2017 Faculty strike purchase information

This page provides information about the service purchase process following the 2017 faculty strike. This process applies to all members who participated in the strike, including members who will switch to the Plan's DBplus design on January 1, 2019.

As a Plan member who was on strike, you will be able to purchase the pensionable service lost during the strike. The CAAT Plan is working on a special process “window” to efficiently deal with the expected high number of strike purchase requests.


Strike purchase process

2017 strike purchase process

Starting in June, you will be able to purchase the strike service based on the processes that applies to you:

1. Unless you fall into one of the tables, below, you will receive a strike purchase package directly from the CAAT Plan in the mail. The package includes a strike purchase form showing the cost to purchase the period of service. If you decide to make the purchase, send the completed and signed form, along with full payment (by cheque or through RRSP transfer) to the CAAT Pension Plan.

2. Contact your employer directly only if you were on strike and you work at:

Loyalist

St. Lawrence

3. Contact your employer directly only if you were on strike, you are other than regular full-time, and you work at:

Conestoga

Confederation

Fanshawe

George Brown

Humber

Lambton

Northern

Sheridan

Strike Service Purchases webinar recording

Strike purchase FAQ

Questions from the Strike purchase webinar

Is the settlement pensionable?

The lump sum payments (of $900 and $450) that are being paid to full-time and partial-load faculty are not pensionable.

The retroactive salary increase that will be applied effective October 1 IS pensionable. This means the cost of your service purchase for the strike period (which will be provided to you), will take into account your increased earnings as a result of the retroactive salary increase.

Questions about Taxes

What are the tax implications of a service purchase in 2018?

After April 30, 2018 purchases made via cash will result in a Past Service Pension Adjustment (PSPA) which removes RRSP contribution room. The PSPA amount will be provided with your quote so you are aware in advance of the purchase how much RRSP room is required.

If I retire March 31, 2018 and purchase the strike period, will I have the tax deduction for 2017?

Any cash purchases will be tax deductible and the CAAT Plan will issue a tax slip in the year the payment is made.

Is the strike purchase payment tax deductible?

Any cash purchases will be tax deductible and the CAAT Plan will issue a tax slip in the year the payment is made.

Can you use any RRSP account for the top up of the purchase cost?

Payments must be made in full, all cash or all RRSP

Does the PSPA adjustment from the CRA mean that we might need to pay more or less taxes or will it mean that our allowable RRSP contribution might change? Could we be subject to some sort of over-contribution penalty if we contribute to our RRSP in May as a result of making the strike purchase?

PSPAs remove RRSP contribution room, but they do not impact taxes. Always ensure you review your latest notice of assessment from CRA when deciding how much to contribute to RRSPs.

I max out my RRSP each year. Do I need to leave room in my 2017 contribution to allow for the strike service purchase or will the tax implication show on the 2018 return?

The strike period will not impact your 2017 contribution room, but it could result in slightly more RRSP contribution room in 2018. When we provide the purchase cost in spring 2018, we will also inform you of the PSPA amount which is the RRSP room that you are required to have to complete the purchase.

Will our T4 income show 5 weeks less income regardless of whether we purchase the strike service or not?

Yes, and when you purchase the strike service, the CAAT Plan will issue a tax receipt.

Can we transfer from our RRSP to purchase the strike period?

Yes. RRSPs can be used to purchase the strike period. If you are retiring before June 30, notify your employer that you wish to use RRSP funds for the purchase, and they will provide you the necessary T2033 form for your financial institution. RRSP transfers are the member's responsibility: you must ensure transfer is completed. Payment must be the full cost of the strike period.

Will we lose a portion of our tax deduction with the missed contributions during the strike? Do I need to top-up my personal RRSP to make up the difference?

Your pension contributions for 2017 without the strike purchase will be less than they would be if you had not been on strike. Any purchases made with cash are tax deductible.

Questions about the purchase process

Where do I send my payment?

