Common-law qualification period moves to 3 years starting January 2018

Posted for Members, June 21, 2017

Other technical changes to Plan language bring consistency

On May 31, the CAAT Pension Plan’s governors approved a restatement of the Plan Text designed to bring the document up-to-date by removing obsolete provisions, ensure alignment with legislation and give members added flexibility. The restated Plan Text goes into effect on January 1, 2018. Most of the changes are administrative in nature and have no impact on the benefits members are earning under the Plan. However, two changes may be relevant for members:

The existing Plan text is available on our website along with the restated Plan text which goes into effect January 1, 2018, and a redlined version that shows all of the changes. Visit our Member Policies page to view the Plan text.

Common-Law marital status for purposes of the CAAT Pension Plan

What you need to know:

The rules that determine common-law marital status for the purposes of the CAAT Pension Plan are changing as of January 1, 2018. Note that this change only applies to the CAAT Pension Plan, and does not apply to any other benefit plans, such as health benefits.

  • Current rules: for the purposes of the CAAT Plan, your marital status is considered to be common-law after you have lived together with your common-law spouse for at least one year.
  • Starting January 1, 2018: for the purposes of the CAAT Plan, your marital status will be considered common-law after you and your common-law spouse have lived together for at least three years.

These changes only apply to your spousal status for the purpose of the CAAT Pension Plan.

You continue to be considered common-law for the purposes of the CAAT Plan if you and your common-law spouse live, and have children together (including adopted children).

Why is the common-law rule changing?

  1. To be consistent with regulations: The Ontario Pension Benefits Act, which governs the Plan, allows a couple to be considered common-law under a pension plan if they have lived together for a period of three years (or less, if the couple has children together).
  2. To provide members with choice and flexibility: By moving to a three-year period, the CAAT Plan better aligns with the Pension Benefits Act, while enabling members who are in a common-law relationship of less than three years (and assuming there are no children together), to choose a designated beneficiary for this period.

How it affects you:

If you are legally married to your spouse, the new rule has no impact on you. As of January 1, 2018, any marital status information you provide the Plan must comply with the new rules. 

Read on to see how you should proceed.

Why does the Plan track marital status?

The CAAT Plan provides survivor benefits to the eligible spouses of deceased members. If a member dies before retirement, the eligible spouse receives the value of the member’s pension. If there is no eligible spouse, payments are made to eligible children, if there are any, and finally, to any named designated beneficiary. By making sure your marital status and beneficiary designations are up-to-date, you ensure that any survivor benefits are properly paid out. Different rules apply if a member dies after retirement.

What you need to do:

To confirm that the correct person will receive survivor benefits if you die before retirement, check page 6 of your most recent Annual Pension Statement, to ensure that your spouse and beneficiary information is accurate and up-to-date.

If you still have questions about which rules apply to your common-law marital status, review the scenarios below. Remember that you should notify the CAAT Plan that your marital status is common-law only AFTER you and your spouse have lived together for the qualifying number of years.

I’m legally married

You don’t have to do anything.

I’m single

You don’t have to do anything.

I’m in a common-law relationship, and have notified the Plan

Confirm the name of your spouse on file with the CAAT Pension Plan by checking page 6 of your most recent Annual Pension Statement.

If the spouse information is correct, you don’t have to do anything further.

If the spouse information is not correct, notify the Plan as soon as possible.

How do I notify the Plan? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

My marital status won’t be considered common-law for a few years, but I want to ensure my spouse receives any survivor benefits. What should I do?

You can name your spouse as your designated beneficiary to receive any survivor benefits.

How do I name someone as my designated beneficiary? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

My marital status is common-law – my spouse and I have been living together for more than one year, but less than three. I have not notified the CAAT Plan.

Notify the Plan of your common-law marital status as soon as possible.

How do I notify the Plan? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

My marital status is common-law – my spouse and I have been living together for more than three years.

If your common-law spouse is shown as your spouse on file on your most recent Annual Pension Statement (page 6), you don’t have to do anything.

If your common-law spouse is not shown as your spouse on file on your most recent Annual Pension Statement, you should notify the CAAT Plan of your marital status.

How do I notify the Plan? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

My common-law spouse and I will have been living together for one year by the end of 2017.

Notify the CAAT Plan of your marital status as soon as you and your spouse have been living together for one year, and do so before the end of 2017.

If you do not notify the Plan before January 1, 2018, your marital status under the Plan will not be recorded as common-law until you have lived together for three years.

How do I notify the Plan? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

My common-law spouse and I will have been living together for less than one year by the end of 2017.

Your marital status for the CAAT Plan will be common-law after you and your spouse have been living together for three years.

Notify the Plan of your marital status after you and your common-law spouse have been living together for three years.

How do I notify the Plan? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

My common-law spouse and I have been living together for less than one year, but we have children together.

Your marital status for the CAAT Pension Plan is common-law and is not affected by the three-year rule.

Ensure your marital status is correct on your most recent Annual Pension Statement (on page 6). If it is not, please notify the CAAT Plan.

How do I notify the Plan? Use the “Change of Spouse/Beneficiary” form included in your Annual Pension Statement package.

When does the new rule take effect? The new rule takes effect on January 1, 2018.

Technical change to service purchase cost methodology

The Plan Text has clarified that all service purchase costs are calculated using the same methodology, ensuring consistent treatment for all members.

What you need to know:

When a member purchases service for a leave of absence within six months of returning to work, the cost is based on the contribution rates in effect at the time of the leave, and the deemed earnings during the leave period (rather than the contribution rates in effect at the time of the purchase). This ensures that the cost of the leave is equal to the contributions that would have been paid had the member been working.

For statutory leaves, such as Pregnancy/Parental or Adoption, employers pay their share of the contributions. For unpaid leaves (including unpaid leaves of absence and strike purchases), the member pays the total contributions cost, which is two times the contributions.

There is no change to the cost of purchasing a leave of absence (statutory or unpaid) more than six months from the return to work. It remains the higher of the actuarial cost, or two times contributions, based on the rates at the time of the request. The total cost must be paid by the member.

The changes will apply to purchases that occur on or after January 1, 2018.

Changes to strike purchases

For any future strike period (that is, a strike that occurs after January 1, 2018), the cost of purchasing the service after the strike will depend on when the purchase is made:

  • Purchase within six months from the end of the strike:
    • The member pays two times contributions based on the salary at the start of the work stoppage, and the contribution rates in effect during the strike.
  • Purchase after six months from end of the strike:
    • The member pays the higher of two times contributions, based on the rates in effect at the time of the purchase, or the actuarial cost.

How it affects you:

This change impacts how future purchase costs are determined.

What you need to do:

You don’t have to do anything. The cost of a purchase is determined at the time that you make the purchase. Note that as a general rule, the cost of a leave gets more expensive the longer you wait to make the purchase.