Designed to meet the unique needs of members who work part time or on contact (also known as other than regular full-time, or OTRFT employees), DBplus is a defined benefit (DB) pension plan design with a fixed contribution rate for members, matched dollar for dollar by employers. As a member of the CAAT Pension Plan who works part time or contract, your DBplus lifetime pension is based on your actual earnings each year, rather than an annualized average over a five-year period.
The focus of DBplus is on maximizing your lifetime pension and providing similar value per contribution dollar as the current plan design. In fact, in DBplus, the average member can expect an 800% return on their contributions in pension payments - that’s $8 in pension payments for every $1 in contributions.
Your pension under DBplus includes the valuable features members want: a secure lifetime pension in retirement, plus conditional inflation protection, plus survivor benefits.
Part time or contract employees who haven’t joined the CAAT Plan have the option to join DBplus by the CAAT Pension Plan at any time during employment.
Are you an employer, a representative of a member group, or an employee of an organization interested in joining the Plan’s DBplus design?
Visit www.dbplus.ca for resources that will help you decide if DBplus is right for your organization. You'll also find the DBplus Value Tool, which lets prospective members estimate the lifetime retirement income they can earn in DBplus.
What are the advantages of DBplus for members?
DBplus is designed to maximize the lifetime pension you can earn.
In the current plan design, OTRFT members typically: earn lower pensions as a result of shorter service; do not reach milestones to receive an early unreduced pension; and are more likely to retire at or after age 65. Also, they rarely take advantage of the bridge benefit, available to members who retire early. Instead of having these features, DBplus has been designed so that more of your contributions dollars are used to build your annual lifetime pension.
Watch the video to learn about the advantages beyond the secure, defined benefit pension that DBplus provides to members.
Making the move to DBplus
A design for those who work part time or on contract
In DBplus, service isn’t part of the pension calculation. Your defined benefit pension from DBplus is based on your contributions: the more you earn, the greater your contributions - and in turn, the higher your lifetime pension. It's that easy.
You receive pension payments every month in retirement, for the rest of your life. The pension you’re currently earning in the CAAT Plan will continue to increase alongside your DBplus pension for as long as you are a contributing member. Based on the Plan’s funding level, your total pension receives an annual increase based on the Average Industrial Wage (AIW) index. When granted, each AIW enhancement becomes a permanent part of your promised pension.
When you retire your total pension is the pension you earned in the current plan design plus the pension you earned in DBplus, plus the total AIW enhancements. In addition, for every year you contribute to DBplus, you earn an additional year towards your early unreduced eligibility in the current plan design.
Continue to enjoy the benefits of membership in a sustainable, secure, defined benefit pension plan. You remain a member of the CAAT Pension Plan. There’s no change to the Plan’s governance structure or investment program.
Watch the video to learn how DBplus member’s contributions work to provide a secure lifetime pension and other valuable benefits.
Contributions in DBplus
Employer matching contributions increase your pension: You contribute a fixed 9% on your total earnings, including overtime earnings, and your employer matches your contributions dollar for dollar. Visit the Contributions page to learn how your tax-free contributions make it easy to build a stable, predictable retirement income.
Increasing your pension with purchases or transfers
The CAAT Pension Plan allows members to purchase eligible periods of employment to consolidate a bigger pension. This means all of the pension you earn is backed by the CAAT Plan’s 120% funded ratio and strong investment performance.
Starting in April, if you worked part time or on contract with a participating employer before you joined the CAAT Pension Plan, you will be able to purchase the pension in respect of this period. Starting in July, you’ll have the opportunity to purchase the pension you previously earned in a Canadian registered pension plan, including defined benefit and defined contribution plans as well. A purchase is a great way to increase your DBplus pension and consolidate your retirement income, so you can collect it from one source at retirement.
We’ve enhanced the DBplus Estimator, so you can now estimate your pension, and see the impact a pension purchase would have on your retirement income.
Five things to know about DBplus purchases:
- Use the DBplus Estimator now to help you decide if a purchase is right for you.
- You can use the Estimator as often as you want, and there is no obligation to make a purchase.
- Purchases can be made at any time until you either leave your job, or retire with an immediate pension.
- The value of the purchase will be calculated at the time the purchase is made.
- The funds for your purchase must come from a registered retirement vehicle, such as a LIRA or RRSP.
Starting in April 2019, you’ll have the opportunity to see the value of a purchase and initiate a purchase request in respect of a period of employment with a participating CAAT employer or with a prior Canadian employer that participated in a registered pension plan.
At that time, we will provide instructions for getting the process started. To stay up to date and learn more, visit the DBplus section of our website.
If you will be leaving your job or retiring in the coming months, and need to complete a purchase before this event, contact the CAAT Plan to expedite the purchase.
