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Increasing your service
The Plan provides 2 important options for increasing your service: Service Purchases, and Transfers. Plan members can purchase any and all time they worked for a CAAT Pension Plan employer before joining the Plan, and any and all service earned in a Canadian registered pension plan with a non-CAAT employer.
The Plan recently made changes that could impact your decision to make a service purchase after July 1, 2012.
- work part time in the College system or on contract for an Ontario college or participating employer before joining the CAAT Plan?
- have an unpaid leave of absence during your CAAT Plan membership?
If so, you have breaks in your pensionable service. Filling those gaps can increase your pension and could help you retire earlier.
Get the new purchasing service pamphlet, "Getting more out of your pension".
CAAT Support members can purchase 2011 strike period. Read more.
Were you a member of a Canadian registered pension plan before working for a CAAT Plan employer? If so, you may be able to transfer your previously earned pension into the CAAT Plan, enabling you to retire sooner with a larger pension.
Get the new transferring service pamphlet, "Increasing your service with a transfer".
Do it yourself estimate
Use our Actuarial Cost Estimator (ACE tool) to get an estimate of the service purchase cost directly from our website. Once you’ve received your estimate and if you decide to pursue the purchase, the ACE tool will give you access to the Service Purchase Application form that you'll need to complete and submit to your previous (CAAT Plan or non-CAAT Plan) employer to get the process started.
Who can make a purchase?
Any member of the Plan who has previous pension service with another Canadian registered pension plan can transfer in the funds to purchase service in the CAAT Plan. In addition, any member who worked for a CAAT Plan employer prior to joining the CAAT Plan can purchase that ‘pre-enrolment’ service, including any part-time service.
This provision doesn’t just apply to new hires – even if you left your former employer years ago, you will be able to transfer the funds or make a purchase, as long as you are currently an active member of the CAAT Plan.
Members who have already retired or terminated from the Plan, or deferred members are not eligible to purchase service, unless they are rehired and become members of the Plan again.
What service can I purchase?
Members can transfer funds from any other Canadian registered pension plan, including Defined Contribution plans, to purchase service in the CAAT Pension Plan (some exceptions apply, see below).
Even if the money from your previous employer has been transferred to a LIRA (Locked-in Retirement Account), the service will still be eligible to be purchased, unless the service was earned prior to 1992. Although pre-1992 service can be purchased, it must be transferred directly from the previous plan – it cannot be purchased using cash or through an RRSP transfer.
What type of service CAN’T I purchase?
Provided the service was earned in a Canadian registered pension plan, it is eligible for purchase. However there are a few exceptions. For example, funds from Group RRSPs, and Deferred Profit Sharing Plans (DPSPs) are not eligible to be transferred into the CAAT Plan.
Will service in my old plan be equivalent to service in the CAAT Plan?
Each pension plan is different. It may be that the pension you earned in your previous plan (i.e. the funds you can transfer into the CAAT Plan) will not be enough to purchase an equivalent amount of service in the CAAT Plan. In that case, you can choose to purchase less service, or, you may be able to “top up” your payment using funds from an RRSP or cash (providing it is post-1991 service).
Please note that you can only purchase in the CAAT Plan as much service as you had in your previous plan. Therefore if you belonged to your Defined Contribution plan for 2 years and 4 months, that’s the maximum amount of service you could purchase - you wouldn’t be able to purchase 3 years in the CAAT Plan. You can, however, purchase less service.
How much will it cost?
The cost of these transfers or service purchases will be equal to the full actuarial cost which is the value of the future pension in today’s dollars. The actuarial cost is based on your age, your current salary and other assumptions such as interest rates. As a general rule, the older you are, and the higher your current salary, the more the service purchase costs.
The cost of these service purchases are entirely paid by you, the member, with no matching contributions from your employer.
Why do I have to pay the whole amount? Isn’t pre-enrolment service split 50/50 with my employer?
A “Pre-Enrolment” service purchase, as defined in the Plan, is a specific type of service purchase (pre-enrolment full-time sessional) for which members and employers pay an equal share of the cost. The ability to purchase pre-enrolment part-time service, is paid entirely by the member. (For a complete list of your service purchase options, click here.)
The cost to purchase pre-enrolment part-time service is the actuarial cost, which reflects the actual cost of providing the extra pension in the future. By charging the actuarial cost, the purchase is cost neutral to the Plan. In other words, other Plan members and employers are not subsidizing your purchase, which makes this provision fair and equitable to all stakeholders.
Why would I want to purchase this type of service?
We recognize that members join the Plan having pension service from one or several prior employers. By making a transfer or purchase, you can increase your service in the Plan and eventually retire with pension income from one reliable and consistent source. More service means an increased pension benefit when it’s time to retire. It also means that you could reach early unreduced retirement milestones sooner, or have a smaller early retirement reduction if you don’t meet the requirements for an unreduced pension. The personal situations and financial priorities of each member are unique. As such, it’s up to each member to determine if the purchase or transfer will be beneficial.
When should I contact my current employer?
These transfer and purchase options are administered through the CAAT Plan. Once you’ve received your employment and earnings data from your previous employer, send your completed forms directly to the CAAT Pension Plan for a formal quote.
The only time you’ll have to contact your current employer is if you’re purchasing pre-enrolment part time service that was in respect of your current employer.
What happens if my previous employer no longer has a record of my employment history or no longer exists?
In order to prepare a quote, the CAAT Plan requires accurate data – including your earnings and service – from your prior employer. If these records are incomplete or no longer available, we can accept such documents as T4s, employment contracts, annual pension statements, termination option documents from the prior plan. The CAAT Plan will review these documents to ensure they provide enough detail for us to provide you with a formal quote. The onus is on you, the member, to provide proof of eligibility and employment history. If you are unable to do so, we will not be able to establish the eligibility period and the amount of service purchasable in the CAAT Pension Plan and you will not be able to transfer funds to purchase the service.
Who should I contact to get this process started?
Calculating the cost of a buyback is a detailed process that involves accurate information about your earnings and service history. To simplify this new process, you must get an estimate of the cost of purchasing the service, before contacting your previous employer.
With our new online Actuarial Cost Estimator (ACE tool), you can get a ballpark estimate of the purchase cost. Then, once you have an idea of the cost, and have taken the time to review your current pension situation and your finances, you may choose to proceed with getting a formal quote for the actual purchase price. You will need to contact your previous employer for information regarding your earnings and service history, which you will in turn provide to the CAAT Plan. Once you receive the formal quote with the actual cost, you will then decide if you wish to proceed with the purchase or not, with no obligation.
We suggest you seek independent advice from a financial advisor, particularly around the tax implications of service purchases.