All payments are to be made to the CAAT Pension Plan.  If you are retiring, your Employer will assist you with direction. 

Since you can make this purchase at any time before retirement, if you are not sure when you are going to retire, does it make more sense to wait until just before retirement to determine whether the purchase is worth doing?

If the precise impact to your retirement pension is an important factor in your decision to purchase, then yes, waiting until closer to retirement may be best for you.

If I have already calculated my cost for strike service, is it possible to pay earlier than June 2018?

No. The only purchases that can be completed before June 2018 are for terminating or retiring members.

Is it possible to make the purchase in installments?

No. The purchase must be made in one lump sum.

How much notice does the CAAT Plan need to process a pension request?

Once we receive a pension application we will send out a retirement option package within 30 days.

When will we receive information on the exact amount of our payment owing? Will there be options to pay this amount with our paycheque, or does it have to be as a once-only lump sum payment?

Members will be notified of the cost of the purchase in June 2018. Depending on the process chosen by your employer, you will either receive a letter from the CAAT Plan, or your employer HR will calculate the cost for you. The payment must be made in one lump sum.

Why does it have to be a lump sum? We were just out for 5 weeks. Is there no way to do a gradual purchase?

We only accept full payments for purchase costs. The cost does not change, and you can make the purchase at any time before you terminate or retire.

When will the strike service purchase show up on the CAAT Plan annual pension statement?

The purchase will appear on the annual statement in the year after you make the purchase.

How much notice must I give my employer of my intention to retire?

We recommend 3 months.

Will you be issuing regular annual CAAT Plan Pension statements?

Yes, by June 30th each year.

Questions about the cost of the purchase

If I purchase the strike service a year from now, will the cost to purchase change?

No. The cost does not change.

Benefit of making the purchase

Does the service purchase affect the date for earliest unreduced pension?

If you have already reached your earliest unreduced pension date, then the date will not change.  If you have not reached this date, and you do not purchase the strike your earliest unreduced date could be 5 weeks later than if you do make the purchase.

I am planning to retire as of June 2018. Do I need to buy back the strike time?.

Purchasing the strike is a member choice - additional service will always increase a member's monthly pension.  You can use the online estimator with your current service and carve out the strike period of .09616 years to compare the difference in your pension with and without the purchase.

I may retire about 5 years from now. How can I calculate the impact of the strike on my pension? What can I do to mitigate this?

The cost is 2 times your contributions for 5 weeks. For an estimate of the cost, refer to your most recent pay stub, calculate how much you contribute weekly, double it and multiple by 5.

What impact will it have on survivor benefits? Do survivors get the same amount as I would?

The strike has no impact on your survivor benefits. The eligible spouse is entitled to 60% of your lifetime pension at the date of your death.

Questions about highest average pensionable earnings

Are the years used for HAPE academic or calendar years?

Calendar years

To clarify, If I purchase the strike service, will my HAPE AND pensionable service for 2017 be equal to what they would have been if there had not been a strike, that is pensionable service = 1 year and HAPE: what I would have earned had there not been a strike?

Yes.

Is it possible that the strike will lower my HAPE because it happened in my last 5 years? 

Yes. Without the strike purchase, the HAPE could be slightly lower for those retiring in the next 5 years.

Are you aware if the Union is paying part of the strike purchase cost?

You will have to speak directly with your union local on cost sharing.

Previous Q&A

Why are the purchases starting in June?

The June start date enables the Plan to complete the purchases in the most efficient manner, and ensure consistent treatment for all affected members.

Note that the purchase date does not affect the cost of the purchase: it’s based on your earnings and contribution rates in effect at the start of the strike; so once calculated, it will never change.

If you’re retiring on or before June 30, 2018, you don’t have to wait to make the strike purchase.

How much does it cost to purchase the 2017 strike service?

