Disability

After exhausting all sick leave credits (where applicable), a plan member may qualify to receive a disability pension. The criteria for eligibility includes, but may not be limited to, the following:

  • The plan member must be an employee as defined by the Act;
  • The plane member must have accumulated a minimum of five years’ pensionable service; and
  • The plan member’s disability must be medically certified as likely to be permanent

The pension payable under medical disability is based upon the amount of pension earned to the date of retirement due to disability. Three things that distinguish this benefit from other retirement options are:

  • The plan member has a permanent disability that prohibits them from returning to work;
  • The benefit is payable with effect from the expiration of sick leave; and
  • There is no minimum age requirement

Note: Participation in a rehabilitation program is mandatory if recommended by the Plan’s medical assessor.

Termination

The circumstances surrounding termination vary depending on whether the plan member was vested or non-vested.

Non-Vested Member

A non-vested member is a person with less than five years pensionable service. If a plan member terminates employment and is non-vested, they will have the following options:

  • receive a cash refund of contributions and interest (less required withholding tax), or  
  • transfer their (employee) contributions and interest to an individual RRSP, thus deferring tax implications, or
  • transfer their termination benefit directly from the Plan to the pension plan of their new employer (provided their new employer’s pension plan permits such transfers), or
  • leave their contributions in the Plan. This would enable you to link their service accumulated to the date of termination, with future pensionable service should they be re-employed in a pensionable position under the Plan.

Vested Member

If a plan member has at least five years of pensionable service, they are a vested member. “Vested” means that they have earned the right to a lifetime pension (i.e. a deferred pension). The options of a vested member may vary according to age and service.

Please note that if a plan member is eligible for an immediate unreduced pension, they do not have the option of a commuted value payment. Furthermore, it is important that they read the entire section on “Vested Member” to be certain of the options available to them.

An election form, detailing their options, will be provided upon termination of employment. Upon termination, plan member’s may elect one of the following options within 180 days:

  • To transfer the commuted value of their pension entitlement to a locked-in retirement account (LIRA), or
  • To transfer their termination benefit directly from the Plan to the pension plan of their new employer (provided their new employer’s pension plan permits such transfers), or
  • To leave their contributions in the Plan and either:
    • receive a deferred pension payable from their earliest eligible retirement age or,
    • link the vested service with future service if they are re-employed in a pensionable position under the Plan.

Furthermore:

  • If a plan member has less than 10 years of pensionable service and has not been continuously employed for 10 years, and are not yet age 45, they may elect within 180 days after termination to receive:
    • A return of their pre-1997 (employee) contributions plus interest; and
    • A transfer of the commuted value of their pension entitlement representing pensionable service performed after December 31, 1996, to a LIRA.
  • If a plan member has accumulated 10 years of pensionable service or has been continuously employed for 10 years, and are at least age 45, they may elect within 180 days after termination to receive:
    • A return of their pre-1987 (employee) contributions plus interest; and
    • A transfer of the commuted value of their pension entitlement representing pensionable service after December 31, 1986, to a LIRA.

Note: The commuted value will not be less than the value of employee contributions and interest. Plan members who do not elect an option within 180 days after termination are deemed to have elected a deferred pension.

If a plan member chooses to remove their termination benefits from the Plan there may be other benefits that are impacted or forfeited. Employers are encouraged to discuss with plan members the impact this decision may have on other employer benefits.

Participating employers are required to submit to Provident10 appropriate documentation for all necessary actions and changes.

Retirement

How does a plan member qualify for a pension at retirement? 

A plan member must have a minimum of five years of pensionable service. This is the vesting period of the Plan. Vesting refers to the right of an employee to a lifetime pension. This does not have to be five consecutive years, but rather a total of 60 months. 

When can a plan member retire?

The date at which a plan member will be eligible to retire depends on many factors: age, credited service in the Plan, and whether they were a member of the Plan on December 31, 2014, when the pension reform changes were introduced. There are also different provisions which will either allow them to retire on an unreduced basis, or to retire earlier subject to a reduction in their accrued pension.

Normal Retirement

The Plan’s normal retirement age, being the age at which all vested members are eligible to retire with an unreduced pension, is 65.

Early Unreduced Retirement

The changes to the Plan’s early unreduced retirement criteria that were made as a part of pension reform were introduced on a transitional basis. During the period up to and including December 31, 2019, they will be eligible to retire early with an unreduced pension if they meet either of the following criteria:

  • They have reached age 60 with a minimum of five years of pensionable service or,
  • They have reached age 55 with a minimum of 30 years of pensionable service

Further, if they were already a member of the Plan on December 31, 2014, and qualify to retire on an unreduced basis under either of these criteria prior to December 31, 2019, they will be eligible to retire on an unreduced basis at any point after that date if they decide to continue working and remain an active member of the PSPP. In addition, if they reach 30 years of service during this period, they will be grandparented under this provision, and will be eligible to retire on an unreduced basis at age 55.

