2011 CAAT Support Strike
During the recent OPSEU CAAT Support strike (September 1 – 19), members of the Plan who participated in the strike did not make contributions to the Plan. They remained members during the strike period, however any payments received while on strike are not considered pensionable earnings in the Plan. The strike period is considered a break in service and can now be purchased.
Strike purchase form updated for 2012
January 3, 2012
The 2011 CAAT Support Strike purchase form (2012 rates) has now been updated and can be used to calculate the cost of a strike purchase as of January 1, 2012.
Examples
November 9
Click here for examples based on salary levels (based on 2011 rates)
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The following examples show the adjustments to a member’s pension as a result of the strike purchase: |
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| Salary | Strike earnings | Purchase cost |
Monthly increase in pension per year of service in the Plan |
Total monthly increase in pension based on years of service in the Plan |
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| 10 yrs | 20 yrs | 30 yrs | ||||
| $30,000 | $1,562 | $328.32 | $0.34 | $3.40 | $6.80 | $10.20 |
| $35,000 | $1,822 | $381.90 | $0.39 | $3.90 | $7.80 | $11.70 |
| $40,000 | $2,082 | $435.48 | $0.45 | $4.50 | $9.00 | $13.50 |
| $45,000 | $2,342 | $489.06 | $0.51 | $5.10 | $10.20 | $15.30 |
| $50,000 | $2,603 | $546.06 | $0.87 | $8.70 | $17.40 | $26.10 |
| $55,000 | $2,863 | $608.76 | $0.95 | $9.50 | $19.00 | $28.50 |
| $60,000 | $3,123 | $671.84 | $1.04 | $10.40 | $20.80 | $31.20 |
| $65,000 | $3,384 | $734.92 | $1.13 | $11.30 | $22.60 | $33.90 |
| $70,000 | $3,644 | $798.00 | $1.21 | $12.10 | $24.20 | $36.30 |
| $75,000 | $3,904 | $860.70 | $1.30 | $13.00 | $26.00 | $39.00 |
| $80,000 | $4,164 | $923.78 | $1.39 | $13.90 | $27.80 | $41.70 |
| $85,000 | $4,425 | $986.86 | $1.48 | $14.80 | $29.60 | $44.40 |
| $90,000 | $4,685 | $1,049.94 | $1.56 | $15.60 | $31.20 | $46.80 |
New Form
September 22
To purchase the service, the 2011 CAAT Support Strike purchase form must be completed.
(This form is an Excel spreadsheet which calculates the cost of the purchase automatically when the annual rate of pay before the strike is entered.)
Methodology
September 22
Based on the annual rate of pay at August 31, 2011, the daily contribution rate based on 365 days in the year is determined.
This daily rate is multiplied by the number of calendar days of the strike (19). This number is multiplied by 2, because the member pays 2 times their contributions.
Read more...
This method ensures that members pay the appropriate amount for the purchase using the blended contribution rates rather than just the high rate. It is also in compliance with the provisions of the Plan text where service is credited by month and year, not day (or working day).
It ensures all employees are treated the same, regardless of their work schedules.
Note that for members who purchase this service after 2011, the calculation will use the new 2-tier contribution rates in effect in the year of purchase.
The examples below show how the cost is calculated. You’ll note that for Example 1, where the member’s annual rate of pay is less than the YMPE, the purchase cost does not consider the high contribution rate at all. For Example 2, where the member’s annual rate of pay is above the YMPE, the cost of the purchase does take into account the high contribution rate on the earnings in excess of the YMPE.
PAs, PSPAs and Tax Implications
September 22
Like all service purchases, the strike purchase may create a PSPA for members. Here is the procedure for reporting PAs and PSPAs for the members:
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PA/T4 – On the member’s T4, report only the earnings actually paid to the member, not the deemed annual rate of pay. For contributions, report only the regular contributions made by the member, not the strike purchase. Calculate the PA based on the actual earnings for the year.
PSPA– For members who make the purchase, the CAAT Plan will calculate a PSPA and, if any, report it to CRA and the member. The Plan will provide a tax receipt to the member for the purchase. If the member pays for the purchase by RRSP transfer, the PSPA will be offset by the amount of the RRSP payment and only the balance will be sent to CRA for approval. PSPAs that are under $50 do not need to be reported to CRA.
Service and Earnings
September 21
Because of the “one day rule” under the pension plan, a full time member who works and contributes to the plan for at least one day in a given month will earn that full month of service.
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Therefore members who participated in the 2011 OPSEU CAAT Support strike, earned service for the full month of September because they worked and contributed to the plan in September after the strike ended. However, since they did not receive pensionable earnings for the period of time of the strike pensionable earnings for September will only reflect the actual earnings from the return to work.
Deemed Strike Earnings
The deemed strike earnings that CAAT will include in the member’s 2011 earnings will be based on the following calculation:
19/365 x annual rate of pay = strike earnings posted by CAAT
Purchasing strike service - cost
September 21
The cost of purchasing the strike period is 2 times member contributions based on:
- The member’s annual rate of pay at the beginning of the strike, and
- The contribution rates in effect at the time of the purchase
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The cost is 100% payable by the member, and the payment must be made in a lump sum. The member can make the purchase at any time up to termination or retirement.
Note that the cost of the purchase will increase when contributions increase, as they are scheduled to do in 2012, 2013 and 2014.
How to make a purchase
September 21
To purchase the service, the 2011 CAAT Support Strike purchase form must be completed. (This form is an Excel spreadsheet which calculates the cost of the purchase automatically when the annual rate of pay before the strike is entered.)
Read more...
To complete the form
Enter your employer name
In Section A enter the member’s name and other information, including the home mailing address and phone number.
