The benefit you earn in the CAAT Plan is yours. If you leave your job you have options to take your benefit with you, or leave it in the Plan as a deferred pension.
Do you work part-time or on contract?
Visit the DBplus page to discover how DBplus maximizes the lifetime pensions of members who work part-time or on contract.
Will you leave your job before you reach retirement age?
If you leave your employment with a participating employer, you will have options for the pension benefits that you have earned during the course of your membership.
All CAAT Pension Plan members are entitled to a pension at retirement. If you terminate your employment with a CAAT Plan employer, the CAAT Plan termination options provide both flexibility and security so you can make the best choices for your retirement income.
When you terminate before your normal retirement date, your membership is automatically extended for 24 months from the date you last made contributions to the Plan. During the 24-month membership extension, you have a number of options for your pension, and at the end of the 24-month period, you gain additional options.
If you are eligible to retire (because you are either age 55, or are age 50 with 20 years of service), you can choose to retire immediately, on an early pension (which may be reduced). Click here to learn more about the Plan’s retirement options.
If you were an active member of the ROM Pension Plan on December 31, 2015, and are still an active member, the provisions that apply to your pension may be different than those outlined on this page. Visit Active members – formerly ROM Pension Plan members for details.
Leaving your job? Be sure to stay in touch!
During the 24-month extension of membership period, if your contact information changes, you must notify the Plan as soon as possible to ensure you receive your option document in time to meet any deadlines, and avoid any delays.
Download the Change of Information - Member Update form and use it to notify us of any changes. Complete the form, sign it, and mail it to the CAAT Pension Plan to keep us up to date.
During the 24-month membership extension
During the 24 months, you have options which will help you build your pension throughout your career:
Begin working at another CAAT employer
If you begin working for another employer that participates in the CAAT Plan, you are required to resume contributing to the Plan as soon as your employment starts. Be sure to notify your new employer that you are a member of the CAAT Pension Plan so that appropriate member and employer contributions can begin, and you can resume earning a pension immediately.
Transfer to another employer’s pension plan
If you begin working with another employer that has a pension plan, you can transfer your CAAT Plan pension to your new employer’s plan, providing that plan will accept the transfer. You can choose this option at any time during the 24-month extension provided you have not started your pension and are under age 65.
How does a transfer work?
Plan transfers are made under Ontario's Pension Benefits Act ("PBA transfer") which allows you to transfer the commuted value of your pension from the CAAT Plan directly to your new employer's plan, if it will accept the transfer. Usually, your new employer will determine the amount of pension that the transferred amount can buy, which may be the same or less than the pension you had built in the CAAT Plan.
After the 24-month membership extension
At the end of the 24-month membership extension, the following options are available, in addition to the portability options above:
Choose a lifetime pension from the CAAT Plan
You can keep your pension in the CAAT Plan, and receive lifetime income in retirement. This is called a deferred pension. Your deferred pension is the pension you earned up to the date you terminated your employment. Your pension remains in a secure, fully funded pension plan, ready for you when you retire.
It doesn’t matter how far you are from retirement, your pension will be waiting for you when you’re ready to collect it. In fact, your pension will continue to grow, receiving inflation protection increases, when they apply, even before you start collecting it. If inflation protection increases were granted during the 24-month membership extension, those will be part of your deferred pension too. Not only that, but you’ll also have all the other advantages of a lifetime pension, such as survivor benefits for your spouse.
Deferred pensions offer flexibility
You can start your deferred pension at the normal retirement age of 65, or as early as age 55 (or even age 50 if you have 20 years of service). If you start before age 65, your pension will be reduced by 5% per year for each year you are from age 65. You also receive a bridge benefit – an additional pension, payable from the early retirement date to age 65, and subject to the same reduction factor as your early retirement pension. This permanent reduction to your payment reflects the fact that you will receive it longer.
Should YOU take advantage of a deferred pension?
A deferred pension is the ideal option for a member who wants the security of a pension that’s backed by a well-governed, professionally-managed defined benefit pension plan. It doesn’t matter how far you are from retirement, your pension will be waiting for you when you’re ready to collect it.
Your deferred pension offers lifelong benefits before and after you retire:
- Retire at a time that’s right for you - there’s no need to follow the markets or worry about the impact the economy will have on your retirement date. Your pension amount is guaranteed regardless of the markets, interest rates, or other external factors.
- You can retire early with a reduced pension – starting at age 55, or as early as age 50 if you have more than 20 years of pensionable service at termination of employment.
- Your deferred pension starts receiving inflation protection increases (when they apply) to partially offset the impact of inflation even before you start your pension.
- You retain the flexibility to transfer your pension to another employer’s pension plan in the future (if the other employer permit transfers).
- At retirement, you’ll receive a steady and reliable stream of monthly pension payments, for life.
- You can’t outlive your pension – you’ll receive your monthly payments as long as you live.
- Survivor benefits are available to your survivors whether you die before retirement or after you start collecting your deferred pension.
Commuted value transfer
You can choose to transfer the commuted value (CV) of your benefit out of the Plan. The CV is a lump-sum payment of the ‘present value’ of a member’s earned pension. In other words, it is the amount of money that would have to be invested today, based on current interest rates, to be equivalent in today’s dollars to the member’s future pension stream. CV assumptions and calculation methodology are prescribed by legislation.
You must be under age 55 (or under age 50 if you have 20 years of service) to choose the CV option.
The CV is calculated at the end of the 24-month extension using the interest rates in effect at that time. You have six months from the end of your 24-month extension of membership in which to choose the CV, after which time, the option is not available.
