Retirement planning - on demand

Did you know that 90% of members who have attended one of the CAAT Plan's retirement planning sessions say they would recommend it to a colleague?

The CAAT Plan offers free, on-site retirement planning sessions at every employer. At these sessions, pension experts from the CAAT Plan provide useful retirement planning resources and information, and are available to chat one-on-one after each session. If you've never attended, you will find it a valuable retirement planning resource.

And now, we also offer the session on-demand as an online course. If you've never attended a session, or want a refresher, these videos let you watch the session on your own time.

Feel free to view them one at a time, or dive in and watch them all at once. They’ll always be here if you need a refresher.

Watch these videos if you are an active member of the CAAT Pension Plan, and you are planning to start your pension immediately after you stop working.

 

Learn more

Video #1 - Is my pension secure?

Did you know that DB pension plans benefit more than just members?
Visit Your retirement security to learn how the DB model is cost-effective, helps members earn stable retirement income, and offers benefits to the Canadian economy.

Transcript

Question 1: Is my pension secure?

The short answer is yes. And how do we know that your pension is secure?

Have a look at this graph. The bar on the left shows the value of all the pensions promised to members.

Based on the 2016 valuation, the CAAT Pension Plan is 110% funded. That means that for every dollar of pension promised to members, there is $1.10 dedicated to stand behind it.

There is over a billion dollars in funding reserves to serve as a cushion against the unexpected – that keeps contributions stable while you are working and your pension strong while you are retired.

This works because the CAAT Plan is a defined benefit pension or DB plan. That means you can depend on a secure retirement income, with a lifetime pension based on a formula.

Only about 1 in 6 Canadians have a DB pension.

The other kind of pension plan you may have heard of is a Defined Contribution or DC savings plan.

These plans are like savings accounts, in that members make contributions and are then responsible for investing the money, as well as associated fees.

Ultimately, their retirement income is based on whatever they managed to earn from their investments, and if the markets should drop, these members may not be able to retire when they want to. Even worse, there’s a chance DC plan members could outlive their retirement savings.

A DB plan, on the other hand, is a pension promise. Your pension is calculated using a formula that uses your earnings, your service, and your age.

You don’t have to worry about investments or be a market guru when it comes to your contributions to the CAAT Plan. And no matter how long you live, your pension will be paid to you every month for the rest of your life.

With the CAAT Plan, your contributions, which you make on every pay, are all that you pay towards this lifetime benefit.

These DB Pension features provide the security, confidence and certainty you need when preparing for retirement.

The CAAT Plan is a jointly sponsored pension plan. This means that the Plan is run by members and employers together. The Plan’s governors are aligned to the common goals of: benefit security, contribution stability, and equity.

Members make contributions and employers match those contributions, so costs and risks are equally shared.

Funding decisions are made to ensure ongoing benefit stability. It’s fair to everyone, because the people who have the risks share the costs and make the decisions. This model is effective and results in secure, stable pensions for members.

Thanks for watching. Be sure to watch our next video, “Is my pension worth more than my contributions?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There are lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #2 - Is my pension worth more than my contributions?

Did you know that it’s investment income that funds the majority of benefits in the CAAT Plan?
Watch the short video Contributions and benefit security  to learn how your contributions work together with investments to keep the Plan sustainable.

Transcript

Question 2: Is my pension worth more than my contributions?

You make contributions to the Plan on every pay. And they might seem high to you, but having a steady stream of income in retirement is expensive.

So a natural question is: “Is my pension worth more than my contributions?”

The answer to that is a resounding yes.

“The average retired member can expect 800%+ of their contributions back in pension payments”

As a general rule, the average retired member can expect their lifetime of pension payments to be worth at least 800% of their contributions.

Here is how it works for members:

You make contributions as you work and earn service.

Once you retire, you can begin to receive a pension paid every month for the rest of your life.

On average, within just 5 years of retiring, the total amount of those monthly pension payments equal the contributions made by the member.

But remember – it’s better than that – because over the course of an average retirement, a member will receive hundreds of pension payments.

The average CAAT Plan member retires at age 62 and lives to age 90. That’s 28 years of pension payments.

The cumulative value of a lifetime of pension payments after 28 years is more than 700% of a member’s contributions. And the pension is paid for life, so it would continue as long as the member lives.

When you factor in the value of inflation protection increases and a lifetime pension for the surviving eligible spouse, the pension is even more valuable than 800% of the contributions you made.

