Retirement planning

If you’re getting close to retirement age, and you haven’t yet started planning, it’s not too late. And even if you’re a new member, and retirement is still a distant concept, it’s never too early to begin thinking of the role your CAAT Plan pension will play in your overall retirement plan.

The choices you make around your CAAT Plan pension can mean the difference between a comfortable retirement, and one that is spent worrying about your income.

The most important drivers of retirement decisions are often personal.

• Is my spouse retired or close to retirement?
• Does my spouse have a retirement plan?
• Is my family ready for me to retire?
• Do I have family obligations that might have an impact on my retirement date (Am I responsible for the care of an elderly relative? Do I have children still living at home?)
• How’s my health?
• How’s my spouse’s health?
• How will I fill my days when I stop working? Volunteering? Travelling?
• How will any of these situations change in the next 2, 5 and 10 years?

Work is a big part of our lives and some retirees are surprised to find it difficult to leave their employment.

• Have I achieved all my career goals?
• Am I still fulfilled by my career?
• Is there more I’d like to accomplish in my field?
• Would I consider performing some form of work in retirement?
• Am I going to make money in a new way? Turn a hobby into work? Consult part-time?
• Will I miss the day-to-day interaction with my co-workers?

Finances are, of course, a key factor in determining your retirement plans. It’s more than just your retirement income. Start by identifying your expenses and debts now, and determine what they will be on retirement dates you’re considering.

• What are my current debts (including mortgage, car payments, etc)
  • Do I need to maintain my current income in order to repay them?
  • Are they at a level that will be manageable on a retirement income?
  • When will they be discharged?
• What are my current ongoing costs (eg, transportation, household expenses, etc)
• How might these change if I stop working?
• What are my current ongoing, but not fixed, costs (eg elder care, kids’ education )?   
• How might these change in the next 2, 5 or 10 years?
  • Are any large expenses looming (eg a family wedding or home renovations)?
• Do I have a contingency fund (or ability to access one) in case of an emergency?
• Are my insurance needs covered?
• What will my ongoing costs be in retirement (eg health plan)?
• How might these change in the next 2, 5 or 10 years?
• What debts might I take on in retirement (eg new vehicle)?
• At what rate will I withdraw from my personal savings? The minimum? Will it depend on what changes year over year?
• Will I be downsizing my home in my retirement?

Once you’ve thought about your current situation it’s time to think about what you want to do when you retire.

Will you stay close to home and spend more time with your family? Do you have plans to travel the world? Can you turn your hobby into a small business?

Before you decide, set aside some time to find out what it will take to achieve your goals. No matter what you decide, the Plan will be there to provide a stable retirement benefit for your life.

However Claire, at 42, has recently decided that she wants to retire early and turn her passion for fitness into a post-retirement career teaching yoga to seniors.

Once she decided what she wants to do when she retires, she mapped out a financial plan that would help her achieve her goal.

Claire started planning by using the Pension Estimator to estimate the effect that different retirement dates would have on her pension income from the Plan. She also visited the Service Canada website to find out how much to expect from her government pensions, (and when to apply), and has taken into consideration the income she may receive from employment.

She was able take stock of her future expenses and determine how much she needs to save in order to pay off her mortgage and see her children through their post-secondary education.

Claire now has a solid retirement plan  that includes income from the CAAT Plan, government pensions, RRSPs and her future employment.

The CPP provides income to individuals who have worked in Canada after the age of 18. The benefit is based on the amount of time you have contributed and the amount of contributions you and your employers have made to the CPP throughout your career. The benefit is available at the age of 65 but a reduced benefit can be collected as early as age 60 providing you have substantially stopped working.

Be sure to apply to HRSDC at least six months before you want to begin receiving your payments. The CPP provides a Statement of Contributions which, much like your Member's Annual Pension Statement, indicates the amount of contributions you have made and the amount of pension you can expect to receive. You can request your Statement from CPP up to once a year and use it to help with your retirement planning. Your CPP pension is paid monthly and is indexed to inflation.