In Section B enter the member’s annual rate of pay before the strike period.
The form will calculate the cost of the purchase shown in the line “Strike purchase cost” at the bottom of Section B.
Save and print the form: both the member and a representative of the employer must sign the form (Sections C andD).
Have the member write a cheque for the entire strike purchase cost, payable to the CAAT Pension Plan. The purchase must be made in a lump sum. Send the completed form and the cheque to the CAAT Pension Plan.
Calculating service purchase cost - examples
September 22
The examples below show how the cost is calculated. You’ll note that for Example 1, where the member’s annual rate of pay is less than the YMPE, the purchase cost does not consider the high contribution rate at all. For Example 2, where the member’s annual rate of pay is above the YMPE, the cost of the purchase does take into account the high contribution rate on the earnings in excess of the YMPE.
Read more...
Example 1 – Member annual rate of pay is less than YMPE (based on 2011 rates)
|
Member's annual rate of pay as of August 31, 2011 |
$40,000 |
|
2011 YBE |
$3,500 |
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2011 YMPE |
$48,300 |
|
Contributions to YBE (12.1%) |
$423.50 |
|
Contributions YBE – YMPE (10.3%) |
$3,759.50 |
|
Contributions > YMPE (12.1%) |
$0.00 |
|
Total Annual Contributions |
$4,183.00 |
|
Deemed daily contributions (365 calendar days) |
$11.46 |
|
Strike days (calendar days) |
19 |
|
Total strike contributions |
$217.74 |
|
Strike purchase cost (2X total strike contributions) |
$435.48 |
Example 2 – Member’s annual rate of pay is above YMPE (based on 2011 rates)
|
Member's annual rate of pay as of August 31, 2011 |
$60,000 |
|
2011 YBE |
$3,500 |
|
2011 YMPE |
$48,300 |
|
Contributions to YBE (12.1%) |
$423.50 |
|
Contributions YBE – YMPE (10.3%) |
$4,614.40 |
|
Contributions > YMPE (12.1%) |
$1,415.70 |
|
Total Annual Contributions |
$6,453.60 |
|
Deemed daily contributions (365 calendar days) |
$17.68 |
|
Strike days (calendar days) |
19 |
|
Total strike contributions |
$335.92 |
|
Strike purchase cost (2X total strike contributions) |
$671.84 |
Q. The strike only lasted 13 working days. Why are contributions being calculated on 19 calendars days?
A. The costing basis and cost shown are in respect of a ‘purchase’ of the period of strike time. It is not meant to reflect missed contributions. The methodology applied is the CAAT Plan methodology for such purchases.
Regardless of the member’s earnings to date or annual rate of pay (above/below the YMPE), the amount charged for the purchase will accurately and appropriately reflect the cost to purchase and provide the strike period under the terms of Plan.
Q. Doesn't basing the calculation on 19 days, mean that the members contribute more than if the strike had not taken place?
A. We are assuming the contributions are spread over 365 days (19/365), NOT 260/261 days as would be used if we were costing the purchase based on working days so the amount paid will be quite close in both cases. For consistency and equity among all members regardless of when or how many days they may have worked during the strike period had they been at work, as well as, for consistency in the number of working days in the year as we understand some colleges use 260 and some use 261, the CAAT plan methodology uses calendar days as all members have 365 calendar days in the year and the strike period was 19 days for all members.
This is the Plan’s ‘purchase’ methodology, not a method to determine missed contributions for the period.
Q. Aren't the earnings being inflated for the strike period?
A. The cost shown is in respect of a ‘purchase’ of the period of strike time. It is not meant to reflect missed contributions. Members are getting credited with the earnings that they are paying for. So, if the purchase methodology means they are paying slightly more because it uses calendar days instead of working days, they are also being credited with slightly more strike earnings toward their HAPE.
Regardless of the earnings to date and member’s annual rate of pay (above/below the YMPE), the cost will accurately and appropriately reflect the cost to purchase and provide the strike earnings under the terms of Plan.
Example:
Annual rate of pay: $60,000
| Calendar | Working | |
| Strike days | 19 | 13 |
| Days in year | 365 | 260 (or 261 depending on college) |
| Strike earnings | 19/365 * 60,000 = 3,123 | 13/260 * 60,000= 3,000 |
| Purchase cost | $671.84 | $645.32 |
Q. Does the strike purchase payment have to be made all at once?
A. Yes. The entire payment must be made in a lump sum. Have the member write a cheque for the entire strike purchase cost, payable to the CAAT Pension Plan, and send the completed form and the cheque to the CAAT Pension Plan.
Q. Should strike and maternity buybacks be combined if a member did not receive EI payments because of strike?
A. No. The strike purchase should be separate from the maternity/parental leave purchase as these are two separate types of service purchases. The strike purchase is 100% member paid, while 50% of the maternity/parental/adoption leave purchase is paid by the employer. Also, a member who is on maternity/parental leave is not likely to be within 5 years of retirement, so making the strike purchase will not likely have an impact on their pension. The member also has the ability to decide whether or not to purchase the strike leave if both leaves are kept separate.
Q. What is the impact of the strike purchase on a member's pension?
A. The following examples show the adjustments to a member’s pension as a result of the strike purchase:
|
Salary |
Strike earnings |
Purchase cost |
Monthly increase in pension per year of service in the Plan |
Total monthly increase in pension based on years of service in the Plan |
||
|
|
|
|
|
10 yrs |
20 yrs |
30 yrs |
|
$40,000 |
$2,082 |
$435.48 |
$0.45 |
$4.50 |
$9.00 |
$13.50 |
|
$60,000 |
$3,123 |
$671.84 |
$1.04 |
$10.40 |
$20.80 |
$31.20 |