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This brochure summarizes the major features of the Pension Plan for
Non-Academic Employees of Mount Allison University. If you have questions
concerning the plan that are not answered in the booklet or for specific
guidance on your rights and obligation under the Plan, please contact
the Human Resources Department.
A. ELIGIBILITY
WHO IS ELIGIBLE TO JOIN THE PLAN?
Most employees may join the plan if they are employed in a non-academic
capacity and either 1) working a minimum of 17.5 hours per week for
at least eight months each year or 2) earning at least 35% of the Year's
Maximum Pensionable Earnings (YMPE) as defined under the Canada Pension
Plan.
WHEN CAN AN ELIGIBLE EMPLOYEE JOIN THE PLAN?
An eligible employee can join the plan on the date of hire and must
join the plan after one year of employment.
B. CONTRIBUTIONS
HOW MUCH DOES A MEMBER CONTRIBUTE?
Members contribute 4% of regular earnings. An additional 2% is contributed
on any regular earnings in excess of the YMPE under the Canada Pension
Plan. Regular earnings in this context means basic compensation (excluding
things like overtime, special allowances and taxable benefits). For
a more precise definition of "Earnings" the official plan
text should be referenced.
IS INTEREST PAID ON EMPLOYEE CONTRIBUTIONS?
Yes, interest is credited at a rate equal to the average of the yields
of five (5) year fixed term chartered bank deposits.
HOW MUCH DOES THE UNIVERSITY CONTRIBUTE?
The University contributes whatever amounts the actuary determines
are required to pay the benefits provided by the plan after taking employee
contributions and the assets in the pension fund into account. The actuary's
calculations are prepared in accordance with the requirements of the
New Brunswick Pension Benefits Act and the Income Tax Act. Employer
contribution amounts vary from time to time depending on the financial
status of the plan. However, provided the member has completed at least
one year of continuous service, the terms of the plan are such that
at least half the value of a member's benefits at termination, death
or retirement must have come from University contributions.
HOW ARE CONTRIBUTIONS INVESTED?
All contributions are deposited into a trust fund held by a Trust Company
or Insurance Company. Decisions about the investment of the fund are
made with the advice of professional investment management firms selected
and monitored by the University. The fund is invested with the objective
of achieving a superior long-term rate of return with an acceptable
level of funding risk. The investment portfolio consists of stocks,
bonds and short-term money market instruments.
C. RETIREMENT BENEFITS
WHAT TYPE OF PENSION PLAN IS THE MOUNT ALLISON PLAN?
The plan is a defined benefit pension plan. In this type of plan, a
benefit formula defines the amount of pension payable based on the member's
service and "average earnings". In this pension plan, "average
earnings" are the greater of the average of the annualized earnings
in the last five years of employment, and the average of annualized
earnings in the best five full calendar years of employment.
WHAT IS THE BENEFIT FORMULA?
The benefit formula for service after July 1, 1970 to the date described
in the next paragraph is:
1 1/3% x Average Earnings x Credited Service
The benefit formula for service applicable to service on or after July
1, 1996 (for members represented by CUPE, Local 2338), on or after July
1, 1998 (for non-bargaining unit employees) and on or after July 1,
1999 (for members of the Mount Allison Staff Association) is:
1.4% x Average Earnings x Credited Service
Under these formulas, a member with 30 years of Credited Service could
expect, in retirement, to replace between 40% to 42% of the member's
average earnings from the pension plan alone (before any adjustments
for early retirement or optional forms of pension). Government retirement
programs may be expected to replace an additional 35% to 40% of average
earnings up to the average YMPE (assuming a full career as a Canadian
resident and retirement at age 65). Projected retirement income information
is shown on the annual member pension statements each member receives
from the University.
If the Average Earnings exceeds the Average YMPE (calculated for the
same period as the Average Earnings), the pension will be increased
to 2% on the excess portion of average earnings for each year of Credited
Service after July 1, 1970.
Example: A CUPE Local 2338 member is retiring January 1, 2011 with 30
years of credited service in the pension plan and average earnings equal
to $33,000. The member originally joined the pension plan on January
1, 1981.
This person would have had 15.5 years under the old 1 1/3 formula and
14.5 years under the current 1.4% formula.