This is an incredibly valuable benefit.

Thanks for watching. Be sure to watch our next video, “How much money do I need for retirement?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There is lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #3 - How much money do I need for retirement?

What do you want to do when you retire?
Visit our retirement planning pages as part of your retirement planning process.

Transcript

Question 3: How much money do I need for retirement?

The first step is to figure out the kind of lifestyle you plan to have in retirement because that will have a direct impact on the amount of money you will need.

You then need to know what your expenses will be in retirement, to ensure you have enough income to cover them.

You might think that you need to replace 100% of your pre-retirement income in retirement, or you might be wondering what percentage of pre-retirement income you’ll need to replace to live your ideal retirement.

Most credible experts suggest that a good replacement ratio is somewhere between 50% and 70% depending on the lifestyle you want to have.

The CAAT Plan is not the only source of retirement income, but it is a vital component in reaching your target, whatever that may be. It combines with government pensions, your personal savings, and any other retirement arrangements you might have been part of during your career.

So how do you figure out how much of your pre-retirement income you’ll need?

Let’s take a look at Robin, our avatar for this session.

Robin is 55 years old and has 24 years of service in the Plan.

Robin is also planning for her retirement and wants to know what her target income replacement should be.

First we need to look at a typical paystub. There is a column for income and a column for deductions.

You pay income tax, and you contribute to the Canada Pension Plan (CPP), Employment Insurance (EI), and the CAAT Pension Plan. You may also have deductions for insurance or other deductions. Once those amounts are all deducted, then you see your net or take-home pay.

Now let’s compare that to income in retirement.

What’s still there? There’s still a column for income, but now it’s pension income. There is still income tax because your pension income is taxable, but it’s usually at a lower rate.

What’s not there? Pension contributions and CPP contributions. These make a significant impact on your take-home pay. While you’re working, you make contributions to the CAAT Plan of approximately 12% of your pay and you contribute about 5% up to $55,300 to CPP. All those other deductions such as EI, union dues, and premiums are gone as well.

When you retire, you go from saving for retirement, to enjoying retirement!

Other expenses that don’t come up on your working paystub are the day-to-day costs of going to work, like commuting, parking, daily cups of coffee, etc. These will change in retirement.

It’s important to remember that while some expenses stop, some new ones will start.

For example, your health premiums are probably almost 100% paid by your employer, but this is an expense you will have to cover in retirement.

It’s worth it to think about all these things in the retirement planning phase of your life.

This is what Robin came up with in her retirement planning. She wants to target an income replacement amount of 60% of her current highest earnings of $76,000.

As we go through the planning examples, we’ll see how close Robin gets to her target.

If you’re starting this process, try tracking your expenses for at least a month so you can identify which expenses will stop in retirement.

For example, if you have a mortgage now, will it be paid by the time you retire? Will your kids still be living at home with you or will they be on their own?

When you have an estimate of your expenses in retirement, you can better target your income replacement amount.

The important thing to remember is that, ultimately, only you can determine how much of your pre-retirement income you’ll need to replace.

Thanks for watching. Be sure to watch our next video, “When can I retire?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There is lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #4 - When can I retire?

Wondering when YOU can retire?
Your Annual Statement shows your projected earliest reduced, unreduced, and normal retirement dates. Click here to learn more about your annual statement.
The Member Handbook contains more information about your different possible retirement dates. Click here to read it online or download a copy.

Transcript

Before we get started, please note that different early retirement provisions apply to members who start their pension after being deferred members. There are helpful links at the bottom of this webpage with more information about starting a deferred pension.

Question 4: When can I retire?

Ultimately, only you can make the decision about the right time to retire. But there are some factors you should understand as you make that decision, such as how much money you will get and when you can start.

Let’s begin by talking about the options you have for starting your pension and the benefits at the key retirement dates.

The Plan has flexible retirement dates, and depending on when you retire, there are different options available to you.

There are three categories: EARLY, NORMAL, and AFTER 65. Each one has different advantages and options.

The default retirement date is called the Normal Retirement date, which is the end of the month you turn 65. “Normal retirement” is a pension term – age 65 isn’t a mandatory retirement date, and it isn’t even the average retirement date in this Plan. Normal means that at age 65, no matter how much service you have, you can retire on an unreduced pension.

Many people are interested in retiring before they reach age 65. Any time you retire before age 65, that’s an Early Retirement.

