Actuarial valuation is an analysis of the financial condition of a pension plan that calculates the liabilities of the plan and the costs of providing plan benefits. An actuary prepares the valuation and the plan sponsor must file the valuation with its pension regulator at least once per year.

An actuarial reduction on early retirement means a reduction in your pension to reflect the fact that you are taking your pension early — it accounts for the cost of your pension being paid over a longer period of time. The actuarial adjustment in your own pension will depend on your specific circumstances, such as your age and your spouse’s age when you retire, your gender, life expectancy, the option you choose, etc.

A business professional who applies their knowledge of mathematics, probability, statistics, and risk theory to financial problems involving future uncertainty such as pension plan valuations.

Asset mix is the percentage of a portfolio or fund that is invested in each of the main asset types (i.e. short–term investments, fixed income, Canadian equity, international equity and alternatives).

Plan assets refer to the property of the pension fund, primarily comprised of the fair value of its investments.

Canada pension integration is the adjustment of your pension to reflect your lower contribution rate up to the YMPE for the period of time you contributed to the Plan.

Cohabiting partner means either:

1. a) in relation to a member, pensioner, or deferred pensioner who has a spouse, a person who is not the spouse of such member, pensioner or deferred pensioner who has cohabited continuously with the member, pensioner or deferred pensioner in a conjugal relationship for not less than three years, or
2. b) in relation to a member, pensioner, or deferred pensioner who does not have a spouse, a person who has cohabited continuously with the member, pensioner or deferred pensioner, in a conjugal relationship for not less than one year,

and is cohabiting or has cohabited with the member, pensioner, or deferred pensioner within the preceding year.

The commuted value of a benefit refers to how much a benefit is worth today. Commuted values express the lump sum value of a promised benefit, usually from a defined benefit pension plan. The commuted value considers the benefits, interest, and mortality. In other words, it is the amount of money that would need to be invested today to pay the earned benefit (at date of calculation) with effect from the date that the benefit would have been paid under the pension plan.

CPI is an inflation measure computed by Statistics Canada that calculates the change in prices of a fixed basket of goods and services purchased by a typical Canadian consumer each month. The CPI is used to calculate annual cost of living increases for pension benefits, a process referred to as Indexing.

Deferred pension is a specified pension determined at the time of termination, which is payable when the plan member reaches the required age.

A deficit exists in a pension plan when the actuarial valuation determines that the value of the plan’s assets is less than its liabilities.

Fiduciary is an individual or institution occupying a position of trust. An executor, administrator or trustee who is responsible for the assets belonging to another person.

A full-time employee is an employee who works the number of hours which constitute full-time employment as determined by a particular employer.

Pension plan governance refers to the structure, processes and safeguards for overseeing, managing and administering the plan to ensure the fiduciary and other obligations of the plan are met.

Immediate pension is a pension payable the first of the month following the month in which a plan member retires. Disability pensions are payable with effect from the expiration of sick leave.

An investment manager is a person or company hired to invest fund assets according to established guidelines. 

Liabilities is the amount required by the plan to cover the cost of paying current and future pension benefits.

Locked-in pension is a legislative requirement that vested benefits under the pension plan must be used to provide a lifetime retirement income and are not available as immediate cash.

A locked-in retirement account (LIRA) has all the essential characteristics of an RRSP with the exception of a cash surrender provision. A LIRA cannot be surrendered for cash but must be used to purchase an annuity payable for life.

Pension adjustment is the value of pension earned in a year. It is reported in Box 52 of your T4 and is used by Canada Revenue Agency to determine your RRSP contribution room for the tax year.

Pension adjustment reversal is a calculation done to reflect restored RRSP contribution room for the years for which pension contributions have been refunded.

Pensionable salary is the portion of a plan member’s total earnings upon which contributions are based and the pension benefit is calculated (e.g. regular earnings, excluding overtime).

A principal beneficiary is the spouse of an employee, pensioner, or deferred pensioner, or where the employee, pensioner, or deferred pensioner has a cohabiting partner, his or her cohabiting partner.

Statement of Investment Policy and Procedures. The SIP&P defines the investment policies, principles and eligible investments which are appropriate to the needs and objectives of the Plan and the Fund.

A spouse is a person who:

1.  is married to the member, pensioner, or deferred pensioner;
2. is married to the member, pensioner, or deferred pensioner by a marriage that is voidable and has not been voided by a judgment of nullity; or
3. has gone through a form of a marriage with the member, pensioner, or deferred pensioner, in good faith, that is void and is cohabiting or has cohabited with the member, pensioner, or deferred pensioner within the preceding year.

Vesting refers to the earned right of a plan member to receive an immediate or deferred pension benefit funded by employer contributions. Under the PSPP, a plan member is considered vested upon accumulating five years of pensionable service.