Members > PlaNet > October 2009

All about contributions

More About

Contributions

FAQ - The contribution formula and pension calculation

You already know about the benefits of belonging to a Defined Benefit pension plan: when you retire you will receive monthly payments for life and leave survivor benefits to your loved ones when you are gone. But just how much do you know about the contributions you're making as a plan member?

Contributory plan
In a "contributory" plan, such as ours, both the employer and the employee make contributions to the pension fund. Many types of contributory arrangements exist, but in our case, for every dollar you contribute to the CAAT Plan on your basic service, your employer pays the same amount. This also means that both members and employers must equally share in funding any shortfalls, typically by increases in contribution rates.

Contributions to increase in 2010
This coming January, the third of three scheduled contribution increases will be implemented, with contributions increasing by 1% of salary for both members and employers. The 2009 and 2010 contribution rates are as follows:

Year	Earnings to YBE	Earnings betweenYBE - YMPE	Earnings above YMPE
2009	11.1%	9.3%	11.1%
2010	12.1%	10.3%	12.1%

Tax treatment of contributions
Your contributions are tax-deductible and reduce the overall income that you report to the Canada Revenue Agency each year, therefore, the impact of a 1% increase is less than 1% on an after-tax basis. In addition, you do not pay income tax on the contributions made by your employer on your behalf.

You will never pay for more than half of your pension
When you retire, if the contributions you have made to the plan during your membership equal more than half of the value of your pension, you will receive a refund. This means you will never pay for more than half of the value of your pension - the rest will come from your College's contribution and Plan investments.

Your contributions will be returned to you if you leave the Plan before vesting
If you leave the Plan before being vested (you have less than 2 years of service), you will receive a refund of the contributions you have made, plus any interest on your contributions. Furthermore, if you were to die before vesting, your spouse, your eligible child or your beneficiary would receive a refund of your contributions.

Your contributions are prudently invested
The combined contributions of each Plan member and their employers are invested in the pension fund. The main objective of the Plan's internal and external investment professionals is to grow the fund.

Contribute as long as you work (until you turn 71)
If you decide to work past the normal retirement age of 65, you can keep investing in your retirement income until you stop working. However once you turn 71, you must stop contributing to the fund and start collecting your pension, even if you continue working.

Contributions for breaks in service
If, during your membership, you have any breaks in service during which you stop making contributions to the Plan (such as a leave of absence), you can restore the lost contributions by purchasing service.

Learn more about contributions

The contribution formula, which is the same for all members, takes into consideration your earnings in the Plan. The longer you remain in the Plan, the higher your pension will be when you retire. For more information about the contribution formula and the upcoming contribution increase, be sure to read “How your contributions are determined” and our Member FAQ.

October 2009