Leaving your job

The CAAT Plan termination options provide both flexibility and security so you can make the best choices for your retirement income

life events

You have options

All CAAT Pension Plan members are entitled to a pension at retirement. If you terminate your employment with a CAAT Plan employer before you’re eligible to retire, you have options. The CAAT Plan termination options provide both flexibility and security so you can make the best choices for your retirement income.

If you leave your employment with a participating employer, you will have options for the pension benefits that you have earned during the course of your membership.

Early retirement: If you are eligible to retire with an immediate pension from the Plan when you terminate, you can start collecting it immediately. If you choose not to start collecting your pension immediately, you can defer your pension and start collecting it later but no later than the end of the year in which you turn 71.

24-month membership extension

When you terminate before your normal retirement date, your membership is automatically extended for 24 months from the date you last made contributions to the Plan. During the 24-month membership extension, you have a number of options for your pension, and at the end of the 24-month period, you gain additional options.

During the 24-month membership extension

During the 24 months, you have options which will help you build your pension.

Begin working at another CAAT employer

If you begin working for another employer that participates in the CAAT Plan, you are required to resume contributing to the Plan as soon as your employment starts. Be sure to notify your new employer that you are a member of the CAAT Pension Plan so that appropriate member and employer contributions can begin, and you can resume earning a pension immediately.

Transfer to another employer’s pension plan

If you begin working with another employer that has a Canadian registered pension plan, you can transfer your CAAT Plan pension to your new employer’s plan, providing that plan will accept the transfer. You can choose this option at any time during the 24-month extension provided you have not started your pension and are under age 65.

After the 24-month membership extension

At the end of the 24-month membership extension, in addition to the portability options above you have the option to choose a secure, lifetime pension from the CAAT Plan, or a commuted value transfer.

Choose a lifetime pension from the CAAT Plan with a deferred pension

You can keep your pension in the CAAT Plan, and receive lifetime income in retirement. This is called a deferred pension. Your deferred pension is the pension you earned up to the date you terminated your employment plus more. During the 24-month membership extension, it receives AIW increases, and after that, inflation protection increases, even before you start collecting your pension. Not only that, but you’ll also have all the other advantages of a lifetime pension, such as survivor benefits for your spouse. Your pension remains in a secure, fully funded pension plan, ready for you when you retire.

It doesn’t matter how far you are from retirement, your pension will be waiting for you when you’re ready to collect it.

What you need to know about the deferred pension option

  • You can start collecting your deferred pension at age 65, as early as age 55, and in some cases as early as age 50 (if you are earning a pension in DBprime and you have 20 years of service, or if you are earning a pension in DBplus). If you start before age 65, your pension will be reduced by 5% per year for each year you are from age 65. This permanent reduction to your payment reflects the fact that you will receive it longer.
  • If you are earning a pension in DBprime, you also receive a bridge benefit – an additional pension, payable from the early retirement date to age 65, and subject to the same reduction factor as your early retirement pension.

Commuted value transfer

You can choose to transfer the commuted value of your benefit out of the Plan. The commuted value is a lump-sum payment of the ‘present value’ of a member’s earned pension. In other words, it is the amount of money that would have to be invested today, based on current interest rates, to be equivalent in today’s dollars to the member’s future pension stream. Commuted value assumptions and calculation methodology are prescribed by legislation.

What you need to know about the commuted value option

  • You must be under age 55 and earning a pension in DBprime, or under age 50 and earning a pension in DBplus to choose the commuted value option.
  • The commuted value is calculated at the end of the 24-month extension using the interest rates in effect at that time. You have six months from the end of your 24-month extension of membership in which to choose the commuted value, after which time, the option is not available.
  • If you choose to take the commuted value out of the Plan, you will have to transfer the funds into a locked-in retirement account. The funds must remain locked-in and can only be used to provide retirement income. For information about the types of locked-in retirement accounts available to you, we suggest you seek independent advice from a financial advisor.
  • In addition, you cannot withdraw money from a locked-in retirement account before age 55, and all funds must be withdrawn or converted to an annuity or a Life Income Fund by age 71.
  • If your pension benefits are subject to federal jurisdiction, your spouse must provide consent prior to a commuted value transfer, in accordance with the applicable legislation.
  • If you opt to transfer your commuted value out of the Plan, you will receive no further benefits from the CAAT Plan. You will be entirely responsible for subsequent investment returns, including the management fees and risks associated with managing your retirement income. If your investments do not perform well, you may end up with a retirement fund that is smaller than what you had when you left the Plan. There is an additional risk of outliving your savings.

Excess contributions

At the end of the 24-month extension, the Plan compares 50% of the commuted value of your deferred pension to the total amount of contributions you made, with interest, to the date of termination of membership.

If your contributions plus interest total more than 50% of your commuted value then these “excess contributions” will be paid to you in accordance with the rules of your jurisdiction of employment. The payment options may differ as defined by your jurisdiction of employment. Details will be provided in your options document if you leave your job before retirement.

Limits on commuted values

The Income Tax Act (ITA) places a limit on the amount of commuted value that you can transfer directly to a locked-in RRSP. If you choose the commuted value option and the ITA limit applies, you can take the excess in a lump sum which is taxed at your current marginal tax rate. If the withholding tax is too low, you will be assessed additional tax payments when you file your income tax for the year of the transfer.

If you prefer a secure, lifetime pension, no action is required

Your pension remains in the CAAT Pension Plan, available for you to start at age 65 (or as early as age 50, with a reduction).

The choice between a commuted value transfer and a deferred pension is an important one, with a variety of risks and benefits to consider.
Is your jurisdiction of employment Quebec?
If your jurisdiction of employment is Quebec, you may have other options available. Contact the Plan for more information if required.

More information about the 24 month extension of membership

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Leaving your job? Be sure to stay in touch!

During the 24-month extension of membership period, if your contact or personal information changes, you must notify the Plan as soon as possible to ensure you receive your option document in time to meet any deadlines, and avoid any delays.

Download the Change of Information - Member Update form and use it to notify us of any changes. Complete the form, sign it, and mail it to the CAAT Pension Plan to keep us up to date.

Grow in benefits - Ontario

Your benefit under the CAAT Plan is determined exclusively under the terms of the CAAT Plan. Grow-in benefits for involuntarily terminated employees, as provided under the Pension Benefits Act (Ontario), do not apply to any members of the CAAT Plan. This is because the CAAT Plan, in accordance with the PBA, elected to opt out of their application, effective July 1, 2012, pursuant to a notice of election filed with the Superintendent of Financial Services.