UNIVERSITY OF OTTAWA PENSION PLAN

UNIVERSITY OF OTTAWA PENSION PLAN
New Pension Plan Member
Luc Lauzière September, 2015
uOttawa.ca
Last update: July 23, 2015
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AGENDA
Section 1-Pension Plan
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Defined Benefit Pension Plan
Financial Planning
Pension Governance Structure
Statistics
Membership
Required contributions (employee/employer)
Benefit formula
Pension indexation
Survivor benefit options
Pension beneficiaries
Service Buy-Back
Options upon termination of employment
Pension Documents
Contact us
Section 2-Working Tools
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uOttawa.ca
Reference to Personal Statement and Annual Report
Human Resources Web Site
Pension Plan Fact Sheets
Personalized Web Site
Financial planner
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Section 1 - Pension Plan
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uOttawa.ca
Defined Benefit Pension Plan
Financial Planning
Pension Governance Structure
Statistics
Membership
Required contributions (employee/employer)
Benefit formula
Pension indexation
Survivor benefit options
Pension beneficiaries
Service Buy-Back
Options upon termination of employment
Pension Documents
Contact us
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DEFINED BENEFIT PENSION PLAN
The University of Ottawa Pension Plan is a defined-benefit plan. This means that, at the time of your retirement, you
will receive a pension based on a formula that takes into account the average salary of your best 60 months of
earnings and the number of years of credited service you have in the Plan.
-Average Salary
-Pension Service
-Pension Formula
=
Pension Payable (Retirement)
X
Actuarial Factors
=
Commuted Value (Death)
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-Contributions
Employee and
Employer
-Investments
=
Required Funds
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FINANCIAL PLANNING
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PENSION GOVERNANCE STRUCTURE
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Organizational Chart of responsibilities and reporting relationships
Plan Sponsor and Administrator:
- Governance structure
- Policies (investment;
funding)
- Plan terms and provisions
Board of Governors
Executive Committee
Pension Plan Committee
Pension Fund
Investment Committee
President
Treasurer/Director
Pension Fund
Pension Fund Investment:
- Policy recommendations
- Investment Strategy
- Manager selection and oversight
- Performance objectives
Key Advisors:
Actuary; trustee/custodian;
investment managers;
consultants
Assistant Director
Treasury &
Pension Fund
Assistant Director
Private Market
Investments
Administrative
Committee
V-P Resources
Associate V-P Human
Resources
Director, HR Total
Compensation
Associate Director,
Pension Plans
Treasury Analyst
Pension Plans
Coordinator
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Pension Plans
Coordinator
Pension Plan Administration:
- Member entitlements
- Member communications
- Pension administration
- Prescribed filings
Key Advisors:
Actuary; trustee/custodian;
regulatory authorities
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STATISTICS
University of Ottawa Pension Plan Statistics as at December 31, 2014:
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Fund Value
1,872,419,564 $
Pension Benefits Paid
62,874,961 $
Withdrawal/Transfers
8,556,068 $
Employee Contributions Remitted
18,026,633 $
Employer Contributions Remitted
45,360,470 $
Employer Special Contributions Remitted
2,788,800 $
Transfer Value in the Plan
3,332,198 $
Buy-Back Value in the Plan
813,869 $
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Number of Retirees/Pensionners
Number of Active Member
Number of Deferred Member
2,021
3,496
776
Plan Activities as at December 31, 2014:
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New Members
New Retirees (active and deferred members)
Deceased Retirees
Terminated Members
Deceased Active Members
Amortized Buy-Back
Withdrawals/Transfers
uOttawa.ca
210
107
48
93
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55
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MEMBERSHIP
New employees aged 30 or more
New employees who are eligible for employee benefits and are 30 or over must join the Plan as soon
as they begin working at the University.
Employees under the age of 30
Employees who are eligible for employee benefits and are under the age of 30 may become members
from the start of their employment or on the first day of any month before turning 30 years old. If
they do not elect to participate, they automatically become members on the first day of the month
following their thirtieth birthday.