The cost of the purchase is two times the contributions you would have made during the strike. The contributions are based on the salary you were earning at the beginning of the strike, and the contribution rates on that date. Once the purchase cost is calculated, it will never change.

The cost is 100% payable by you (the member), and the payment must be made in a lump sum. There is no employer contribution.

Refer to the cost chart below, to see examples of the purchase costs at different earnings levels.

I’m full-time. Should I make the purchase?

As a result of the 2017 strike, you will have 25 fewer days of pensionable service for 2017.

As a general rule, purchasing pensionable service will increase your pension, and could result in an earlier unreduced retirement date.

The chart below shows the cost to purchase the strike period at various earnings levels (for full-time members). It also provides general guidance on how much more pension you might get, in today’s dollars, by making the purchase. 

Cost chart – full-time members only

The chart below shows the estimated cost for a full-time member to purchase the strike period, along with an estimate of the increase in the monthly lifetime pension based on purchasing the strike. It shows the estimated cost of purchasing the strike period along with some general guidance on how much more pension you might get, in today’s dollars, by making the purchase. This will help you decide whether making a purchase is right for you.

How to use the table:

  • Find your earnings level in this chart in the first column. (The table shows salaries in $5,000 increments.)
  • The middle column shows the cost to purchase the strike. Note that you cannot purchase a portion of the strike period – it must be purchased in full.
  • The right column shows the estimated increase in lifetime pension with a strike purchase, in today’s dollars.

Annual salary

Estimated cost to purchase the 2017 strike period

Estimated increase in lifetime pension benefit with strike purchase

(full-time members only)

Monthly

Annual

$50,000

$1,077.00

$5.21

$62.52

$55,000

$1,185.00

$5.73

$68.76

$60,000

$1,325.00

$6.51

$78.12

$65,000

$1,467.00

$7.32

$87.84

$70,000

$1,610.00

$8.12

$97.44

$75,000

$1,752.00

$8.92

$107.04

$80,000

$1,894.00

$9.72

$116.64

$85,000

$2,037.00

$10.52

$126.24

$90,000

$2,179.00

$11.32

$135.84

$95,000

$2,321.00

$12.12

$145.44

$100,000

$2,463.00

$12.92

$155.04

$105,000

$2,606.00

$13.73

$164.76

$110,000

$2,748.00

$14.53

$174.36

$115,000

$2,890.00

$15.33

$183.96

$120,000

$3,033.00

$16.13

$193.56

 

Assumptions and Limitations

Please note:

  • The estimates do not assume any future increases in salary or YMPE
  • The estimates do not take into account any early start adjustments should you retire before reaching your earliest unreduced retirement date
  • The estimates do not take into account increased bridge benefits payable should you retire before age 65.

Will a service purchase affect my early unreduced retirement date? 

There is no one answer on whether your earliest unreduced retirement date will change as a result of the 2017 strike. It will depend on your age, amount of service you currently have and the type of unreduced pension you are on track to become eligible for.

Members become eligible for unreduced pension benefits at the earliest of three dates:

  • 60/20 rule: If you are age 60 or over with 20 or more years of pensionable service, you are eligible for an early unreduced pension.
  • 85 factor: If your age plus pensionable service equals 85 or more, you are eligible for an early unreduced pension.
  • Age 65: If you do not meet the 60/20 rule or the 85 factor prior to age 65, you become eligible for a normal retirement pension, which is unreduced, at age 65.

For example, if you are age 59 with 20 years of pensionable service, you will still reach the 60/20 rule at age 60 regardless of whether you purchase the strike, as you would still have more than 20 years of service when you reach age 60.

However, if you are age 61 with 19 years of service and don’t make the strike purchase, it may take you an extra month to reach 20 years of pensionable service to achieve both requirements under the 60/20 rule.

Similarly, if you expect to reach the 85 factor first, your early unreduced retirement date could be delayed a month depending on when you were born. This is because the Plan uses your exact age as of the end of your month of retirement, along with your pensionable service, to determine whether you have met the 85 factor.

