The CAAT Plan termination options provide both flexibility and security so you can make the best choices for your retirement income
All CAAT Pension Plan members are entitled to a pension at retirement. You have options if you terminate your employment with a CAAT Plan employer before you’re eligible to retire. It’s important to understand how the decision you make today about your pension can impact your retirement income in the future.
If you leave your employment with a participating employer, you will have choices to make about the pension benefits you earned during your membership.
It’s important to understand how the pension decisions you make today can impact your retirement income in the future.
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.
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 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.
Use My Pension, CAAT’s member portal, to update the email address, mailing address and phone number CAAT has on file.
If your employer joined CAAT through a merger, 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.
While you’re in the 24-month membership extension period, you have a few options:
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. Make sure your new employer knows you’re a member of the CAAT Pension Plan. If you’re required to resume contributing to the Plan, the appropriate member and employer contributions will begin, and you can resume earning a pension immediately.
If you start working for another employer does not participate in the CAAT Plan and your new employer has a Canadian registered pension plan you can transfer your CAAT Plan pension to your new employer’s plan if that plan will accept the transfer. You can choose this option at any time during the 24-month extension if you have not started your pension and are under age 65.
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.
The choice between a commuted value transfer and a deferred pension is an important one, with a variety of risks and benefits to consider.
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:
Not only does CAAT offer the valuable benefits Canadians want, but it is also one of the fastest growing pension plans in Canada. CAAT is an industry leader, delivering secure workplace pensions to Canadians from coast-to-coast. It doesn’t matter how far you are from retirement, your pension will be waiting for you when you’re ready to collect it.
Since the 24-month extension of membership period has now ended, Catherine’s option document from CAAT has arrived in the mail. It’s time for Catherine to make a big financial decision. She reads the option document and also consults with a financial advisor. Although Catherine has other options including taking her commuted value out of the CAAT Plan, Catherine chooses a deferred pension from CAAT. She knows that a pension from CAAT will help reduce her stress and the worry of saving for her retirement on her own. Keeping her pension with CAAT means she’ll collect a pension from a trusted source. When it comes to her CAAT pension, Catherine won’t need to worry about market fluctuations, think about investments decisions, or worry about investment fees. CAAT’s pension experts have it handled.
Each year Catherine receives an annual statement from CAAT that shows her deferred pension is continuing to grow based on conditional inflation increases. When Catherine reaches age 65, she’s ready to start the next chapter of her life and decides to retire. She sees how her CAAT pension complements her other retirement savings and government retirement plans. Now she’ll receive a CAAT pension every month for as long as she lives. In retirement, Catherine’s CAAT pension gives her a steady, predictable income stream which makes it easier to budget for her expenses. And Catherine’s pension in retirement increases with conditional inflation protection.
With advances in healthcare, Catherine knows that people are living longer but she has the peace of mind that her CAAT pension will continue as long as she lives and when she passes away her spouse will receive survivor benefits to help support their financial well-being.
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. The commuted value is a one-time payment representing what your future pension would be worth today if invested at current interest rates. Commuted value assumptions and calculation methodology are prescribed by legislation.
Twenty-four months have passed since Lia left her job at an employer that participated in the CAAT Pension Plan. Recently she received her option document from CAAT. She reads the option document and also consults with a financial advisor.
Because Lia participated in DBplus and is under age 50 at the end of the 24-month extension of membership period she has six months to decide if she wants to take the commuted value of her pension out of the plan. She decides to take the commuted value, which means the funds are transferred into a locked-in retirement account. The funds in this account can only be used to provide Lia with retirement income.
Right away Lia has the stress of making investment decisions. She worries if she is making the right decisions to ensure that her money will continue to grow until she is ready to retire.
Lia continues to work for 15 more years, before she is ready to retire. During this period, she checks on her investments but realizes the lump sum of money she received from her commuted value is not growing as quickly as she hoped. Her investments are not performing as expected and the stock market can be unpredictable.
After working for 30 years, Lia is ready to start the next chapter of her life and decides to retire. Lia continued to save for retirement after leaving the CAAT Plan, but she doesn’t make consistent contributions. Based on her estimated retirement income from other retirement savings and government retirement plans, Lia is stressed about her finances. With advances in healthcare, Lia knows that people are living longer, and she worries about market fluctuations and the possibility she will run out of money. Lia is forced to be careful with her money to make sure it lasts as long as she lives.
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.
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 your jurisdiction of employment is Quebec, you may have other options available. Contact the Plan for more information if required.
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.
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