Effective May 1, 1992 , persons eligible for employee benefits and hired on that date or later have had
to become members either
 on the first day of the month immediately following two years of service at the University,
or
 on the first day of the month immediately following their thirtieth birthday.
Employees who do not fall in the above categories
Any person who, in two consecutive calendar years, works 24 continuous months and either earns
35% of the YMPE (yearly maximum pensionable earnings*) or works at least 700 hours in each of
these two consecutive calendar years may choose to become a member of the Pension Plan if he or
she wishes to.
Re-hired pensioner
A member who has retired under the University Pension Plan and is receiving a pension benefit cannot
become a contributing member again if re-hired by the University.
*Year’s Maximum Pensionable Earnings (YMPE)
The Canada/Québec Pension Plan Yearly Maximum Pensionable Earnings is currently set at $53,600.
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REQUIRED CONTRIBUTIONS (EMPLOYEE/EMPLOYER)
A.
Required employee contributions
Up to the Integration Level*
Above the Integration Level
B.
Employer contributions
Current Integration Level
4.85%
7.50%
13.29%
$37,793
Your contributions are based on your regular salary, which does not include special income such as overtime
pay, premium pay, bonus pay or second-salary sources. Because of the Canada Revenue Agency tax rules,
the contributions you make to the University of Ottawa Pension Plan based on your salary are not subject to
income tax. As a result, you save on tax immediately.
The following example illustrates how the contribution formula works. Your total contributions to the Plan for
2015 would be calculated as follows if you earned a yearly salary of $60,000.
4.85% of your salary up to $37,793
= $1,832.96
PLUS
7.50% of $22,207 ($60,000-$37,793)
= $1,665.52
Total Contributions
$3,498.48
*Integration level
The University pension plan provides for a pension that differs for the portion of earnings below and above a certain
threshold. The threshold of earnings is based on the maximum earnings (YMPE) covered for purposes of determining the
pension payable from the Canada and Quebec Pension Plan and differs for service before and after January 1st, 2004.
Currently the Canada and Quebec Pension Plan set this amount at $53,600 for 2015.
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PENSION BENEFIT FORMULA
A.
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Pension calculation formula (following the reform)
•
Average salary = 60 best months up to the maximum CRA prescribed salary of $154,172 as
at January 1st, 2015
•
For the Pre-2004 service the Integration Level is set at $31,790
Please note that there is no maximum pensionable service in the pension plan.
Service to December 31, 2003 (Pre-2004)
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i) $31,790 X 1.3% X pension participation
ii) (Average salary - $31,790) X 2% X pension participation
=a
=b
Total annual pension pre-2004 (a + b)
=c
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B.
Pension calculation formula (post reform)
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Average salary = 60 best months (Total pension service)
Pre-2004 set Integration Level of $31,790 indexed annually at a rate of 55 % of the increase in
the YMPE*
Service Post -2003
i) $37,793 X 1.3% X pension participation
ii) (Average salary - $37,793) X 2% X pension participation
Total annual pension post-2003 (a + b)
Total Annual Pension UO
=a
=b
=d
(c + d)
MINIMUM PENSION TEST
As part of the pension plan reform, a participant to the University pension plan is entitled to a
minimum pension equal to 1.5% for each pension year. (Average salary X 1.5% X pension
participation)
MAXIMUM CRA PENSION RULE
As part of the CRA Pension rules, the maximum pension plan entitlement in a registered pension plan
is $2,818.89 per year of pensionable service effective January 1st, 2015.
*Year’s Maximum Pensionable Earnings (YMPE)
This is the amount the government sets each year, and uses to base your contributions to (as well as
your benefits from) the Canada Pension Plan or Quebec Pension Plan. In 2015, the YMPE is $53,600.
Annual changes to the YMPE are based on increases in average Canadian industrial wages.
