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As the old adage goes, a penny saved is a penny
earned and, since we are talking about your
retirement savings, every cent counts!
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Understanding Your Benefit Options
Under age 55 with two or more years of LAPP membership
This package was sent to you because your employer
advised our administrator, Alberta Pensions Services
Corporation (APS) that you stopped contributing to the
Local Authorities Pension Plan (LAPP). Use the package
to help you choose the option that works best for you.
It might be tempting to jump to the page that shows
the dollar amounts for your benefit. That’s only natural;
but come back to these pages to make sure you’ve read
all you need to help you make your decision. Once your
benefit is paid, you cannot change your option.
You have two or more years of LAPP membership. This
means you have earned a lifetime LAPP pension even
if you are not yet old enough to collect it. Since you
are not yet 55, you are too young to start collecting
your pension, but you are never too young to plan for
your future. Take time to understand the information
provided in this package and to talk to someone
about your options: your former LAPP employer, your
accountant or our Member Services Centre.
IMPORTANT: Please complete your Benefit Choice form
and return it to APS by the due date shown on the top
right-hand corner of your Benefit Choice form.
Note: These options are not available to you if you
immediately begin working with and contributing under
another LAPP employer.
Option A (on the Benefit Choice Form)
Leave Your Funds with LAPP
If you are not sure of your immediate plans, it’s a
good idea to leave your funds in LAPP for now. This is
because you can’t change your decision after a payout
has been made from your account. By leaving your
funds with LAPP, you can choose to take them out of
the plan later, if need be.
Leaving contributions with LAPP is a great way to
retain the benefits of being a plan member. For
example, if you become a LAPP contributor again, this
period of service will be added to your new service.
If you choose Option A, please complete the
enclosed forms:
The table in your package tells you the estimated
monthly pension you could receive on the date you
become eligible to be paid an unreduced pension. If
that date seems too far away, remember that you
can retire as early as age 55. Your pension would be
reduced to reflect the earlier payment.
• Benefit Choice form
• Designation of Beneficiary form
Some important pension facts about leaving funds with LAPP:
• The pension is paid to you for as long as you live. Even a small pension more than pays for itself.
• If you die before you retire, your pension partner may be entitled to a lifetime pension (or a one-time
payment of the value of that pension).
• If you become disabled, you may qualify for your LAPP pension before reaching age 55.
• LAPP will send you a statement every year to remind you that you still own your LAPP benefits.
• With LAPP, you do not pay administration fees or commissions. There are no surprises when you get your
annual statement because your contributions cannot be “lost” when the markets take a turn.
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Option B (on the Benefit Choice Form)
Transfer your Funds to another Pension Plan
Some public sector pension plans have a special
arrangement with LAPP called a Reciprocal Transfer
Agreement. This means LAPP may be able to send the
value of your LAPP pension to your new employer’s
pension plan.
Check Frequently Asked Questions, I’m Thinking of Leaving,
at lapp.ca to see a list of eligible pension plans. Contact
your new employer immediately to ask about the
transfer process and to have them notify APS.
If you choose Option B, please complete the
enclosed forms:
• Benefit Choice form
• Designation of Beneficiary form
Option C (on the Benefit Choice Form)
Withdraw your Funds from LAPP
With “Option C”, three sub-choices are available. To understand what must be transferred to a Locked-In
Retirement Account (LIRA) and what can be transferred to an RRSP or paid to you by cheque, please review the
illustration of benefit payout on the next page. You may be eligible for more than one choice under Option C but,
whatever method or methods you choose, you must withdraw ALL the funds from LAPP.
I. LOCKED FUNDS: Transfer Funds to a LIRA (Locked-In Retirement Account)
A LIRA is a type of RRSP where funds are locked-in until
you are at least 50 years of age.
Once transferred out of the pension plan, the amount
in your LIRA can be affected by market ups and downs,
and there is no guarantee that you will retain the
original transfer value. By the time you need to use
your LIRA for a lifetime benefit, it may or may not be
enough to replace the lifetime pension you could have
had from LAPP.
If you choose Option C — Transfer Funds to a
LIRA, set up your LIRA with your bank and complete
the enclosed forms:
• Benefit Choice form
• Transfer to a Locked-in Retirement Account (LIRA)
II. MAXIMUM TRANSFER VALUE (MTV) EXCESS: Receive a Payment by Cheque
If you are eligible, the amount that could be paid to
you by cheque will be shown on your personalized
information. MTV Excess can only be taken as a cash
payout.
The minimum income tax will be withheld from any
payment made directly to you. When added to your
employment income for the year, you may be required
to pay a significant amount of additional tax when you
file your income tax return.
