DBplus: A new defined benefit design for those who work part-time or on contract

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Join us for the DBplus webinar on October 10

Register here to learn more about the features of DBplus and have your questions answered by a pension expert.

When: October 10, 2018, at 12:00 PM - 1:00 PM

Designed to meet the unique needs of other than regular full-time (OTRFT) employees, DBplus is an easy-to-understand defined benefit (DB) pension plan 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.

A change for OTRFT members on January 1, 2019

All OTRFT employees who are CAAT Pension Plan members will begin earning a pension under DBplus on January 1, 2019. You don’t have to do anything – the switch will be automatic. The pension you have earned to January 1, 2019 will still be there for you. In fact, it will continue to grow every year until retirement.

If DBplus applies to you, you’ll receive a letter from the CAAT Plan in the fall of 2018. It will provide you with the information you need about the transition to DBplus, and what it means to your pension. At the same time, we’ll launch a new Pension Estimator, so you can calculate your combined pension from the current Plan design, and DBplus, at any retirement date you choose.

You don’t have to do anything – the switch will be automatic.

OTRFT employees who haven’t joined the CAAT Plan still have the option to join DBplus by the CAAT Pension Plan at any time during employment.

The 3-Step Pension Estimator and DBplus

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 this 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. 

How does DBplus work?

Learn about how DBplus member’s contributions work to provide a secure lifetime pension and other valuable benefits.

DBplus provides a secure lifetime income in retirement, plus so much more

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.

What are the advantages of DBplus for members?

Learn about the advantages beyond the secure, defined benefit pension that DBplus provides to members.

DBplus features

DBplus provides valuable features, designed for OTRFT members.

Earn a secure lifetime defined benefit pension plus valuable additional features

Your pension is calculated using a formula, so you know what your annual pension will be when you retire. You receive pension payments every month in retirement, for the rest of your life.

Plus, your pension will receive conditional inflation protection in retirement.

Plus, your pension includes survivor benefits for your eligible spouse.

The pension you’ve already earned continues to grow while you work

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.

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.

A design for those who work part-time or 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.

Retirement features designed for OTRFT members

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 5% to 3% 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.

Your pension continues to grow if you keep working after age 65.

Seamless transition if you change jobs

  • If you start working full-time:
    You 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:
    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.

Increase your pension with purchases or transfers

DBplus allows you to purchase eligible periods of employment or transfer eligible funds, to consolidate a bigger pension. This means all of the pension you earn is backed by the CAAT Plan’s 118% funded ratio and strong investment performance.

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 programme.

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 - June 27, 2018


Curious about how it works?

Read on for details about how DBplus provides valuable lifetime pensions.

Pension Formula

  • The pension formula is divided into two components.  
    1. Guaranteed annual base pension (payable from age 65)– calculated at the end of each year.
    2. AIW Enhancements – applied at the start of each year.
  1. 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.

  1. 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

See it in action

Click here to see 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.

DBplus pension example

  • This graph shows how a pension grows while you’re working, and can continue to grow in retirement with conditional inflation protection enhancements.