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PENSION CALCULATION EXAMPLE 1-Service to December 31, 2014
AGE:
60 years
SERVICE: 25 years
1)
2)
AVERAGE SALARY:
INTEGRATION LEVEL:
$40,000
$31,790 / $37,793
SERVICE PRE-2004
i) $31,790 X 1.3% X 14
ii)
$8,210 X 2% X 14
=
=
$5,785.78
$2,298.80
$8,084.58
SERVICE POST-2003
i) $37,793 X 1.3% X 11
ii) $2,207 X 2% X 11
=
=
$5,404.40
$485.54
$5,889.94
Total pension UO 1 + 2
$13,974.94
MINIMUM PENSION TEST ($40,000 X 1.5% X 25)
=
3) CPP/QPP maximum reduced (-34.80%) pension
=
$8,332.56
Total UO + CPP/QPP
=
$23,332.56
uOttawa.ca
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PENSION CALCULATION EXAMPLE 2 -Service to December 31, 2014
AGE:
60 years
SERVICE: 15 years
1)
2)
AVERAGE SALARY:
INTEGRATION LEVEL:
$60,000
$31,790 / $37,793
SERVICE PRE-2004
i) $31,790 X 1.3% X 4
ii)
$28,210 X 2% X 4
=
=
$1,653.13
$2,256.80
$3,909.93
SERVICE POST-2003
i) $37,793 X 1.3% X 11
ii) $22,207 X 2% X 11
=
=
$5,404.40
$4,885.54
$10,289.94
Total pension UO 1 + 2
MINIMUM PENSION TEST ($60,000 X 1.5% X 15)
=
$13,500.00
3) CPP/QPP maximum reduced (-34.80%) pension
=
$8,332.56
Total UO + CPP/QPP
=
$22,532.43
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PENSION INDEXATION
A)
B)
Three steps indexation formula based on inflation from previous year
(Consumer Price Index (CPI)-September to October)
1.
Full indexation if inflation is less than 2%
2.
2% automatic indexation if inflation is between 2% and 3%
3.
Inflation minus 1% if inflation is between 3% and 8% (Max 8%)
Special Ad Hoc indexation
Annual revisits of percentage not accorded in 2 & 3
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SURVIVOR PENSION BENEFIT TO THE SPOUSE AND GUARANTEE PERIODS
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Standard Option
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5 years guarantee / 60% Survivor benefit to the spouse
Therefore, if your death occurs on or before the guarantee period;
and you are survived by your spouse, he/she will receive your full monthly pension until the
end of the 5 years guarantee and then it will reduce to 60% for his/her lifetime.
and there is no surviving spouse, a lump sum representing the value of the remaining
guaranteed monthly payments becomes payable to your Estate.
Should your death occur after the guarantee period;
and your spouse survives you, his/her monthly benefit will be 60% of your benefit for her
lifetime.
and there is no surviving spouse, the pension payments cease; there is no death benefit
payable to the estate
because the guarantee period is expired.
Optional Options
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0 years guarantee / 60% Survivor benefit
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10 years guarantee / 60% Survivor benefit
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15 years guarantee / 60% Survivor benefit
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100% lifetime with 0-5-10-15 years guarantee periods
-Reduction of approx. 15% for the 100% survivor benefit
-Reduction of approx. 2% for a 10 years guarantee period
-Reduction of approx. 5% for a 15 years guarantee period
Note: There is only one choice at retirement .
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PENSION BENEFICIARIES
Pre-retirement (Pension Benefit Value payable):
1)
Spouse
The person married to you by a religious or civil ceremony or with whom you
have been living in a relationship that resembles a marriage for at least one year
and whom you have designated in writing to the University as your spouse.
Based on pension plan text, waiver of spousal benefit allowed before retirement.
2)
Designation or Estate
Post-retirement (Survivor Benefit payable based on choice):
1)
Spouse
Same as above. Based on pension plan text, no waiver of spousal benefit is
offered at retirement.
