There are a number of factors that can affect your pension. These are:
1. Leaving your job
If you leave your job, you may be eligible for one or more of the following options:
- Receive a full pension from the pension plan starting on your normal retirement date
- Get a reduced pension from the pension plan starting on an early retirement date
- Receive a refund of certain contributions
- Transfer the commuted value of your pension benefits to another approved retirement arrangement
Within 30 days of the end of your employment, you must receive a written statement from your pension plan administrator that includes:
- Details about the pension benefits payable to you
- Your options
- Deadlines for choosing an option
- Information about any refund plus interest, that you are eligible for
Options for members of a multi-employer pension plan (MEPP)
- If you leave your job and are a member of a MEPP, your plan membership does not end automatically
- In order to cancel plan membership, you need to submit an application to your plan administrator 24 months after contributions have stopped being made on your behalf - or any shorter period set out in the MEPP
E.g. If you left your job on December 1, 2018 and no further contributions were made to the MEPP on your behalf, you can apply to end your membership on December 1, 2020.
Note: You will not be able to transfer the value of your pension benefits to another plan or LIRA, until the date of your application.
Options for vested members of a pension plan
As a vested member of a pension plan, your options depend on several factors, including whether or not you are eligible for early retirement.
- You are entitled to receive a pension from the plan when you reach retirement age
- If you are contributing to the plan, you may also be eligible for a refund of certain contributions
- You may also be able to transfer the commuted value of your pension benefits out of the plan
Eligibility for a refund of your contributions: 50 per cent cost rule
You are entitled to a refund of a portion of your pension contributions, plus interest, if you meet the following:
- You belong to a defined benefit pension plan and you were required to make contributions to that plan
- The value of your pension contributions made after December 31, 1986, plus interest, is more than 50 per cent of the commuted value of the pension, or deferred pension you accumulated after that date.
This may be paid as a taxable lump sum payment, or transferred directly to a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF).
Additional voluntary contributions (AVCs)
If your pension plan allowed you to make AVCs you are entitled to a refund of your contributions, plus accrued interest or investment income.
Eligibility for transferring money and other options
If you are a vested member when your employment ends, but are not yet eligible for early retirement, you may:
- Leave your accrued benefits in the pension plan to provide for a deferred pension
- Transfer the commuted value of your pension benefits out of the plan
If you are eligible for early retirement, you may be able to transfer the commuted value of your benefits out of your pension plan your plan allows it or is being wound up.
Rules for transferring money
If you transfer the commuted value of your pension benefits to any of the following, they will remain locked-in:
- Another pension plan
- A Locked-in Retirement Account (LIRA) or a Life Income Fund (LIF)
- An insurance company to buy a life annuity
Once all of the commuted value has been paid or transferred our of your pension plan, you will have no further entitlement to pension benefits.
Restrictions when transferring money
If your pension plan is not fully funded, your pension plan administrator will not be able to transfer the full commuted value of your pension benefits immediately. In this case, the transfer may happen in two steps:
Step 1. The plan administrator will first transfer a portion of the commuted value of your pension benefits based on the plan’s funding level
Step 2. The plan administrator will then transfer the remainder of the commuted value, plus interest, within five years of the date of the first transfer
Payment of small amounts
At the time that you leave your plan, if your annual defined benefit pension is not more than four per cent of the Year's Maximum Pensionable Earnings (YMPE), or the commuted value of your pension is less than 20 per cent of the YMPE, you may be entitled, or required to:
- Receive the commuted value of your pension benefits in cash
- Transfer the commuted value of your pension benefits into your RRSP or RRIF"
2. Taking a leave of absence
Absences due to pregnancy, parental or emergency leave
If you contribute to the pension plan, you will continue to participate in the plan while on leave. During your absence, you will continue to earn (or accrue) pension benefits. Your employer will also continue to make contributions, unless:
- You give written notice that you do not intend to make contributions for this period
- You give written notice indicating that you do not wish to participate in your plan while on leave
If you are not required to make contributions, you will still continue to participate in the plan and earn pension benefits.
Absences due to injury (if you are on workers’ compensation)
If you are required to contribute to your pension, you will continue to participate in the plan while on leave.
- You will continue to earn pension benefits for up to one year after the date of your injury or any longer period set out in your plan’s terms
- You and your employer will both continue make contributions during this period
If you are not required to contribute to your pension, you will continue to participate in the plan while on leave.
- You will continue to earn pension benefits for up to one year after the date of your injury, or any longer period set out in your plan’s terms
- You employer must continue make contributions during this period"
3. Your employer goes bankrupt or becomes insolvent
If your employer becomes bankrupt, any pension plan they sponsor may be wound up.
- Your pension plan administrator must provide a notice of proposal to wind up the pension plan to the CEO of FSRA, all active members, former members and retired members
- The CEO of FSRA may appoint an administrator to wind up the plan
- Despite the wind up, retired members will continue to receive their pensions
Before the wind up is approved, your plan administrator may submit an application to the CEO of FSRA to:
- Begin paying pension benefits to newly retired members
- Begin paying death benefits to a spouse or plan beneficiary
- Continue to pay plan expenses from the pension fund"
What happens if there is not enough money to pay all promised benefits, to all members?
In In this situation, the Pension Benefits Guarantee Fund (PBGF) will guarantee certain defined benefits.