The annual pension amount (before any adjustments for early retirement
or optional forms of pension) would be calculated as follows:
15.5 × 0.013333333 × 33,000 + 14.5 × 0.014 ×33,000
= 6,820 + 6,699 = 13,519
which represents 41% of the person's average earnings.
HOW DOES A MEMBER ACCUMULATE CREDITED SERVICE?
A member accumulates credited service from the date he or she becomes
a member of the plan. This type of service is known as "Credited
Service as a Member."
Example: A full-time employee who joins the plan on January 01 will
have one year of Credited Service as a Member on the following December
31.
If a member is employed less than full-time in a given year (for example,
part-time employees or sessional employees) or has a period of leave
without pay, his or her Credited Service as a Member is pro-rated.
Example: A full-time employee who takes a six-month period of leave
without pay from January 01 to June 30 would only accumulate one-half
year of Credited Service during that calendar year.
Example: A part-time employee who works 3 days a week (instead of usual
5) without any leaves of absences during the calendar year would accumulate
0.6 years of Credited Service for that calendar year
.
Members who have continuous service before the effective date of the
plan (July 01, 1970) and who joined the plan on or before October 01,
1970 may also be eligible to receive some credit for that service. The
benefit formula for service before July 1, 1970 is:
1% x Final Average Earnings x Employment Service Before July 01, 1970,
Less Two Years
WHEN WILL A MEMBER RECEIVE THIS PENSION?
A Member can retire and start to receive this pension at the member's
normal retirement date. Normal retirement date is the day the member
turns age 65, if that day is the first calendar day of a month. Otherwise,
the normal retirement date is the first day of the next month.
Examples: The normal retirement date for a person who turns age 65 on
March 1st will be March 1 st. The normal retirement date for a person
who turns age 65 on March 8 th will be April 1 st.
If a member continues to work beyond his/her normal retirement date,
then he/she would continue to participate in the Plan and accumulate
additional credited service. However, under the current Income Tax Act
rules, in no event can a member start their pension later than December
31st of the year they turn age 71.
Members may also have the option to retire and receive their pensions
before age 65. These options are described later in this information.
HOW LONG WILL A MEMBER RECEIVE THIS PENSION?
The pension is payable for as long as a member lives. Additional payments
may be made after the member's death depending upon the form of pension
chosen.
WHAT IS THE NORMAL FORM OF A PENSION?
If a member has a spouse on the date of retirement, the normal form
of pension is payable in monthly installments for his or her life, with
a reduced pension payable after the member's death to his or her spouse.
The reduced pension payable to the spouse is equal to 60% of the member's
pension and is payable for the life of the spouse.
If a member does not have a spouse on the date of retirement, the normal
form of pension is payable for the member's lifetime, and in any event,
for a period of not less than 60 months (five years).
A member may wish to elect another form of a pension on retirement.
For example, a member may wish to elect a form of a pension that would
provide the spouse with a pension that does not reduce on the member's
death. The amounts of optional forms of pension are adjusted so that
they have the same overall financial value as the normal form of pension.
For example the monthly amount of a joint and survivor pension that
does not reduce on the death of a member would be smaller than the monthly
payment under the normal form of pension since a full survivor pension
is more valuable than a survivor pension that reduces by 40% of the
original amount.
A member retiring before his normal retirement date may also elect a
form of pension that is "integrated" with the current level
of Old Age Security. In this form, the pension payable before age 65
is higher than the normal form, but it decreases by the amount of the
Old Age Security benefit level (based on the level in effect at retirement)
when the member reaches age 65, and is eligible to receive the Old Age
Security Benefit.
Each retiring plan member will receive a summary of the pension options
available three to four months before his or her retirement.
WHAT HAPPENS IF A MEMBER RETIRES BEFORE THEIR NORMAL RETIREMENT DATE?
Any member who terminates employment after age 55 but before age 65
is deemed to have retired early under the terms of the plan.
MEMBERS WHO RETIRE EARLY BETWEEN 60 AND 65 WITH AT LEAST 25 YEARS OF
EMPLOYMENT
A member who is at least age 60 and who retires with 25 or more years
of continuous employment may do so without a pension reduction.
