date is January 31, 2009. He has 28 years of pensionable service on that date.

  43. My retirementNormal Retirement Pension Mark’s normal retirement pension calculation:

  44. My retirement How we calculate your pension Sources of retirement income Retiring Early Unreduced Pension Reduced Pension Retiring at age 65 Working past age 65

  45. My retirementWorking past age 65 You can keep working after age 65 If you stop contributing to CPP at age 65, see your College HR department to report the change to the CAAT Pension Plan

  46. My Pension Payments Indexation

  47. My pensionHow do I retire? Pick your retirement date Complete a TRD form with your College HR or payroll The Plan will send you a Retirement Option Document with your benefit choices Return the completed forms to the Plan Timelines are crucial

  48. My pensionPension Payments • Paid by direct deposit in equal monthly installments on 1st business day each month • Payments are made in Canadian funds • Living outside Canada? • Cheques in Canadian funds are mailed. • If you receive a bridge benefit:pension + bridge benefit are combined in one deposit

  49. My Pension Payments Indexation

  50. My pensionIndexing Your pension may be indexed each January Formula75% of the September over September increase in the Consumer Price Index At the end of each year, you receive a letter telling you the amount of any indexing applied to your pension, starting the following January.

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