All members can retire on an early pension at age 55. You can even retire as early as age 50 if you have at least 20 years of service.

Finally, if you continue to work beyond age 65, your retirement date is postponed and your pension will keep growing as long as you are working and contributing to the Plan.

However, no matter how long you keep working, by law, you must start your pension by the end of the year you turn 71, even if you continue working. That’s a provision of the Income Tax Act.

So with the CAAT Plan, you can retire from age 50 to age 71 – a very flexible window of 21 years.

If you retire early, you receive your pension for longer. But the longer you work, and the more service you have, the bigger your pension will be. This is why we recommend that you think about how much money you’ll need as part of the decision-making process.

Let’s now consider the advantages of each type of retirement.

If you retire early, you receive a bridge benefit. This additional pension, which is also based on a formula, is paid to you from your early retirement date - no matter when it is - until you turn 65. Then the bridge benefit stops, while your lifetime pension continues to be paid for the rest of your life.

There are two types of early retirement: Early Reduced and Early Unreduced.

You can qualify for an early unreduced pension with a combination of age and service.

We call this date the earliest unreduced date, or your magic number, and it is achieved in two ways:

The first is the 60/20 Rule: if you are age 60 with 20 years of service, you have earned an early unreduced pension.

The second is the 85 Factor: if your age plus service equals 85, you have earned an early unreduced pension.

If your pension is unreduced, so is your bridge benefit.

 

Please note that a member who starts their pension after being a deferred member is not entitled to an unreduced pension prior to the normal retirement date.

If you don’t qualify for an early unreduced pension, you can still retire early, but with a slight reduction to your pension. This is because you’ll be receiving more payments over your lifetime.

The reduction is calculated by taking your early reduced retirement date and counting the years until you would reached your earliest unreduced date, had you continued to work. We then multiply those years by just 3% and reduce your lifetime pension and bridge benefit by that percentage.

For example, if there’s a difference of four years between your early reduced date and your earliest unreduced date, those four years are multiplied by 3% to get a 12% reduction on your pension.

The Plan offers this low reduction because it’s valuable insurance for you if something unexpected happens, and you have to stop working earlier than you originally planned.

One thing to point out is that if you start your pension after being a deferred member there are different reduction factors for your pension. Have a look below the video for links with more information on starting your pension from deferred status.

According to the 2014 Sun Life Canadian Health Index, 7 out of 10 Canadians retire earlier than they expected, and the #1 reason is health.

Early Retirement is a popular provision in the CAAT Plan. One of the reasons the Plan governors are committed to early retirement options is that it’s a cost-effective way to give members flexibility and security. It lets you choose to retire based on your personal needs, and provides a level of comfort if you end up retiring earlier than you planned.

What are the advantages of a normal pension, or even of working past age 65?

The longer you work, the bigger your pension will be, so for those who aren’t ready stop working and retire, it’s good to have the option to keep working and continue earning a pension. Once you reach age 65, the bridge benefit drops off, but your government pensions can all start.

What if you’ve started collecting your pension and then decide you’d like to go back to work for a participating employer?

If you’re under age 65 and you are rehired in a full-time position, you pause collecting your pension and resume contributing to the pension plan.

If you’re under age 65 and rehired in a part-time or contract position, OR you’re over 65 and are rehired in any type of position, you have the option to either pause your pension and resume contributing, or keep your pension and not contribute.

We met Robin in video #3. Robin is wondering about the impact of leaving work and retiring early with a reduced pension.

Robin is 55 and has 24 years of service, so she’s eligible for an early retirement because all members can retire at age 55.

Is she eligible for an early unreduced pension? Her service plus age equal 79, so she doesn’t meet the 85 Factor. And even though she has 24 years of service, she isn’t age 60 yet for the 60/20 factor.

So this is an early reduced pension. For a detailed explanation of how her reduction is calculated, take a look at the video for question five.

The handiest retirement planning tool you get is your Annual Member Statement.

Everyone will see their normal retirement date – that’s the end of the month that you turn 65.

You’ll also see your earliest reduced date (if it hasn’t already passed).

Finally, if you qualify for an early unreduced pension, the projected date you will reach the magic number is also shown.

You’ll also see the pension you’ve earned to the end of the previous year.

If you’re still working, your pension will already have grown by the time you get the statement.

Thanks for watching. Be sure to watch our next video, “How much pension will I get?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There are lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #5 - How much pension will I get?