The CV amount is locked-in; the funds must be used for your retirement income. If you choose to take the CV out of the Plan, you will have to transfer the funds into a locked-in retirement account and you cannot use them for any other purpose. In addition, you cannot withdraw money from a locked-in retirement account before age 55, and all funds must be withdrawn or converted to an annuity or a Life Income Fund by age 71.
If you opt to transfer your CV out of the Plan, you will receive no further benefits from the CAAT Plan. You will be entirely responsible for subsequent investment returns, including the management fees and risks associated with managing your retirement income. If your investments do not perform well you may end up with a retirement fund that is smaller than what you had when you left the Plan. There is an additional risk of outliving your savings.
When you forfeit the deferred pension in favour of the CV, you also give up valuable other benefits. The CV does not include:
- The right to a guaranteed pension, paid for the rest of your life, including the option to start receiving that pension as early as age 55 (with a reduction)
- A lifetime pension for your surviving eligible spouse
- Future inflation protection increases to help protect the purchasing power of your pension.
- The flexibility to transfer your pension directly from the CAAT Plan to another employer’s pension plan in the future.
At the end of the 24-month extension, the Plan compares 50% of the commuted value of your deferred pension to the total amount of contributions you made (on which your employer contributed a matching amount), with interest to the date of termination of membership.
If your contributions plus interest total more than 50% of your commuted value, you will receive a refund of the difference, called excess contributions. This does not apply if you transfer directly to another CAAT Plan employer, and may not apply if you transfer your pension benefits to another employer under a Reciprocal Transfer Agreement.
Limits on commuted values
The Income Tax Act (ITA) places a limit on the amount of CV that you can transfer directly to a locked-in RRSP. If you choose the CV option and the ITA limit applies, you have two choices for the excess amount:
You can take the excess in a lump sum which is taxed at your current marginal tax rate. If the withholding tax is too low, you will be assessed additional tax payments when you file your income tax for the year of the transfer.
The choice between a CV transfer and a deferred pension is an important one, with a variety of risks and benefits to consider. Please review the pamphlet “Termination of employment” for more information.
Questions and answers
What happens when a member terminates?
When you leave your job, your employer’s HR department will notify the CAAT Plan that your 24-month extension has begun.
If you start working at another CAAT Plan employer during the 24-month extension, your membership will transfer seamlessly.
If you are starting employment with a new employer that does not participate in the CAAT Plan, but offers a pension plan, and you are interested in transferring your pension, you should contact your new employer immediately to investigate your options.
At the end of the 24-month extension of membership period, you will receive notification from the CAAT Pension Plan outlining your additional termination options, including the monthly amount of deferred pension you can receive from the Plan, and the CV amount.
What happens if I become eligible to retire during the 24-month extension?
If you turn 55 during the 24-month extension (or you turn age 50 and have 20 years of pensionable service), you can start your pension immediately with a reduction of 3% per year for each year you are away from the nearest early unreduced retirement factor (the 85 Factor, the 60/20 Rule or age 65, whichever is closer). If you are planning to retire early, it might be to your advantage to do so within the 24-month waiting period, rather than waiting until it is over. This is because at the end of the 24-month period, your pension will be subject to the 5% per year reduction applicable to a deferred pension.
If you retire prior to age 65 you will also receive a bridge benefit, paid to age 65. If your early pension is reduced, your early bridge benefit will be reduced at the same rate.
If you become eligible to retire during the 24-month extension and wish to start your pension early, you should contact the CAAT Plan directly.
What if I start working for a CAAT Plan employer AFTER the 24-month extension is up?
If you start employment with the same or another CAAT Plan participating employer again after the 24-month extension, and you have chosen a deferred pension, you are required rejoin the Plan immediately.
Note that if you previously received a refund of excess contributions, you must repay them, within 6 months of your rehire so that your ultimate pension calculation will use your total service from both periods of membership. If you don’t repay the excess contributions refund, you will receive two pension payments: the frozen deferred pension and the pension you earned when you rejoined the CAAT Plan.
If you have transferred the commuted value of your retirement benefit out of the Plan, you will have to re-purchase your past service, and repay any refund of excess contributions to restore your service. Be aware that, depending on how much time has passed and how well your investments have performed since you transferred your commuted value out of the Plan, you may not have sufficient funds to cover the full cost of the past service purchase. In this case you can make a partial purchase or make a top-up payment using other funds you might have.
Did your 24-month extension of membership end before July 1, 2016?
Under a Plan change effective July 1, 2016, members who end the 24-month extension of membership have 6 months from the date the extension of membership ended to choose the commuted value, provided they are still under age 55 at that time (or under age 50 if they already have 20 years of service)
Members whose 24-month extension of membership ended before July 1, 2016 have 6 months from the effective date of the Plan change - until December 31, 2016 - to choose the commuted value, provided they are still under age 55 at that time (or under age 50 if they already have 20 years of service).
For members who prefer a secure, lifetime pension, no action is required. Your pension remains in the CAAT Pension Plan, available for you to start at age 65 (or as early as age 55, with a reduction). Note that members who have 20 or more years of service can retire as early as age 50, with a reduction.
Are you already eligible to retire?
If you are over age 55 (or age 50 with at least 20 years of service) when you terminate, you are eligible to retire with an immediate pension from the Plan. If you choose not to start your pension immediately, you can defer your pension and start collecting it later.
Your benefit under the CAAT Plan is determined exclusively under the terms of the CAAT Plan. Grow-in benefits for involuntarily terminated employees, as provided under the Pension Benefits Act, do not apply to any members of the CAAT Plan. This is because the CAAT Plan, in accordance with the PBA, elected to opt out of their application, effective July 1, 2012, pursuant to a notice of election filed with the Superintendent of Financial Services.