During your membership, you’ll make contributions based on a percentage of your salary. Your employer contributes toward your future retirement income as well, by matching your contributions in the Plan. Your contributions are tax deductible to you, meaning they lower your income for tax purposes. In addition, you pay no income tax on the matching contributions made by your employer.
Do you work part-time or on contract?
The CAAT Pension Plan is introducing DBplus, a new defined benefit design for Other than regular full-time (OTRFT) members who work part-time or on contract. All OTRFT members will make the switch to DBplus on January 1, 2019.
Visit the DBplus page to discover how DBplus will maximize the lifetime pensions of OTRFT members. While you're there, watch the videos, and register for upcoming webinars to learn more.
Contributing to your future
The CAAT Pension Plan makes it easy to save for retirement and build a stable, predictable retirement income. You contribute a percentage of your earnings into the Plan each pay and your employer matches your contributions dollar for dollar.
Your contributions, and those of your employer, are prudently invested in the Plan fund from which your pension is paid when you retire. Contributions are used to fund your benefit, but your benefit is worth so much more than just the contributions you made.
Contributions and benefit security - Video series
[Click here for transcripts]
To fulfil the pension promise, contributions and investments work together to equal your defined benefit pension, and keep the plan sustainable.
Picture the funding equation as a scale that needs to be balanced.
On the right, the value of all benefits earned by members, plus the expenses of running the Plan.
On the left, member and employer contributions, plus the income earned from investing them.
The Plan must maintain balance to be sustainable in the long run. How do we do this?
In a Defined Benefit plan, we regularly project how much money is needed to pay the current and future pension benefits of members based on their age, service and earnings.
The Plan is cost-effective, meaning more goes to benefits and less to expenses.
Current and future pension payments come from the pension fund.
Contributions and investments work together to pay for the benefits.
It’s the investment income that funds the majority of the benefits, leading to stable and affordable member and employer contributions.
The Plan works hard on your behalf to maintain the balance of these key factors ensuring the long-term security of your benefit and the pension plan.
The CAAT Plan’s number one goal is to provide members with secure, lifetime retirement benefits at an appropriate cost.
For members, a lifetime pension means peace of mind and financial security in retirement.
Contribution rates work with investment returns to pre-fund member benefits.
During their working years, members and their employers contribute equally to the Plan.
These contributions are used exclusively for member benefits.
Contributions are made in two parts: basic and stability.
Basic contributions fund the expected cost of pensions that members will be paid throughout their retirement.
In this plan, members and employers pay a stability contribution rate to help build reserves.
The reserves improve overall benefit security by providing a cushion to withstand economic and demographic shocks,providing greater stability for members and strengthening the overall security of member benefits.
When does the stability rate go down?
The Plan governors review the funding each year. Using the Funding Policy, they determine the appropriate time to reduce stability contribution rates.
In 2015, The Plan is in Funding Level 3.
As the Plan moves along the funding levels, into funding level 4, the Plan can begin to reduce the stability rate.
Everybody benefits from stable, predictable contribution rates. They keep the Plan secure, and your future on a sustainable course.
Contribute as long as you work (until you turn 71)
If you decide to work past the normal retirement age of 65, you can keep contributing and earning more retirement income until you stop working. However once you turn 71, you must stop contributing to the fund and start collecting your pension, even if you continue working.
Contributions for breaks in service
If, during your membership, you have any breaks in service during which you stop making contributions to the Plan (such as a leave of absence), you can consider restoring the lost contributions and build a bigger pension by purchasing service.
Tax free contributions
One of the most cost effective aspects of belonging to a defined benefit pension plan is often one of the most overlooked. Under the Income Tax Act, the federal government provides several forms of tax relief to Canadians who make contributions to registered pension plans like ours.
- You receive immediate tax savings when you contribute to the Plan. Your pension contributions are deducted from your gross income, which reduces your taxable income – the amount on which your taxes are deducted. By the end of the year, the income on which you pay taxes has been reduced by the amount of your pension contributions. This has the same effect as an RRSP contribution – but your employer reduces your tax right away, so that you don't have to wait until you file your tax return.
- Your contributions are 100% matched, or doubled, by your employer. These contributions are not a taxable benefit to you – you do not count this as income.
- Like your RRSP savings, the contributions you and your employer make are allowed to accumulate in the pension fund tax-free. Once you retire and begin collecting your pension from the Plan, income tax will be applied to your payments. However, in most cases, it will be at a lower marginal tax rate than when you were employed.
Contribution Rates in 2019
Contribution rates are 11.2% on earnings below the YMPE and 14.8% on earnings above the YMPE.
The earnings on which you pay pension contributions are based on your contributory earnings, which include basic salary and other payments such as shift premiums and coordinator allowances. They do not include overtime pay, most lump sum termination payments, and certain other types of payments.
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.