MEMBERS WHO RETIRE EARLY BETWEEN 55 AND 59 WITH AT LEAST 30 YEARS OF
EMPLOYMENT
A member between ages 55 and 59 who retires with 30 or more years of
continuous employment may do so with a pension reduced by 3% for each
year his / her age is less than age 60 when the pension commences. (Such
a member could delay pension commencement to age 60 and receive the
pension on an unreduced basis.)
Example: A member who retires early at age 56 with 31 years of continuous
employment would have his or her pension reduced by 12% (3% times four
years).
MEMBERS WHO RETIRE EARLY BETWEEN 55 AND 59 WITH LESS THAN 30 YEARS
OF EMPLOYMENT BUT WHOSE AGE PLUS SERVICE TOTALS AT LEAST 85
A member between ages 55 and 59 who retires with less than 30 years
employment service but whose age plus continuous employment service
total at least 85, may do so with a pension reduced by 6% for each year
his / her age is less than age 60 when the pension commences. (Such
a member could delay pension commencement to age 60 and receive the
pension on an unreduced basis.)
Example: A member who retires early at age 57 with 28 years of continuous
employment would have his or her pension reduced by 18% (6% times 3
years).
D. TERMINATION BENEFITS
WHAT HAPPENS IF A MEMBER LEAVES THE UNIVERSITY BEFORE AGE 55?
If a member leaves the University before age 55 for any reason other
than death, the benefit the member will receive from the plan is based
on how long the member has been employed by the University ("continuous
service").
If a member terminates employment with less than one year of continuous
service, the member will be entitled to receive a refund of his/her
own contributions to the plan, plus interest.
If a member terminates employment with between one and five years of
continuous service and with less than two years of continuous membership
in the plan, the member will be entitled to receive a refund of twice
his/her own contributions to the plan, plus interest.
If a member terminates employment with five or more years of continuous
service or with two or more years of continuous membership in the plan,
the member will be entitled to receive a deferred pension commencing
on the normal retirement date (a refund of contributions is not permitted
by law). In lieu of a pension payable at normal retirement date, the
member may elect to have the commuted value of the deferred pension
transferred to a locked-in retirement account (LIRA) or other financial
vehicle as permitted by law.
The commuted value is a lump sum amount that represents the value of
the pension that a member earned under the plan. The plan guarantees
that the commuted value will be equal to at least twice the member's
own contributions plus interest.
E. DEATH BENEFITS
WHAT BENEFITS ARE PAID IF A MEMBER DIES BEFORE HIS OR HER PENSION COMMENCES?
If a member dies before his or her pension commences, the surviving
spouse will receive a death benefit equal to the termination benefit
described above except that instead of a deferred pension, the surviving
spouse will receive a benefit equal to the greater of 1) twice member
contributions plus interest and 2) 100% of the commuted value of the
deferred pension. The spouse will have the option of receiving this
benefit in a lump sum or as a monthly pension payable for his or her
lifetime.
If a member does not have a spouse at the time of death, the death benefit
would be paid in a lump sum to the member's designated beneficiary or
estate.
WHO IS THE ADMINISTRATOR OF THE PLAN?
The administrator of the plan is: Mount Allison University
65 York Street
Sackville, New Brunswick
E4L 1E4
Telephone: (506) 364-2280
CAN EMPLOYEES INSPECT DOCUMENTS THAT PERTAIN TO THE PENSION PLAN?
Any employee who is a member of the plan or is eligible to become a
member of the plan may, on written request to the plan administrator
and without charge, inspect documents or information as provided under
the New Brunswick Pension Benefits Act and the regulations under the
Act.
HOW WOULD ANY SURPLUS BE ALLOCATED ON THE WIND-UP OF THE PLAN?
While the University expects to maintain the pension plan into the
future, it does have the right to change the plan or wind it up, in
full or in part.
If, after provision has been made for the benefits payable to or in
respect of plan members on the wind-up of the plan, any assets remaining
in the fund would be refunded to the University, provided the University
complied with the requirements of the Pension Benefits Act and the Income
Tax Act.
Important Note: While the foregoing summarizes the main features of
the Mount Allison University Pension Plan for Non-Academic Employees,
the actual terms of the plan are contained in the official plan document,
which may periodically be amended. Should there be any differences between
this information and the official plan document, the provisions of the
official plan document will prevail.
Revised: March 31, 2011
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