If you submitted a completed purchase request form before January 1, 2019, the purchase will be completed and applied to your pension from the current Plan design, referred to as DBprime.
Planning your retirement
Your DBplus pension is calculated using a formula, so you know what your annual pension will be when you retire.
How much will you get - the DBplus pension formula
- The pension formula is divided into two components.
- Guaranteed annual base pension (payable from age 65)– calculated at the end of each year.
- AIW Enhancements – applied at the start of each year.
- Guaranteed annual base pension
- The promised pension earned in the current year, calculated at the end of each year you contribute, using your total contributions, and your employers matching contributions.
- The formula uses a pension factor as a multiplier to calculate your pension. It is set based on the Plan’s Funding Policy and is currently 8.5%.
- 8.5% x year’s total contributions* = your guaranteed base pension.
*Note that the year’s total contributions are the member's plus your employer’s matching contributions, doubling the value of your pension.
- AIW enhancement
- This is the amount added to the previous year’s total promised pension. It is applied at the start of each year in which you are a contributing member, subject to the Plan's Funding Policy and is based on the announced increase to the Average Industrial Wage (AIW) index.
- AIW Enhancements start to be applied in 2020.
- The AIW index represents wage inflation in Canada, which has averaged about 2.2% over the past 20 years.
- AIW enhancements, once added, become a permanent part of your promised pension. That means that the AIW enhancements are cumulative – each year’s enhancement is paid on top of the previous year’s total pension, plus enhancements.
- DBplus past promised benefits** x AIW enhancement rate.
**Past promised benefits accrued to the end of the previous year, including any past AIW enhancements
When can you retire?
Under DBplus, you can retire at age 65, or retire as early as age 50, with an early start adjustment. The adjustment rate varies from 3% to 5% based on the Plan’s funding level. Initially, the reduction rate for retirements has been set to 3% for each year you are under age 65. The actual rate will depend on the Plan terms in effect at your retirement.
Your pension continues to grow if you keep working after age 65.
Estimating your pension
The new DBplus Estimator, lets you estimate your combined pension from the current plan design (which we call "DBprime"), and the DBplus design, at any retirement date you choose.
Take note: Estimates provided by the 3-Step Pension Estimator assume that you continue working and accruing a pension under the current plan design until your retirement dates. If you are an OTRFT member, your pension accrual will change on January 1, 2019, and that assumption is not valid. Therefore, the pension estimate from that estimator will not accurately reflect your ultimate pension from the CAAT Pension Plan, which would be made up of a pension from the current plan design, and a pension from DBplus. Be sure to use the DBplus Estimator for OTRFT members.
Here's an example of how your DBplus pension could grow over time
Phillip is an OTRFT member of the CAAT Pension Plan and earned a pension of $2,500 per year in the current plan design before moving to DBplus in 2019.
He earns $20,000 in 2019, and his total contributions are $1,800. His employer matches his contributions, for a total of $3,600.
His annual guaranteed base pension for 2019 would be $306.
8.5% x $3,600 = $306 per year
In 2020, when the AIW enhancement is applied, Phillip’s guaranteed base pension of $306 PLUS the pension he accrued in the current Plan design ($2,500), would increase by 2.2%.
($306 + $2,500) x AIW enhancement rate = $2,867
Phillip continues to contribute and build his pension throughout his employment, and benefit from AIW increases each year. Phillip’s total pension will be the total guaranteed base pension, the pension he earned under the current Plan design, and all of the cumulative AIW enhancements received in DBplus.
When Phillip retires, his pension will include conditional inflation protection enhancements and survivor benefits for his eligible surviving spouse.
An explanation of the Plan's conditional inflation protection provision that applies to both plan designs can be found here.
If you start working full-time for a participating employer
If you start working full-time for a participating employer, you will start making contributions and earning a pension under the current Plan design. Your pension in DBplus continues to grow with AIW enhancements. Not only that, but for each year you contribute to DBplus, you earn an additional year towards any early unreduced eligibility for benefits you have in the current plan design.
If you start working for a different participating employer
If you start working for a different participating employer, you remain a member of the CAAT Pension Plan, and will continue to accrue a pension – under DBplus if you’re OTRFT at another employer, or under the current plan design if you become a full-time employee.
If you leave your employment with a participating employer
If you leave your employment with a participating employer, the termination options that apply to all CAAT Pension Plan members can be found on the Leaving your job page.
Separation or divorce
The separation/divorce rules that apply to members of both plan designs can be found on the Separation or divorce page.
The valuable survivor benefits available to your beneficiaries can be found on the Survivor benefits page.
Are you full-time? If so, there is no change for you.
You will continue to earn a secure lifetime pension under the current plan design. Full-time employees will still join under the current plan design automatically when hired.
Watch the webinar - December 7, 2018