You don’t have to learn the pension formula!
The 3-Step Pension Estimator on our website lets you model your retirement on any date or age of your choosing. Click here to estimate your pension.
If you’re within five years of retiring, contact the Plan for a formal estimate of up to three different scenarios. Click here to download an estimate request form.

Transcript

Before we get started, please note that different early retirement provisions apply to members who start their pension after being deferred members. There are helpful links at the bottom of this webpage with more information about starting a deferred pension.

Question 5: How much pension will I get?

In thinking about when to retire, clearly you need to know how much your pension will be.

It is calculated using this formula, which, as you can see, doesn’t include contributions, investment returns or interest rates. That’s because the pension is based on your earnings, your pensionable service and your age.

You don’t have to memorize the formula or know exactly how it works, but many members are curious, so here is a brief explanation.

The green boxes are earnings: we take the five consecutive years of your highest earnings and average them. This is called the HAPE (or highest average pensionable earnings). The YMPE (or year’s maximum pensionable earnings) is the amount of earnings on which you contribute to CPP.

Earnings up to the Average YMPE are multiplied by 1.3%; any earnings above the AYMPE are multiplied by 2%. The 0.7% is used to calculate your bridge benefit.

All of this is multiplied by all of your pensionable service in the Plan.

Finally, we apply the Early Start Adjustment, which is the 3% reduction we talked about in the previous video “When can I Retire?” If your early pension is unreduced, the early start adjustment is 100%, because you’ll receive all of your pension. If your early pension is reduced, the early start adjustment is 100% MINUS the reduction percentage. We’ll show you in an example.

You might remember Robin from the previous videos. Robin is thinking about retiring on an early reduced pension? Let’s look at her pension calculation so she can decide whether that’s the right decision for her.

The first thing we do for every early retirement is determine if the member is eligible for an early unreduced pension.

Robin is 55 years old, so she is eligible to retire. She has 24 years of pensionable service which means she has not qualified for an early unreduced pension. So we use her age and her service to determine her early start adjustment.

Remember, as long as you’re not a deferred member, the reduction is 3% per year away from your earliest unreduced date.

We now have to calculate the lowest possible reduction for Robin. Let’s look at the three reduction scenarios:

  • The first calculation determines her early start adjustment based on age 65. Robin is 10 years away from age 65, so 3% times 10 years is 30%.
  • The second calculation determines her reduction based on when she will qualify for the 60/20 factor. We know that Robin already has more than 20 years of service so we look at her age. She is 5 years away from age 60, so 3% times 5 years is 15%.
  • The third calculation determines her reduction based on when she will qualify for the 85 factor (age plus years of service). Robin is 55 years old with 24 years of service, so she has 79 “points.” We subtract 79 from 85 to get six. We then divide that by two (because Robin is full-time, she gets two “points” for each year – one for age and one for service). So 3% times 3 years is 9%.

As a result, Robin would receive a 9% reduction on her pension and her bridge benefit.

When we apply that to the pension formula as an early start adjustment, it’s 100% minus 9%. In other words, she would receive 91% of her pension as a result of retiring early. That’s her early start adjustment.

Now here is Robin’s pension calculation plugged into the formula.

We have taken her HAPE, up to and above the 2017 average YMPE of $53,480, and multiplied it by her total service, as well as the early start adjustment of 91%

So if Robin were to retire now, at age 55, her annual lifetime pension would be $25,020 or $2,085 / month.

But we’re not quite done: remember that Robin is also eligible for a bridge benefit – an additional pension paid from her early start date, to age 65.

The Early Start Adjustment of 91% also applies to her bridge, which would come out to $8,010 per year, or $665 per month.

And the Early Start Adjustment of 91% also applies to her bridge, which would come out to $8,170/year or $680 per month.

Here is Robin’s retirement income from the CAAT Plan if she retires at age 55 on an early reduced pension, based on the calculations we just showed you.

So what might Robin be thinking about as she decides whether or not to retire?

Robin’s target income replacement is 60% of her Highest Average Pensionable Earnings. How close does the CAAT Plan pension get her if she retires right now?

  • Before age 65, Robin would receive $2,766 per month from the CAAT Plan – that would be her lifetime pension PLUS her bridge benefit.
  • From age 65 on, she would receive $2,085 per month from the CAAT Plan – that would just be her lifetime pension since the bridge benefit ended.