The goal of Old Age Security is to provide a minimum income to Canadian citizens and legal residents aged 65 and older. OAS income is not dependent on your employment history and you do not have to be retired to begin collecting it. In fact, even if you have never worked in Canada, you can still receive OAS if you meet certain age and residency requirements. In general, the amount you receive is based on the length of time you have lived in Canada - the longer your residency, the larger the benefit. If your income after age 65 is above a certain amount, you may be required to repay some or all of the benefit you received.

You must apply for your OAS pension at least six months before you want to begin receiving it. If you apply after the age of 65, you may only be able to collect up to 11 months of back payments so it's important to apply as soon as possible. Your OAS benefit is paid monthly and is indexed to inflation.

The GIS benefit provides income for individuals over the age of 65 who are receiving OAS and who have little or no income from other sources. This supplement is normally not relevant to pensioners receiving income from the Plan.

The amount of the benefit is based on both your income and that of your spouse. You must apply for the GIS benefit in order to receive it and you must renew it each year.

Your GIS benefit is added to your monthly OAS payment and is indexed. If your annual income increases above a certain amount, or you do not renew your benefit, your GIS payment will stop.

The Allowance acknowledges the circumstances facing couples who rely on one pension when the working spouse retires. To receive the Allowance, you must be between the ages of 60 to 64, married or in a common-law relationship and your spouse must be eligible to collect both the OAS and GIS benefits. You must also be a Canadian citizen or legal resident and meet certain residency requirements. The amount of your benefit is based on the combined income of you and your spouse. To receive the Allowance you must apply for it and it must be renewed each year.

The Survivor Allowance is provided to a senior who meets the requirements for the Allowance but whose spouse has died. The benefit is based on the income of the surviving spouse. If you are in receipt of the Survivor Allowance and subsequently enter into a marriage or common-law relationship, you are no longer eligible to receive the benefit. When you turn 65, both the Allowance and the Survivor Allowance stop and are normally replaced by the OAS benefit.

The GAINS benefit is administered by the Ontario Ministry of Finance and is similar to programs available in some of the other provinces. This program provides a minimum income to Ontario seniors over the age of 65 whose income falls below a certain level.

There are residency requirements that must be met and the individuals must be in receipt of OAS and GIS benefits from the federal government. This supplement is normally not relevant to pensioners receiving income from the CAAT Plan.
You do not need to apply for this benefit - eligibility is determined each year based on your income tax return. For information on this program, visit the Ministry of Finance's website.

Canada has entered into social security agreements with several countries, which may make it easier for you to collect government benefits. If you don't meet the CPP contribution or the OAS residency requirements here in Canada, time spent living and working in other countries may allow you to qualify. For example, if after the age of 18 you lived in the United States, you can count this period as residency in Canada. Any contributions to the US pension program will also count as contributions for the purposes of the CPP, thereby allowing you to qualify for Canadian benefits.

Many of the agreements work both ways. If you lived and worked in other countries but do not meet their eligibility requirements, periods of contributing to the CPP may be applied to their plans. Human Resources and Social Development Canada's website contains numerous fact sheets on the agreements Canada has with other countries including the United States, Germany, Ireland and Barbados.

Once you have qualified to receive your CPP and OAS benefits, you can collect them outside of Canada. You may however, lose your entitlement if you move outside of Canada for six months or more. If you are planning to leave the country, be sure to consult with HRSDC for information.

It’s important to remember that your government benefits, like CPP and OAS, are paid in the last 3 business days of each month. Your CAAT Plan pension is paid on the first business day of each month. This means your retirement income payments will be staggered during the month. Remember that your CAAT Plan pension and your government pensions, (CPP and OAS) are all taxable.

Registered Retirement Savings Plans (RRSPs) provide you with the opportunity to grow your savings tax-free for retirement. Each year, you can claim an income tax deduction for the entire amount you have contributed to your RRSP, up to your limit. The interest you earn in your RRSP is also tax-sheltered - you only pay taxes on the amount that you withdraw. Therefore, not only can you save on your taxes in the years you contribute, and shelter investment growth within your RRSP, but you may also be taxed at a lower rate when you withdraw the funds after you stop working.

