Open Buybacks

The new procedure will include a web-based tool that provides members with a ballpark estimate of the cost of purchasing their service. If they wish to proceed to get a formal quote from the CAAT Plan for the purchase of service from either a previous non-CAAT or CAAT employer, forms will be available on the website for them to use.

Providing the required information and supporting documentation is the member’s responsibility. Neither the CAAT Plan nor the current college (except for the college that was the employer during the college pre-enrolment period) is responsible for providing assistance in obtaining the required information. We want to ensure that this does not considerably add to your workload.

A: Members who have service with another Canadian registered pension plan (RPP) will get the required information and download the service application forms from our website. They are then responsible for approaching their previous employer and getting the forms completed. The member should not need to contact their current (CAAT) employer to complete this process.

On the other hand, members who have eligible pre-enrolment service with a CAAT employer may approach you, however they should have already downloaded and partially completed the service application forms in order to start the formal quote process.

These forms will be available online after the member has completed the final step in the web-based estimator tool. In other words, members will have had to complete the initial estimate to be able to download the service application form. We think this will ensure that only those who are serious about the purchase will complete the forms.

A: The new provisions are effective as of November 1st however the tool will not be immediately available.  For anyone with planned retirement dates between November 1 and the end of year, we’ll honour the November 1 date. This means when costing the purchase, we’ll use the member’s salary and age at November 1st.

A: Starting November 1, Open Buybacks will be a permanent provision of the Plan. There are no ‘windows’ or end dates for this purchase opportunity - members will be able to make the purchase at any time, right up until termination or retirement.

A: The procedures surrounding Open Buybacks will be the same as those currently in place for existing buybacks. We will provide the necessary pension-related facts members will need to make their decision.

In our role as pension provider (and your role as employer) we cannot be seen to be influencing decisions or providing advice - it’s really up to each individual member (in consultation with their independent financial advisor, if necessary) to decide what works best for them.

A: The ballpark estimate received from the website is for planning purposes, and cannot be relied on as a formal quote. The official quote, which the member will receive AFTER completing the service application form with the relevant employer, will be effective as of the date the employer received the form from the member for completion.

From that date, the member will have 90 days to decide if they want to make the purchase. Once they have verified they are going to make the purchase, they will have another 90 days to provide the funds to the CAAT Plan.

A: Other major pension plans offer or are starting to offer these additional purchase opportunities. Pension plans are recognizing that members want enhanced portability options that will help them build service for retirement and receive a secure pension from one plan.

A: We will be communicating this change with your members via our upcoming Member Newsletter and on the member section of our website. You won’t need to broadcast these changes or send a special announcement to your staff. Our goal is to minimize the impact of this change on your workload.

A: Any and all time a member was employed by a CAAT employer is eligible to be purchased under the new provisions.

This means part-time members could buy any and all service from date of hire to date of enrolment, including the 2 year eligibility period, as well as any other time before joining the Plan.

This provision does not change any of the existing OTRFT eligibility rules.

• Employees will still have to complete 24 months of continuous service before they can join the CAAT Plan
• Membership in the CAAT Plan will remain optional for part-time employees.

We strongly encourage you to use the Waiver form (available on our website) to document those part-time employees who are eligible, but choose not to join the Plan.

We are currently reviewing the OTRFT eligibility requirements in the Plan, and will be seeking your input in the future on that matter, however there are no current changes planned to the existing provisions.

A: It’s up to the member to take the chance as to whether they may one day become a full-time employee. If they remain part- time and purchase the service under the new provision, then yes, the cost will be 100% member paid, on an actuarial basis. It’s possible the member may never become full-time. Further, the member will want to consider that the cost of the sessional service will increase as the member ages and salary increases.

One option for members in that situation would be to purchase the part-time service under the new provision, and wait to see if they become full-time before they make a decision about purchasing the full-time sessional service, once again taking into consideration the increase in cost the longer they wait to make the purchase. This is one of the decisions members will have to make for themselves.

A: We will use the same calculation for service as we use once the part-time employee is a member of the Plan.

You’ll need to provide total part time hours worked during the year and the appropriate full-time equivalent hours.

Service is calculated as total part-time hours divided by full-time equivalent hours, multiplied by 12, for total months of service.

A: We understand that it is important that members be allowed to purchase only service they actually worked, but we also recognize that it’s quite possible that complete records will not be available for some service.

We did receive some useful suggestions during the teleconference that we will be reviewing in detail in the coming weeks. We want to make sure we are fair to the member, but also ensure we are not significantly adding to your workload. We will be asking for more of your input and feedback prior to making a final decision.

A: There are different tax rules governing the transfer of pension funds on service earned before 1992 and service earned after 1991.

In order to transfer funds in respect of pre 92 service with another registered pension plan into the CAAT Plan, the funds have to come directly from the other plan. The funds in respect of this service cannot be transferred from a LIRA or Locked-in RRSP. This means that the member would have to have left pension funds in the other plan for the service prior to 1992 in order to purchase that service.

There are no such restrictions for the transfer of post 91 service into the CAAT Plan. Funds in respect of that service can be transferred into the Plan from a LIRA (Locked-in RRSP) or directly from the other registered pension plan.

A: No. Pre 92 service can be purchased provided the funds come directly from another registered pension plan, not from a LIRA

A: Yes. If the member can prove the funds came from another Canadian registered pension plan, they are eligible for transfer in order to purchase service in the CAAT Plan.

A: This is currently under review, however we are considering accepting such documents as T4s, termination option documents, or annual statements from the other plan. In the coming weeks we’ll expand on this list and post it on the website for you and members.

A: Although this situation is highly unlikely, as IPPs are rare, funds in respect of IPPs can be transferred in to purchase service and the onus will once again be on the member to provide proof of the service in the other plan.

A: On our website we will provide the member with the facts they will need to make an informed decision. Currently members can use our new pension estimator to easily model different retirement scenarios using different retirement ages, dates and years of service (including the years of purchased service).

For example, assume a member who has 15 years of service in the Plan and uses the data in their Annual Statement to calculate their pension, wants to know the impact on their pension of purchasing an additional 5 years of service. In order to determine that, they would use the online pension estimator to do an estimate using the 15 years and then they would simply add the potential new service (5 years) to the current service (15 years), and run a calculation using 20 years of service. This will show how adding the additional service will affect their pension. They can then decide if the increase in pension is worth the cost of purchasing that additional service.

A: It may be costly to purchase, for example, 6 months of service as in this case. It’s up to each member to decide if the cost of the service purchase will be worth the impact it will have on their pension and/or early retirement eligibility. Using the tool to get a ballpark estimate of the cost of purchasing service and then using the new Pension Estimator to determine the impact on the pension with the additional service will help members decide if they want to request a formal quote.