If we compare that to her pre-retirement income, before age 65, it’s about 44%, and after age 65, it’s around 33%.

She would also have to consider the impact of government pensions and savings on her income before making a decision about retiring.

But what if Robin keeps working to her earliest unreduced date?

Here is Robin’s retirement income from the CAAT Plan if she retires at age 58 on an early unreduced pension.

Her pension would be $30,600 per year, or $2,550 per month, and up to age 65, she would receive an additional $10,430 per year, or $869 per month bridge benefit.

Why did her pension go up?

Robin earned six “points” towards the 85 factor because her service and age each went up by three years. So age 58 plus 27 years of service totals 85. Therefore she can retire on an early unreduced pension.

These numbers will bring her closer to what she needs to replace 60% of her pre-retirement income. Before age 65, she will have 54% of her pre-retirement income, and after age 65, when the bridge stops, the CAAT Plan will account for 40% of her pre-retirement income.

A quick note about earnings increases. For this example we have assumed Robin’s earnings would remain level at $76,000 from age 55 until age 58.  We have also assumed that the YMPE will remain the same as the 2017 level. 

In reality both her earnings and the YMPE are likely to increase over time.

What if Robin wants to keep working? If she works to age 62, is she closer to her target replacement income?

By age 62, her pension has increased to $35,110 per year, or $2,926  a month, with an additional bridge benefit until age 65 of $12,000 per year, or $1,000 per month.

So you can see that her pension has continued to increase.

These figures also assume no increase in Robin’s earnings or the YMPE from their current level. But since her projected retirement date is now 7 years away, these projections become less precise. As she gets closer to age 62 Robin can reassess these projections using updated figures.

In video # 8, we’ll take a look at the impact of government pensions on her total retirement income, and see how close Robin gets to her target replacement income.

Robin thinks that age 62 is perfect for her retirement. Before age 65, with the bridge, she exceeds her target retirement income with her CAAT Plan pension alone.

After age 65, when the bridge drops off, she’s close at 46%.

Add in government pensions and she will be comfortably within her target range (we’ll talk more about government pensions in video 8).

Here’s another Pro Tip – you can do all this modelling for yourself using our online 3-Step pension estimator. With a few simple inputs, you can get estimates of your pension at any date or age you choose.

Thanks for watching. Be sure to watch our next video, “Is my pension adjusted for inflation?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There is lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #6 - Is my pension adjusted for inflation?

Wondering how it works?
Watch the video Inflation protection on our website to see how the different pensionable service periods affect pensions in payment.

Transcript

Question 6: Is my pension adjusted for inflation?

The price of goods and services always seem to be on the rise, so it’s natural to wonder if the amount of pension you get from the Plan will keep its value throughout your retirement.

The Plan provides a benefit called Inflation Protection, which is an increase to your pension, equal to 75% of the annual increase in the Consumer Price Index (or CPI).

Inflation protection adjustments are yearly increases to pensions in payment, and help you maintain the spending power of your pension.

The years you earned your service in the Plan are a factor in calculating inflation protection:

  • For pensionable service earned before 1992, there is no inflation protection.
  • For pensionable service earned between 1992 and 2007, inflation protection increases are guaranteed, and will be paid forever.
  • Pensionable service earned after 2007, receives ‘conditional’ inflation protection, which means it’s added each year that the Plan is fully funded. Once added, it is paid forever.

The Plan is currently fully funded, and inflation protection on post-2007 service will be added each year until at least 2019.

Let’s look at how inflation protection impacts Robin’s pension.

Robin earned service in each of the 3 time periods:

  • 4% of her total pensionable service was earned before 1992
  • 67% of her pensionable service was earned between 1992 and 2007
  • And the remaining 29% of her total pensionable service was earned after 2007

When inflation protection increases are applied:

  • The pension earned before 1992 does not receive inflation protection increases.
  • The pension earned between 1992 and 2007 will always increase.
  • The pension earned after 2007 will increase when the Plan is fully funded.

So for Robin, 96% of her pension receives an annual inflation protection increase.

Inflation adjustments are cumulative. Each year’s increase is added to the previous year’s pension, plus any previous inflation protection increase.

This graph illustrates the impact of inflation protection over the last 15 years. For this example, we assume the member has no service before 1992, and receives inflation protection on all of their service.

The blue line on the bottom represents the initial annual pension of $22,000 per year. Without inflation protection, the pension does not increase.