Depending on the source of your funds, the RRSP you open can be locked-in or not locked-in. If you transfer funds to an RRSP from a registered pension plan or other locked-in savings plan, that locked-in RRSP (also known as Locked-in retirement account or LIRA) can only be used as retirement income. On the other hand, if you open an RRSP account at a bank or financial institution using cash, savings bonds or other liquid assets, this RRSP is not locked-in and funds can be withdrawn and used before retirement if needed. The amount taken out, however is considered taxable income in the year it's withdrawn, unless it is used to purchase a home (under the Home Buyer's Plan), or to pay for your education (under the Lifelong Learning Plan). Information on these programs can be found on the Canada Revenue Agency's website.

Once you retire, the emphasis shifts from funding your RRSP to managing the retirement income you have accumulated along with your government and CAAT Plan pensions. CAAT Plan and government pensions will provide a steady stream of income for the rest of your life. However when it comes to your RRSP, you must decide how to manage your assets to ensure you will have enough to see you through your retirement needs.

You must stop contributing to your RRSP by the end of the year you turn 71. At that time, funds withdrawn from a non locked-in RRSP can be taken as cash (subject to income tax), used to buy an annuity, or transferred to a Registered Retirement Income Fund. However funds that were transferred out of a registered pension plan into a locked-in RRSP can only be used for retirement income in the form of an annuity, or a transfer to another locked-in vehicle.

Some options are outlined below:

RRIFs are similar to RRSPs, with the exception that you must withdraw funds from your RRIF on a regular basis. They are used to accept transfers of funds from non locked-in RRSPs and other investment vehicles. You must establish your RRIF by the end of the year in which you turn 71 and you must make a minimum withdrawal to use as retirement income each year. This withdrawal will be taxed at the appropriate rate. RRIFs are flexible in that you can control your investment, and, as with RRSPs, your earnings and interest accumulate tax-free.

LIFs are similar to RRIFs but with additional restrictions. LIFs only accept transfers of locked-in funds from registered pension plans and locked-in RRSPs. As with RRIFs, there are minimum withdrawal limits, however LIFs also impose maximum limits.

As with LIFs, LRIFs also accept the transfer of locked-in funds from registered pension plans and allow you to invest and grow your savings tax-free. LRIFs also impose minimums and maximums on the amount that you must withdraw yearly. However, LRIFs are meant to provide you with retirement income for life - there is no requirement to purchase an annuity at a specific age.

Depending on your needs, you can use your personal savings to purchase an annuity. An annuity provides you with guaranteed income either for a specific period of time or for your lifetime. The financial institution, life insurance or trust company that issues your annuity is responsible for your investments and for paying you a stream of income for your retirement. How much you receive depends on the size of annuity you purchase and actuarial factors such as your age, gender and life expectancy. Some annuities offer, at an extra cost, a joint and survivor option that will continue to pay your spouse when you die.

The above list provides a general idea of the options available to you, however it is not meant to be exhaustive. How you manage your retirement income will depend on your individual circumstances. As with all financial decisions, it's a good idea to research the available options and consult an independent investment advisor or financial planner for advice.

Going back to work after retiring is an individual decision. For some, returning to work makes economic sense - income from employment may be a necessity for any number of reasons. Many pensioners report feeling "cut off" from what had been a significant portion of their life and return to work in order to ease the transition into retirement. On the other hand, some retirees return to work simply because they enjoy it. Retirement may give them the chance to follow a new career path or work independently. Retirement allows them more time to pursue hobbies and interests, some of which can turn into income-generating enterprises.

After you retire, you may decide to return to work in the College system, for a new organization, or even for yourself. If you do become employed outside of the College system, you can continue to collect your CAAT Plan pension as well as your income from employment. Once you've started your pension, however, you no longer have the option to transfer your CAAT Plan service to another organization's pension plan.

