RETIREMENT
Retirement:
When can I retire on pension?
You can retire at any time after your 55th birthday, assuming you have retired from active employment. You must retire from the Plan before the end of the year in which you turn 71.
What if I retire and am later re-hired by a contributing employer?
You will be treated as a new member of the Plan.
Retirement Income:
How much pension will I receive?
Retirement benefits are based upon the total contributions made to the Plan on your behalf and the total amount of interest earned on those contributions. This total amount will be used to buy you a pension, in the form of an annuity, which will provide you with retirement income.
What if I don’t want to receive an annuity?
You will be given a number of options when you retire, including the annuity. If you do not wish an annuity to be purchased on your behalf, you will be able to transfer your money into a locked-in RRSP, or use it to buy a Life Income Fund (LIF). Your money will be “locked-in”.
What does “locked-in” mean?
Locked-in money is money that can only be used to buy you retirement income. It will never be available to you in cash.
All employer contributions are locked-in money. Voluntary contributions are not.
Are any pension contributions not "locked-in"?
If total contributions with interest are less than 4% of the CPP earnings ceiling (e.g. less than $1,748 in 2007) then these funds may be paid out in a lump sum. You must pay income tax on any cash payment you receive from the Plan.
What is a Life Income Fund?
A Life Income Fund is an investment instrument used to hold and pay out pension funds upon retirement. LIFs allow you to convert your retirement savings into retirement income. A LIF is created by transferring your locked-in pension assets from the pension plan (starting not earlier than age 55 or later than December 31 of the year you reach age 71).
Forms of Pension:
How long does my pension continue?
If you purchase a pension (also called an annuity) at retirement, it will provide you with payments for your lifetime. After your death, depending on the form of pension you choose, your spouse may also be provided with income, either equal in size to the payment you received or at a lesser level, for the remainder of your spouse’s lifetime.
What if I choose a LIF?
Revenue Canada has established a minimum and a maximum annual withdrawal amount for LIF’s. You can choose any level of income between the two.
Are there any special rules that I need to be aware of?
If you have a Spouse, you must, by law, receive your pension in a form that will provide them with at least 60% of the pension that was in payment to you during your retirement. Your Spouse can choose to waive his or her right to this mandatory form, and allow you to choose some other form of income.
Under existing legislation, Spouse is defined as:
- a person who, at the relevant time, was married to the Member or who is a party to a void marriage with the Member
- if there is no person to whom paragraph "A" applies, a person who is cohabiting with the Member in a conjugal relationship, at the relevant time, having so cohabited with the Member for at least 1 year (i.e.: common-law partner).
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