If you choose Option C — Receive a Payment
by Cheque, please complete the enclosed form:
• Benefit Choice form
III. NON-LOCKED FUNDS: Transfer Funds to an RRSP
If you are eligible, the amount will be shown on your
personalized information. Income tax is not deducted
when funds are transferred to an RRSP.
If you split your payout between a refund and transfer
to RRSP, make sure you show what amount or
percentage of your total payout is to be paid directly to
you by cheque or transferred to your RRSP.
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If you choose Option C — Transfer Funds
to an RRSP:
• Complete the enclosed Benefit Choice form
• Compete the enclosed Transfer to an RRSP form
Illustration of Benefit Payout
PAYOUT
Locked Funds
Today’s pension value up to the
maximum allowed by tax rules,
paid as a single payment
Locked Funds must
be transferred to a
Locked-In Retirement
Account (LIRA).
Funds transferred to LAPP on
locked-in basis
Non-Locked
Funds
Excess contributions and interest
Optional service and transfers
MTV Excess
Value of pension in excess of the
maximum allowed by tax rules
Non-Locked Funds can be
transferred to an RRSP, or
paid to you by cheque, less
income tax.
Paid to you be cheque,
less income tax.
This image shows you how your payout is divided between what must be
transferred to a LIRA and what can be paid without being locked in.
Did You Know?
The value of your pension is the amount of money that must be set aside today at the current interest rates to
provide pension funds at a future date. The lower the interest rates the higher the amount required, and vice versa.
If you have non locked funds (contribution excess plus interest) you may choose one of the following:
• Transfer to RRSP (Income tax is not deducted when funds are transferred to an RRSP)
• Cash Payout
• Split Between a Transfer to RRSP and Cash Payout
Frequently Asked Questions
It takes between six to eight weeks to process an
account once all completed forms are received from
you and your employer.
How did you get my salary and service information?
Your employer provides APS with service and salary
information. If your records differ from what is reported
in this package, please contact your employer.
What if I am going through a divorce or already have a
Matrimonial Property Order?
When a marriage breaks down, pension benefits are
viewed as matrimonial property. You may want to
obtain legal advice to make sure you understand your
options. Please call us at the number on the next page
for more information on how your pension is affected
by marriage breakdown.
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What if I change my mind?
Your choice cannot be changed once the transfer or
payout is completed. However, if you leave your funds
with LAPP, you will remain eligible to withdraw them
at a later date of your choosing unless you re-join the
pension plan.
What if I re-join LAPP at a later date?
If you left your funds with LAPP, they will be added to
your new service. If you removed your funds from LAPP,
you may re-establish your service under LAPP but it
might cost more than what was paid out from LAPP.
What if I am still paying for optional service or a leave
of absence?
You’ll need to finish paying for the service within 90
days of your last day of plan membership or you’ll only
get credit for the portion of service your payments have
covered. Ask your employer to assist you with this.
Checklist
‰‰Complete the Benefit Choice form no matter what choice you make.
‰‰To leave your funds with LAPP complete the Designation of Beneficiary
form (or complete this form online at mypensionplan.ca).
‰‰To transfer to another pension plan talk to your new employer right away.
‰‰To transfer funds to your LIRA complete the Transfer to a Locked-in Retirement Account.
‰‰To transfer your funds to your RRSP complete the Transfer to a Registered Retirement Savings Plan form.
‰‰Call APS if you need assistance or have questions. Remember, your choice cannot be changed once a
payment has been made.
‰‰Make a copy of your completed paperwork for your records.
‰‰Mail or fax (780-421-1652) the original copies of your completed paperwork to APS
by the due date shown at the top right corner of your Benefit Choice form.
‰‰Note the date you sent your forms to APS. To process your request takes APS between six and
eight weeks from the date they receive the completed paperwork from you and your employer.
‰‰Help protect your privacy by sending personal information to APS only by regular mail or fax.
Notes
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The information sheet is only a summary of your benefit options.
Should anything in this information sheet conflict with governing legislation, the legislation shall apply.
NEED MORE INFORMATION?
Alberta Pensions Services Corporation (APS) proudly
serves LAPP and provides responsive and focused
member service on behalf of the Plan. If you need more
information, please contact APS through the Member
Services Centre at:
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LAPP c/o Alberta Pensions Services Corporation
5103 Windermere Blvd. SW
Edmonton, AB T6W 0S9
Telephone: 1-877-649-LAPP (5277)
E-mail: memberservices@lapp.ca
Fax: 780-421-1652
Website: www.lapp.ca.