Mohawk College
College Presentation
June 10, 2009
1
Agenda
Pension Basics
Building my pension
Leaving my job
My retirement
My pension
Survivor Benefits
More information
2
Pension Basics
Facts about CAAT Pension Plan




Established June 1, 1967
Multi-employer Pension Plan
24 Colleges, 18,900 members, 10,925 pensioners
Defined benefit plan
3
Pension Basics
Facts 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
OCASA
Sponsors’
Committee
4
Pension Basics
How 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
5

Pension Basics
How the plan is funded
6
Building my pension
When am I eligible to join?
How much do I contribute?
Can I increase my pension?
7

Building my pension
When 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
8
Building my pension
When am I eligible to join?
How much do I contribute?
Can I increase my pension?
9
Building my pension
How 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
10
Building my pension
Contribution Rates
Earnings
to $3,500
Earnings
$3,501 –
$46,300
Earnings
$46,301
and over
(YBE)
(YBE - YMPE)
(>YMPE)
From Jan. 1, 2009
11.1%
9.3%
11.1%
From Jan. 1, 2010
12.1%
10.3%
12.1%
Beyond 2010 to be determined based on funding
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Building my pension
Contribution Example
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
+
9.3%
x
$38,610
Greg’s contributions in 2009
His College's contributions
Total contributions
=
$389
=
=
=
=
$3,591
$3,980
$3,980
$7,960
($42,110 - $3,500 = $38,610)
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
Building my pension
Contribution Example
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%
+
9.3%
+
11.1%
x
$3,500
=
$389
x
$42,800*
=
$3,980
x
$35,300*
=
$3,918
=
$16,574
Mary’s contributions in 2009
Her College's contributions
Total contributions
=
=
$8,287
$8,287
*($46,300 - $3,500 = $42,800; $81,600 - $46,300 = $35,300)
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Building my pension
When am I eligible to join?
How much do I contribute?
Can I increase my pension?
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Building my pension
Can 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
15
Building my pension
Can 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
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
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
17
Leaving my job
What happens if I leave my job before I can
retire?
18
Leaving my job
Termination Benefits
Non-vested
(you have less than 2 years of membership or
service)
 You will receive a refund of your contributions +
interest
19
Leaving my job
Termination 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
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
Leaving my job
Termination 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)
21
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
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My retirement
How we calculate your pension
1.3%
x
HAPE up to the AYMPE
x Pensionable Service
x
HAPE above AYMPE
x Pensionable Service
plus
2.0%
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
AYMPE: Average Year’s
Maximum Pensionable
Earnings
Average YMPE for the year
of retirement and 4
preceding years.
23
My retirement
How we calculate your pension
Bridge Benefit:
An extra pension payable from early retirement to age 65
1.3%
x
HAPE up to the AYMPE
x Pensionable Service
2.0%
x
HAPE above AYMPE
x Pensionable Service
0.7%
x
HAPE up to the AYMPE
x Pensionable Service
plus
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My retirement
CAAT 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
25
My retirement
Sources of Retirement Income
Early Retirement
Age 60
Age 65
Lifetime pension
Bridge Benefit
Ag
e
65
CPP pension (reduced)
OAS pension
Your personal savings
26
My retirement
Government 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
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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
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My retirement
Early Unreduced Pension
When am I eligible?
 85 Factor
your age plus service equals 85 or more
or
 60/20 Rule
You are age 60 or more and have 20 years of
pensionable service
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My retirement
Early 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
30
My retirement
Early Unreduced Pension
Stuart’s pension is calculated like this:
1.3% x $43,620 x 20 years
=
$11,341
plus
2% x $11,380*
=
$4,552
=
$15,893
x 20 years
Stuart’s benefit from age 62
* $55,000 - $43,620 = $11,380
31
My retirement
Early Unreduced Pension
Because he is under 65, Stuart will receive a Bridge
Benefit until he turns 65.
0.7% x $43,620 x 20 years
Plus pension paid from age 62
=
=
$6,107
$15,893
Stuart’s total payment to age 65
=
$22,000
32
My retirement
Bridge Benefit Stops
When he turns 65, Stuart’s Bridge Benefit will stop.
Total benefit to age 65
At age 65 the bridge stops
(with indexation)
Lifetime benefit
$22,000
- $ 6,107
$15,893
Remember Stuart can apply for CPP as early as age
60 and OAS at age 65
33
My retirement
Early Reduced Pension
When am I eligible?
You are eligible to retire on an immediate reduced
pension on or after reaching the earlier of:
1. age 55 with at least 2 years of pensionable service
or Plan membership,
or
2. age 50 with at least 20 years of pensionable
service
34
My retirement
Early 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
35
My retirement
Early 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%
36
My retirement
Early Reduced Pension
Norah’s reduction factor is lowest of
Age 65
65 - 53 = 12 yrs x 3%
60/20 Rule
60 - 53 = 7 yrs x 3%
85 Factor
(85 - 79)/2 = 3 yrs x 3%
= 36% reduction
= 21% reduction
= 9% reduction
37
My retirement
Early Reduced Pension
Norah’s pension calculation includes a reduction of 9%
1.3% x $43,620 x 26 years
plus
2%
x $40,380* x 26 years
=
$14,743
=
$20,998
Total
=
$35,741
Minus early retirement reduction (9%)
=
- $3,217
Lifetime benefit from age 53
=
$32,524
* $84,000 - $43,620 = $40,380
38

