Working in retirement

Going back to work after retiring is an individual decision. For some, returning to work makes economic sense - income from employment may be a necessity for any number of reasons. Many retired members report feeling cut off from what had been a significant portion of their life and return to work in order to ease the transition into full retirement.

On the other hand, some retirees return to work simply because they enjoy it. Retirement may give them the chance to follow a new career path or work independently. The slower pace allows them more time to pursue hobbies and interests, some of which can turn into income-generating enterprises.

Working and your CAAT Plan pension

After you retire, you may decide to return to work in the college system, for a new organization, or even for yourself. If you do become employed outside the college system, you can continue to collect your CAAT Plan pension as well as your income from employment. Once you've started your pension, however, you no longer have the option to transfer your CAAT Plan service to another organization's pension plan.

If you do return to the college system, you have options that are based on your age and your employment status.

  • Full time, under age 65
    If you return to full-time employment for an employer  that participates in the CAAT Plan after starting your early retirement but before turning 65, you will re-enroll in the CAAT Plan. Your CAAT Plan pension will stop and you will resume contributing to Plan for as long as you are employed (but no later than age 71).
  • Part time, under age 65
    If you return to part-time employment for a college employer after starting your early retirement but before turning 65, you decide whether or not to rejoin the Plan. You can become a member as above, or you can continue to collect your CAAT Plan pension along with your employment income.
  • Over age 65
    If you are between the ages of 65 and 71 and you return to work for a college employer, either on a full-time or part-time basis, you have the choice to resume your membership in the Plan or to continue collecting your CAAT Plan pension along with your employment income. By law, when you reach the age of 71, you must stop contributing to the pension plan and begin collecting your pension. This applies if you are still employed at age 71 or if you return to work after that time.

When the time comes for you to retire for the final time, your pension calculation will be based on your service and earnings for all of your periods of employment, less an adjustment for any pension payments you have already received.

Returning to work and your Canada Pension Plan (CPP) benefit

The Canada Pension Plan recently implemented a number of changes to CPP benefits. These changes are relevant to anyone who starts collecting a CPP pension after 2010. If you are retired and are considering a return to the workforce, these changes may affect you.

Possible financial implications

Planning for post-retirement employment involves determining the possible impact on your other sources of retirement income. Employment earnings may have an effect on the retirement benefits you are eligible to receive from the government. For example, your retirement income may consist of your CAAT Plan pension and your Canada Pension Plan (CPP) benefits as well as your employment earnings.

When you become eligible to collect your Old Age Security (OAS) benefit at age 65, your overall income may surpass the OAS threshold. If that is the case, your OAS benefit may be subject to a "clawback" and you could be obliged to repay some or all of your benefit.

In addition, your employment earnings may affect the amount of income tax you are required to pay each year. Depending on your situation, you may wish to adjust the amount of tax deducted from your paycheques or your pension income by completing and submitting Personal Tax Credits Return forms (available from CIBC Mellon) to the payer.

Overall, the impact of returning to work after retirement can be beneficial to your finances as well as to your transition into retirement. The skills and experience that older workers bring to the workforce are invaluable. Even if working in retirement is not an option, volunteering and mentoring may be right for you. In either case, you may find it worthwhile to consider post-retirement employment as part of your overall retirement plan.