The green line at the top represents the pension plus inflation protection, which increases to over $27,000 per year by 2017. The dashed portion of the green line projects the pension to 2031 to show how the pension could continue to increase if the next 15 years’ inflation protection rates are the same as the past 15 years’ rates. 

You can clearly see the positive impact of cumulative inflation protection on purchasing power.

Thanks for watching. Be sure to watch our next video, “What happens to my pension after I die?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There is lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #7 - What happens to my pension after I die?

Your pension includes survivor benefits for your eligible spouse no matter when you die
To learn about pre-retirement survivor benefits, visit Survivor Benefits on our website where you can download the pamphlet Protecting your loved ones.
Be sure to check your Annual Statement to ensure your spouse and beneficiary information is up-to-date. You can notify us of changes by completing the Change of information or beneficiary form, and having your employer submit it to the CAAT Plan.

Transcript

Question 7: What happens to my pension after I die?

The Plan is designed to provide members with a secure, lifetime pension. It also provides a valuable lifetime survivor pension to the retired member’s eligible spouse when a retired member dies.

If you have an eligible spouse when you die, your eligible spouse will receive a lifetime pension equal to 60% of your pension for the rest of his or her life.

The survivor pension calculation is based on your last lifetime pension payment, which includes inflation protection (but does not include the bridge). The spousal pension will receive inflation protection in the same manner as your pension did.

If you have an eligible spouse at retirement, you can opt for a 75% survivor pension. In that case, your pension is reduced, to fund a higher survivor pension for your spouse. The reduction is based on an actuarial calculation which determines the cost of providing the higher survivor benefit.

Let’s assume Robin is married and not separated from her spouse when she retires at age 62 with a pension of $35,110.

Upon Robin’s death, her eligible spouse would receive an annual survivor pension of around $21,065, which is 60% of Robin’s pension.

If Robin had selected the 75% survivor pension option, her annual pension would be reduced to $33,350, and her spouse would receive $25,015 per year upon her death.

What happens if Robin doesn’t have an eligible spouse at retirement? Or if her spouse dies after she retires and then she remarries? 

In these situations, Robin’s new spouse, (or post-retirement spouse) is the eligible spouse, and will collect the 60% survivor benefit, at no additional cost. This is an unusual feature, and you won’t find it in many other pension plans.

What about Robin’s children? If Robin does not have a spouse at retirement, but has eligible children under the age of 18 when she dies, 60% of her monthly pension will be paid to her eligible children until they reach age 18.

One question we often hear is: “What will my beneficiaries receive?”

Well, only eligible spouses or children are entitled to survivor pensions. However, your pension also includes a 60 month guarantee that could result in a lump sum payment to your beneficiary, but only if you die early in retirement without an eligible spouse or children.

This provision guarantees that the total amount of pension paid to you, and to any of your survivors cannot be less than 60 times your initial monthly payment.

To illustrate this scenario, if Robin dies 3 years after retiring, with no eligible spouse or eligible children, she would have received 36 pension payments. Under the 60 month guarantee, Robin’s beneficiary would receive 60 months’ worth of Robin’s initial pension, MINUS the amount of pension that Robin already received; in this case, 3 years’ worth.

There’s more information about survivor benefits, including what happens on marriage breakdown – both before or after retirement - on our website. We’ve added links to the bottom of this page.

Here’s a pro tip from our experts: As you can see, the Plan is funded to provide lifetime pensions for members and survivor pensions for eligible spouses.

If you want to leave something for your children, you may wish to review your insurance and estate plans as part of your retirement planning activities. One option might be to purchase a life insurance policy that allows you to leave a benefit to your children.

Thanks for watching. Be sure to watch our next video, “How do government pensions work?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There is lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #8 - How do government pensions work?

You have to apply to Service Canada to start your government pensions
Visit the Service Canada website to learn more about, and apply for CPP and OAS. You can also request an estimate of your CPP pension.
www.canada.ca (Click on Canada Pension Plan or Old Age Security.)
Or call 1-800-O-CANADA

Transcript

Question 8: How do government pensions work?

As part of your retirement planning, you’ll need to know about your government pensions and how they impact your total retirement income.

The Canada Pension Plan, or CPP, is the national pension plan that you have been paying into throughout your working career. It provides a lifetime pension based on your total earnings history.

Old Age Security, or OAS, is not a pension plan. It provides a benefit based on residency requirements only, and not on your earnings when you were working.