Will a service purchase affect my Highest Average Pensionable Earnings (HAPE)?

If you are more than five years away from retiring or terminating, then the strike is unlikely to affect your HAPE. If you are within five years of retiring or terminating then the strike could impact your HAPE. HAPE is an average calculated over your highest consecutive five years of earnings. If that highest five year earnings period is interrupted by the five weeks of the strike, the Plan has to calculate your average by going back and bringing into this average five weeks’ worth of earlier (and likely lower) earnings. Without a strike purchase, this could bring your overall HAPE down.

For example, if you were to retire on June 30, 2018 and you are at your highest earnings, your HAPE calculation would normally be based on your actual earnings from July 1, 2013 to June 30, 2018. If you do not purchase the 2017 strike period, your HAPE would still be based on five years’ worth of earnings, but would include the five weeks prior to July 1, 2013. If the earnings in that earlier five week period are lower than what your earnings would have been during the 2017 strike, your HAPE will be reduced. In this scenario, purchasing the strike period will restore your HAPE.

However, if you are more than five years away from retiring or terminating and your earnings increase or remain the same, then your HAPE will be based on that future five-year period and will not be impacted by the 2017 strike. For example, if your retire June 30, 2023 and your earnings are at their highest over the preceding five years, your HAPE calculation will be based on the period July 1, 2018 to June 1, 2023. As a result, purchasing the strike period will impact your service, but will not impact your HAPE. 

I’m retiring on or before June 30, 2018 - do I have to wait for the purchase window?

You don’t have to wait for the special process window to purchase the strike. If you are retiring on or before June 30, 2018 and you want to make the strike or any other purchases, the purchase must be completed before you retire. You should notify your employer as soon as possible that you wish to make the purchase. This way, we will be able to get everything completed before you retire. If your Pension Application has already been submitted to the Plan, we will contact you.

What if I terminate my employment on or before June 30, 2018?

You don’t have to wait for the special process strike purchase window. If your employment terminates, you can still make the strike purchase, but you must do so within 30 days of your termination. Talk to your employer as soon as possible to start the process. 

 I’m part-time and part of the OPSEU bargaining unit that participated in the strike. Will I be able to make the purchase?

Yes. Your purchase will use the same process as full-time striking members at your college.

What is the process to make a purchase? 

There will be two different processes, depending on your employer’s payroll and reporting capabilities and preference. In either process, the purchases will start in June, 2018.

Mail-out option

The CAAT Plan will calculate the cost of the strike purchase based on data submitted by the employers. Starting in June 2018 the CAAT Plan will mail each member a letter with the cost of the purchase and a Strike Purchase form.

  • The Plan will mail a strike purchase quote to each member at their home address.
  • To make the purchase, the member completes the Strike Purchase form and returns it to the CAAT Plan with the cheque for the entire purchase amount.
  • A past service pension adjustment (PSPA) will be required before the purchase can be processed. The Plan will arrange to have the PSPA approved with Canada Revenue Agency (CRA). If the PSPA is approved, the Plan will complete the process, including issuing tax receipts.
  • If the PSPA is denied, CRA will contact the member directly.
  • Members can make the payment using cash or RRSP transfer
  • Once the purchase is complete, the member will receive confirmation from the CAAT Pension Plan.
  • The member’s next Annual Statement will show the pension with the service purchase included.

Form-based option

  • The employer will calculate the cost of the purchase using a 2017 Strike Purchase form, which the member must sign.
  • The employer can submit the forms starting in June 2018, along with the member’s payment.
  • A past service pension adjustment (PSPA) approval will be required before the purchase can be processed. The Plan will arrange this approval with Canada Revenue Agency (CRA). If the PSPA is approved, the Plan will complete the process, including issuing tax receipts.
    • If the PSPA is denied, CRA will contact the member directly.
    • Members can make the payment using cash or RRSP transfer.