For members who join the Plan after December 31, 2014, or for members who are not grandparented or who do not qualify for early unreduced retirement during the transitional period, the early unreduced retirement criteria changed. In this case, they will be eligible to retire early with an unreduced pension if they meet either of the following criteria:

  • They have reached age 60 with a minimum of 10 years of pensionable service or,
  • They have reached age 58 with a minimum of 30 years of pensionable service

Early Reduced Retirement

There are several scenarios which allow plan members to retire early, with a reduction in their accrued pension. During the transitional period to December 31, 2019, they are eligible under the following criteria if they were a member of the Plan on December 31, 2014:

  • If they are between the ages of 50 and 55 with a minimum of 30 years of pensionable service, they can retire and receive an immediate pension that will be reduced by one-half per cent for each month they are less than age 55.
  • If they are between the ages of 55 and 60 with less than 30 years, and their age plus service totals a factor of at least 85, they can retire and receive an immediate pension that will be reduced by one-half per cent for each month they are less than age 60.

If they were enrolled in the Plan after December 31, 2014, or were a member of the Plan at December 31, 2014, and do not retire by December 31, 2019, the reduced early retirement criteria are as follows:

  • If they are between the ages of 53 and 58 with a minimum of 30 years pensionable service, they can retire and receive an immediate pension that will be reduced by one-half per cent for each month they are less than age 58.
  • If they are between the ages of 58 and 60 with less than 30 years, and their age plus service totals a factor of at least 88, they can retire and receive an immediate pension that will be reduced by one-half per cent for each month they are less than age 60.

In these situations, the unreduced pension is calculated first, and the reduction is applied to the calculated pension and not to the accrual. As an example, if a plan member is retiring in the transitional period, have 30 years of service and are age 53 years and seven months, the reduction would be based on the number of months that you are less than age 55, and is determined as follows:

Months until age 55:  17 months 

Reduction: 17 * 0.5% = 8.5%

Finally, all members are entitled to retire as early as age 55 if they are vested. If a plan member does not satisfy any of the above criteria, their immediate pension in this case will be actuarially reduced.

What documents are required for a plan member to retire?

The initial pension calculation is prepared by the employer and forwarded to Provident10 with the following:

  • Termination form
  • Birth certificate
  • Birth certificate of principal beneficiary and/or child (required before survivor benefits can be paid)
  • Social Insurance Number of principal beneficiary* (required before survivor benefits can be paid)
  • Calculation of Pension Entitlement form
  • Marriage certificate
  • TD (1) forms (provincial and federal)
  • Direct deposit information

*Principal beneficiary includes legally married spouse or cohabiting partner, and includes a same sex partner.

It is the responsibility of the participating employer to submit all retirement forms within the deadlines prescribed by Provident10. Employers are notified of these deadlines on an annual basis. 

Death

What if a plan member dies before retirement?

In the event of a plan members death prior to retiring, the benefits that will be payable depends on many factors, as described below.

If they die before they have been credited with at least five years of pensionable service, a refund of their contributions and interest will be paid to their estate.

If they die with at least five years of pensionable service, their principal beneficiary will have the following options:

  • a lifetime pension equal to 60% of the benefit earned to the date of death, or
  • a lump sum payment of the greater of:
    • 100% of the commuted value of the plan member’s pension entitlement, calculated at the date of death;
    • the commuted value of the 60% survivor benefit as determined at the date of death.

If the plan member’s principal beneficiary elects to receive the 60% survivor pension, it is payable to the principal beneficiary for life. Payments will commence on the first day of the month following the month of the plan member’s death.

If the plan member does not have a principal beneficiary at the time of death, the commuted value of their pension entitlement will be paid to their estate.

What if a principal beneficiary dies leaving dependent children?

Upon the death of a principal beneficiary who is receiving the 60% survivor benefit, the benefit will continue to be paid to (or for the benefit of) surviving children:

  • until the youngest child reaches age 18, or
  • if a child is in full-time attendance at a recognized school or post-secondary institution, until the course of study is completed or the child reaches age 24, whichever occurs first.

What if a plan member dies after they retire?

Upon the death of a pensioner, the surviving principal beneficiary or, in the absence of a principal beneficiary, the dependent children will receive a survivor benefit equal to 60% of the pension.

In the case of a principal beneficiary, the benefit is payable for life. In the case of dependent children, the benefit is payable until the youngest child reaches age 18 or, if a child is in full-time attendance at a recognized school or post-secondary institution, until the course of study is completed or the child reaches age 24, whichever occurs first.

Please note that, if it has not been removed, the offset (or bridge benefit) will be removed from the survivor pension when the plan member would have reached age 65.

Are there any other provisions which protect plan member interests in the event of their death?

Yes. If a plan member and/or their survivors should die before the total of benefits paid out is equal to their contributions plus interest, the difference between the amount of contributions with interest and the total benefits paid will be calculated and paid to their estate.

GMPP Transfer Requests

The processing of approximately 2,300 Government Money Purchase Pension Plan (GMPP) transfer requests is scheduled to begin by late February, 2018.

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