You can start CPP at age 65. But CPP also has flexible start dates.

You can start CPP as early as age 60 with a reduction. The reduction factor is 7.2% per year for each year you are under age 65. Starting CPP early has no effect on your CAAT Plan pension at all.

You can also choose to start CPP later than age 65. In that case, your CPP pension will be increased by 8.4% per year you are over age 65. So this means, if you decide to delay your pension until age 70 it would be increased by up to 42%. But it also means you would have missed out on 5 years of payments from the CPP.

Did you know that if you’re at least age 60 and still working, you can start your CPP early, even though you’re still contributing to the CPP? Your CPP pension would be reduced, and your CPP contributions would go towards building a ‘post-retirement’ benefit, which is an extra benefit paid to you when you retire.

The CPP pension is calculated based on your career earnings. It approximates about 25% of your career average earnings, up to the YMPE, and is scheduled to increase to 33% by 2025. The increases will start to phase in slowly, starting in 2019 and only on future earnings.

In 2017 the maximum CPP pension is $13,370 per year or $1,114.16 per month. The the average CPP is $7,980 per year or $665 per month. Approximately 50% of Canadians receive the maximum amount of CPP.

Now let’s look at the Old Age Security benefit.

Eligibility is based on Canadian residency requirements: You must be 65 years or older, a Canadian citizen or permanent resident, and living in Canada for at least 10 years.

OAS cannot start before age 65, but you can delay the start of OAS up to age 70. In that case, your OAS amount is increased by 7.2% per year you are over age 65. Your OAS is clawed back if your income exceeds a certain threshold.

You can learn more about Canada Pension Plan and Old Age Security by visiting www.canada.ca.

You may Remember Robin from the previous videos. She is now fine-tuning her total retirement income as part of her retirement planning.

She wants to start her CAAT Plan pension at age 62, but needs to decide whether or not to start CPP at the same time.

On the one hand, her CPP would be reduced, but on the other hand, she would receive it for 3 years longer than if she waits until 65.

Robin knows that she can start her CAAT Plan pension early, collect her bridge benefit AND early CPP pension at the same time.

So Robin’s question, is, should she start CPP early with a reduction or wait 3 years without this additional income? This is a question that each member needs to decide for themselves.

Robin decides that starting her CAAT Plan pension at age 62 – and then starting both CPP and OAS promptly at age 65 – works for her situation.

Now that Robin has made her decision, let’s take a detailed look at the impact of CPP and OAS on Robin’s total retirement income, and on her target retirement income. You may remember that Robin’s target income replacement is about 60% of her pre-retirement income.

At 62, Robin will start collecting her CAAT Plan pension for the rest of her life, and a CAAT Plan bridge benefit for 3 years – until she turns 65.

With her CAAT Plan pension and bridge benefit alone, Robin will receive an annual pension of just over $47,000 which is about 62% of her pre-retirement income and over 100% of her target retirement income. 

At age 65, Robin’s bridge benefit will stop, but her CPP and OAS pensions will start.

If Robin receives the average CPP and the maximum OAS, she can expect an annual income of $50,000, which is 66% of her pre-retirement income, and, again, more than 100% of her target.

Here’s another pro tip:

Your pension is taxable, and an amount is withheld for income tax, at the source. This is the same as your pay – which has an amount withheld for income tax.

When you retire, you’ll receive a T4A from us that you will use to complete your taxes, and determine if more tax is owing or if you will get a refund. Be sure to review the tax credits that are available to you. For example, income splitting allows a higher-income spouse to ‘split’ their income with their lower-earnings spouse for tax purposes. 

Income splitting may eliminate or lower the OAS clawback by lowering your tax bracket, so it’s worth investigating.

To learn more about, or to start, your government pensions, visit the government of Canada website to apply. You should apply about 6 months before you want to start receiving your benefits.

Thanks for watching. Be sure to watch our next video, “What can I do to get started?”

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There is lots more information and details available on our website, including the Plan terms, which govern above all else.

Video #9 - What can I do to get started?

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Transcript

Question 9: What can I do to get started?

We’re now going to count down the top 5 things you should think about as you’re preparing for retirement. 

It’s never too early to start retirement planning.

Make the CAAT Pension Plan website your first stop. It features a number of resources to help with your retirement planning.

You can estimate your pension at any time using our 3-Step Pension Estimator.

If you're within 5 years of retirement, the Plan can give you an estimate for up to three different retirement scenarios. There's a form to download on our website to get started.