If you do return to the College system, you have options that are based on your age and your employment status.

• If you return to full-time employment at a College after starting your early retirement but before turning 65, you will re-enroll in the CAAT Plan. Your CAAT Plan pension will stop and you will resume contributing to Plan for as long as you are employed (and no later than age 71).
• If you return to part-time employment at a College after starting your early retirement but before turning 65, you decide whether or not to rejoin the Plan. You can become a member as above, or you can continue to collect your CAAT Plan pension along with your employment income.
• If you are between the ages of 65 and 71 and you return to work at a College either on a full-time or part-time basis, you have the choice to resume your membership in the Plan or to continue collecting your CAAT Plan pension along with your employment income.
• By law, when you reach the age of 71, you must stop contributing to the pension plan and begin collecting your pension. This applies if you are still employed at age 71 or if you return to work after that time.

When the time comes for you to restart your retirement, your pension calculation will be based on your service and earnings for all of your periods of employment, less an adjustment for the pension payments you have already received.

Planning for post-retirement employment involves determining the possible impact on your other sources of retirement income. Employment earnings may have an effect on the retirement benefits you are eligible to receive from the government. For example, your retirement income may consist of your CAAT Plan pension and your Canada Pension Plan (CPP) benefits as well as your employment earnings. When you become eligible to collect your Old Age Security (OAS) benefit at age 65, your overall income may surpass the OAS threshold. If that is the case, your OAS benefit may be subject to a "clawback" and you could be obliged to repay some or all of your OAS.

In addition, your employment earnings may affect the amount of income tax you are required to pay each year. Depending on your situation, you may wish to adjust the amount of tax deducted from your paycheques or your pension income by completing and submitting Personal Tax Credits Return forms (available from the Canada Revenue Agency).

Overall, the impact of returning to work after retirement can be beneficial to your finances and personally fulfilling. The sense of contributing that comes from working is known to have a positive impact on individuals of all ages. In addition, the skills and experience that older workers bring to the workforce are invaluable. Even if working in retirement is not an option, volunteering and mentoring may be right for you. In either case, you may find it worthwhile to consider post-retirement employment as part of your overall retirement plan.

You’re almost 65 and not ready to start your retirement now. Or you’re in your 50s, and can’t resist the promise of a long, interesting retirement. How will you find out what your options are before it’s time to make your decision?

• This website is an excellent starting point for finding out as much as possible about your pension options, before it’s time to make your decision. Be sure to read our articles such as this one  to learn more.
• Attend a presentation: CAAT Plan staff hold many presentations at colleges throughout the year. If we’re going to be at your college, come down to meet us.
• While you’re thinking about the best time to retire, take some time to review your most recent Annual Pension Statement to see what your pension was at the end of last year and confirm your early retirement dates.

There are several ways to get an estimate of your pension:

• Get an informal estimate at any time using our new Pension Estimator. The estimator can provide you with an idea of the pension you can expect at different ages. Use it to help you plan your retirement income and decide on your potential retirement dates and options.
• Contact the CAAT Pension Plan any time for an estimate. We can provide estimates with a number of different scenarios – “What happens if I retire in June? What if I wait till January?” so you can choose the right time for you.

Before you retire, you should review your college career to see if you have any service available for purchase (such as maternity/parental leaves or unpaid leaves of absence). We’ll work with your employer to provide you with the cost of purchasing service and tell you whether or not you are within the purchase deadlines.

If you haven't already done so, now is a good time to name a beneficiary for your CAAT Pension Plan benefit or to confirm the beneficiary you have already designated.

• If you have a spouse, he or she is automatically entitled to any and all death benefits in the plan and will receive a spousal pension when you die. If you have a spouse, no other death benefits are payable to anyone other than your spouse. In case your spouse predeceases you, or you both die at the same time and you have no eligible children, you should name another individual or individuals to receive survivor benefits, if any,  when you die.
• If you don't have a spouse but you do have eligible children (under the age of 18), they will receive survivor benefits until they reach the age of 18.
• If you don't have a spouse or eligible children, your beneficiary could receive survivor benefits when you die.