2)
Children
Your eligible dependent children as per the provisions of the plan are your
natural or adopted children under 19 at retirement whom you support and/or
who is under age 27 and a full time student in a recognized education institution
and/or is physically or mentally disabled.
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BUY-BACK OPPORTUNITIES
As a member of the University of Ottawa Pension Plan, you may be able to buy pension
credits in the Plan for the following :
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years of service transferrable from another employer following your employment with
the University;
years of University service where you could have contributed but did not;
years of University service where you contributed but then had refunded to you;
periods of leave without pay with no pension contributions;
periods of parental leave or special educational leave with no pension contributions;
shortfall payment following your transfer from another employer.
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OPTIONS UPON TERMINATION OF EMPLOYMENT
If you leave the Plan before becoming eligible to receive an immediate pension, the options available to you depend on how
long you participated in the Plan or your age when you leave the University. The options are as follows :
1.
If you are under age 55, you can :
a)
Leave your pension at the University as a deferred pension and payable at age 60;
b)
Transfer the value of the pension to another employer's registered pension plan, if that employer accepts the
transfer;
c)
Transfer the value of the pension to a locked-in*registered retirement savings plan or life income fund
The commuted value of your annual accrued pension will be transferred, subject to the limits prescribed by the
Canada Customs and Revenue Agency-RCA, into a locked-in retirement account (LIRA), into a life income fund (LIF),
to your new employer's plan (the limits prescribed by the RCA will apply for hybrid and defined contribution plans) or
to an insurance company for the purchase of a life annuity. The commuted value shown above is only an estimate of
the amount that may be payable in the event of termination of your employment. In fact, the commuted value of your
benefits will depend on the assumptions used at the time of termination of your employment, in accordance with the
recommendations of the Canadian Institute of Actuaries (CIA). Please also note that the CIA changed the standards
for calculating these values. These changes came into effect on April 1, 2009 and will apply to any event occurring
after this date. Based on the new standards, the value could be higher or lower depending on the economic conditions
at the time of the event.
2.
If you are 55 or over, you have the following options:
a)
start receiving a reduced pension;
b)
defer your pension until you reach factor 90 or age 60;
*Locked-in
"Locked in" means that your funds cannot be withdrawn before age 55 (earliest age a pension may be received under the Pension Plan), and can
only be used to generate a pension/payment benefit or be transferred to a life income fund.
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PENSION DOCUMENTS
Regulatory Documents:
Statutory Declaration of Civil Status and Dependent Declaration
Enrolment
Designation of Pension Beneficiary
Legal Documents:
Birth Certificates
Marriage Certificate
Administrative Documents:
Buy-Back Contract
Transfer of Service Agreement
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CONTACT US
Pension Sector (Tabaret Hall-019) hrpension@uottawa.ca
Luc Lauzière
Associate Director, Pension Plans
Tel.: 2652
Luc.Lauziere@uOttawa.ca
Micheline Moreau
Pension Plans Coordinator (Operations and Buy-Backs)
Tel.: 1206
Micheline.Moreau@uOttawa.ca
Louise Pelletier
Pension Plans Coordinator (Benefits and Transfers)
Tel.: 1747
lpellet2@uOttawa.ca
Sylvie Laflamme
Administrator, Pension Plans Data
Tel.: 1536
Sylvie.Laflamme@uOttawa.ca
Sara Boucher
Administrator, Benefits and Services to Pensioners
Tel.: 5375
Saraboucher@uOttawa.ca
uOttawa.ca
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Section 2 - Working Tools
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uOttawa.ca
Reference to Personal Statement and Annual Report
Human Resources Web Site
Pension Plan Fact Sheets
Personalized Web Site
Financial planner
PERSONAL STATEMENT AND ANNUAL REPORT
uOttawa.ca
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HR WEB SITE: www.uottawa/human-resources/
uOttawa.ca
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PENSION PLAN FACT SHEETS
uOttawa.ca
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PERSONALIZED WEB SITE
uOttawa.ca
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FINANCIAL PLANNER
uOttawa.ca
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QUESTIONS
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