My retirement
Early 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.
0.7% x $43,620 x 26 years
Minus early retirement reduction (9%)
=
=
$7,939
$ - 714
Bridge benefit paid to age 65
=
$7,224
Norah’s total payment from 53 - 65
Reduced lifetime benefit from age 65
=
$39,748
$32,524
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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
40
My retirement
Retiring at age 65
Normal Retirement Date
 Last day of the month in which you turn 65
41
My retirement
Normal 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.
42

My retirement
Normal Retirement Pension
Mark’s normal retirement pension calculation:
1.3% x $43,620 x 28 years
plus
=
$15,878
2%
=
$3,013
=
$18,891
x $5,380* x 28 years
Lifetime benefit from age 65
* $49,000 - $43,620 = $5,380
43
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
44

My retirement
Working 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
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My Pension
Payments
Indexation
46
My pension
How 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
47

My pension
Pension 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
48
My Pension
Payments
Indexation
49
My pension
Indexing
Your pension may be indexed each January
Formula
75% 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.
50

My pension
How does indexing work?
? ? ?
Indexation paid up to
January 1, 2014.
After that, Indexation
paid if Plan is 100%
funded and Plan
specifically amended.
Indexation paid
for life
? ? ? ? ?
Indexation paid if
Plan is 100%
funded.
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
My pension
How does indexing work?
Doug enrolled in 1979. He retired on December 31, 2009 with a pension of $14,400,
or $1,200/month. If, in 2012, indexation of 2% is paid on all but post 2007 service,
his pension would increase by $22 a month.
$500/month
$500 + $10
$600/month
? ? ?
$600 + $12
$100/month
$100 + $0
? ? ?
52
Survivor Benefits
If you die before you retire
If you die after you retire
53
Survivor Benefits
If you die before you retire
Eligible spouse
Married (or common law),
living together at time of
death.
Includes same and opposite
sex
Your pension accrued to date of death, converted to
commuted value. Your spouse chooses one of:
 Immediate pension (based on spouse’s age)
 Commuted value transfer
 Deferred pension at age 65
Eligible Child
Must be under 18
Only if no spouse at
Member death
50% of your pension accrued to date of death
Divided between each child under 18 and re-divided as each
child turns 18.
Beneficiary
Only if no spouse.
Anyone designated
If no spouse, but eligible children: Commuted value of your
benefit minus the value of the children’s benefit.
If no spouse or eligible children: Commuted value paid in
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lump sum to designated beneficiary or estate.
Survivor Benefits
If you die after you retire
Eligible spouse
Married (or common law), living
together at time of death.
Includes same and opposite sex
60% of your lifetime pension, paid for life
(75% if that option was chosen at retirement)
Eligible Child
Must be under 18
Only if no spouse
(or surviving spouse dies)
60% of your lifetime pension
Divided between each child under 18 and re-divided as
each child turns 18.
Last child receives 60 months guarantee less pensions paid
Beneficiary
Beneficiary of last surviving recipient receives 60 months
guarantee less pension paid to all.
55
Marriage Breakdown
 Copy of separation or divorce agreement
or
 Waiver signed by former spouse, waiving a claim to
member’s pension benefit
56
Your pension plan
 Join the plan when you are hired full-time
 Increase your pension if you have service eligible for
purchase or transfer
 Retire early on a reduced or unreduced pension
 Bridge benefit until age 65 if you retire early
 Your pension is paid to you for your life
 Survivor benefits to your spouse, eligible children, or
beneficiary
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Do you have questions?
 Estimate your retirement benefits, or the cost of a
service purchase on our website:
www.caatpension.on.ca
 Your Annual Statement and Member Handbook
 Call us: 1-866-350-CAAT (2228)
416-673-9000
 When you’re ready for CPP and OAS get estimates
at www.servicecanada.gc.ca
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