You can choose anyone as your beneficiary such as your children, family members or friends. You can name as many different beneficiaries as you like, and indicate what percentage of death benefits you would like each to receive. When you die, your beneficiaries will receive any benefits owed to you under the 60 months guarantee. If you have no beneficiary when you die, your estate will receive any benefits owed to you.

Simply complete the “Change of Information or beneficiary" form and send it to the CAAT Pension Plan to update your beneficiaries in the Plan. Make sure all your spouse information is also up-to-date. It is important to note than any change of beneficiary automatically revokes any previous beneficiary designation, so in order to add a new beneficiary to an existing list, you have to rename everyone on your beneficiary list and indicate the percentage of your death benefit they should receive.

Wills and Insurance

While you’re reviewing your beneficiary designations for the CAAT Pension Plan, you might want to review your will and see if it’s up-to-date. If you haven’t looked at it since your children turned 18, you might want to take the time to update it. Ensuring your will is up to date will help make sure your loved ones are protected when you’re gone. Do not name your CAAT Pension Plan beneficiary in your will. The CAAT Plan beneficiary designation form is the best way to ensure your beneficiary designation is carried out.

This is also a good time to look at your insurance needs. Consider all your policies – life, home, and auto. You might be eligible for seniors’ discounts. When you retire, you’ll also be able to choose from a selection of health plans, enabling you to maintain drug coverage, and more. You arrange the selection of this health plan with your employer through the health plan provider at retirement. It’s a good idea to assess your long-term health needs and determine which policy will work best for you. As these policies are entirely member paid, it’s also a good idea to get a costing from your HR department so you know how much you’ll be paying.

The Plan's normal retirement date is the end of the month in which you turn 65. Early retirement is available to those who qualify as early as age 50. You should notify your Human Resources department as soon as possible to begin the retirement process, otherwise your first pension payment could be delayed. We recommend at least 2 months notice in advance. Your employer HR representative will give you the forms you will need to fill out and sign and tell you what documents you are required to submit.

In order to begin collecting your benefits in a timely manner, it's important to promptly submit completed forms and documents. Your College will provide you with the necessary forms and will let you know which documents you may require. You will also receive forms from the Plan that you will need to fill in, sign and submit to us. You can ensure you will have all the necessary documents by collecting them in advance. You will need a void cheque from the bank account you want your pension paid into and you may be asked to supply proof of your age and your spouse's age. Knowing what's involved will help you better understand your option document that you will receive from the CAAT Plan when you apply.

When you receive your “option document” from the CAAT Pension Plan, you might have a few different payment options to choose from. If you’re married, your spouse automatically receives a 60% survivor pension on your death. In addition, you’ll have the option to choose an actuarially reduced pension now, so that when you die, your spouse will receive a 75% survivor pension. You can only choose this at retirement, so it’s important to be ready. The option document will show you what your pension would be if you choose the 60% or 75% survivor option.

You must apply directly to with Social Development Canada to receive the necessary information and application forms for CPP and OAS and to find out the amount of government benefits you are eligible to receive. For more information, visit government website link  You can apply for CPP any time after age 60, and can apply for OAS when you turn 65.

If you are retiring earlier than age 65, you will receive an additional benefit called the bridge benefit. Your bridge benefit will stop when you turn 65, which will result in a decrease in your total monthly pension payment. We send you a notice before your 65th birthday to remind you that your bridge benefit will stop when you turn 65. It's important to keep this fact in mind for budgeting and financial planning purposes. You can get an estimate of your pension and bridge benefit using our Estimator.

Once your pension request has been processed and your paperwork has been completed, you will begin receiving your pension. Your pension will be deposited directly into your bank account on the first business day of each month. Inflation protection will be added to your pension in years when it is granted. Remember if you retire before age 65, your bridge benefit and any inflation protection added to it will stop when you turn 65.