Our website also features videos, webpages and downloadable booklets that explain everything, from contributions to retirement planning.

If you have a personal question, you can contact our member hotline, either by phone or email. We have pension experts standing by, ready to answer your questions.

Don’t forget to contact Service Canada to request an estimate of your CPP pension.

There’s a link on this page, below the videos.

Throughout your membership, you might have breaks in service – for example, if you had a leave of absence.

Maybe you worked for a participating CAAT Plan employer before actually joining the CAAT Plan, or for a different employer with another Canadian registered pension plan.

If this applies to you, and your employer participates in the CAAT Plan, you can maximize your pension by purchasing or transferring that past service into the CAAT Plan, to include as part of your CAAT Plan pension. A purchase or transfer can increase your service, which will result in a higher pension and could bring you closer to an unreduced pension if you retire early.

If you’re interested in a purchase, use the ACE Tool on our website. It will show you the cost of a purchase, and help you get started in the process.

Purchases have to be completed before you terminate employment or retire, and they can take months to complete. To avoid any delays in starting your pension, we recommend you look into purchasing service as soon as possible.

Also, be sure to check your most recent Annual Statement to make sure any past eligible purchases are complete.

As you get closer to retirement, you will want to start fine tuning your plans.

We suggest you spend some time reviewing your Annual Statements to ensure that the Plan has up-to-date information about your spouse and marital status.
It is a good practice to name a designated beneficiary, in the event that something were to happen to you and your spouse. Your beneficiaries could be entitled to a payment if you were to die early in retirement.

While you are working, you can use the Change of Information form found on our website to name a designated beneficiary. When you retire, there is a different form to use.

In the event of a separation or divorce, your pension can be included in property that’s to be divided. You must notify the Plan if your separation terms require a portion of your pension to be paid to your former spouse. The number one cause of a delay in starting your pension is a lack of proper documentation on marriage breakdown. So if you’ve had a marriage breakdown in the past, check to make sure the CAAT Plan has the information we need.

You can get more information on our website, and we’ve put some links below this video.

Review your insurance needs. Many insurance companies offer seniors discounts, and your needs may have changed – for example, you might be driving your car less, which could save you money.

Once you’ve decided to retire, be sure to start your paperwork 3 to 6 months before you want your pension to start.

Your HR department will provide you with a form to complete. They will submit it to the Plan and we will get your pension process started. You’ll then receive an ‘Option Document’ from us, which you’ll use to make your final payment choices. 

You’ll also want to speak to your employer about any health benefit coverage you may be able to apply for.

When you’re ready to start your government pensions, you must apply for them separately, through Service Canada. Don’t forget to apply for them 3 to 6 months before you want to collect them.

The last step? Collect your pension and enjoy your retirement!

Your CAAT pension is paid on the first day of the month, directly into your bank account.

If you retire early, your lifetime pension and bridge are combined into one monthly payment.

Pension payments are always made in Canadian dollars.

If you plan on moving outside of Canada, it might be a good idea to keep your Canadian bank account open.

CIBC Mellon is our pension payroll provider, and you will receive periodic mailings from them during your retirement. Any mail you receive with the CIBC Mellon logo probably relates to your pension, so make sure you open it.

Once you’re retired, we’ll still be reaching out to you.

Once a year, we’ll send you an annual statement – it will show your pension paid, and any increase as a result of inflation protection.

You can do your part by keeping us up-to-date with any changes to your banking information, your marital status or your address.

Be sure to visit our website to sign up for My Pension NewsLink, our email news service. My Pension NewsLink subscribers get news from the Plan first.

We’ve reached the end of our Planning for Retirement presentation.

Thank you for watching.

If you haven’t already done so, be sure to watch all of the videos in the Planning for Retirement series. If you have questions, feel free to contact us.

This retirement planning video is based on Plan provisions in effect as of December 1, 2016. There are lots more information and details available on our website, including the Plan terms, which govern above all else.

Didn't find what you were looking for?

I'm going to leave my job before I am eligible to retire.

Learn about your options here

I want to start my pension, which is deferred.

Different early retirement provisions apply to members who start their pensions after being deferred members. Learn about the provisions that apply here.

 

The retirement planning videos are effective as of December 1, 2016. A detailed legal description of the provisions of the Plan can be found in the Plan Text. Should this information differ, the Plan Text will govern.

 

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