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planning your retirement
Whether you’re almost 65 and ready to retire, in your 50s and can’t resist the prospect of retiring early, or simply have questions about what you’ll get from the CAAT Pension Plan, we’re here to help you understand your options.
Learn all about your pension from CAAT’s pension experts.
One of the advantages of belonging to a Defined Benefit pension plan like the CAAT Plan is that, since your pension is based on a formula, you can predict your approximate pension income and identify the best time for you to retire.
In DBprime, your lifetime pension is calculated using a formula that’s based on your highest average pensionable earnings, all your pensionable service, and your age. Once you retire, your pension is paid for the rest of your life.
The variables in this formula are: a) your earnings, b) your years of pensionable service, and c) your age at retirement. Your age and pensionable service determine if your pension is reduced or unreduced.
1.3% x highest average earnings to AYMPE x pensionable service
2% x highest average earnings above AYMPE x pensionable service
If you retire before age 65, you receive an additional payment called a bridge benefit. The bridge benefit is paid every month until you turn 65.
0.7% x highest average earnings to AYMPE x pensionable service
Highest average pensionable earnings (HAPE)
These are your earnings during the 60 consecutive months that your pensionable earnings were highest. This design ensures your pension is calculated based on your best earnings.
The Average of the Year’s Maximum Pensionable Earnings. The YMPE is the maximum earnings on which you contribute to the Canada Pension Plan (CPP). On your earnings above the YMPE, you do not contribute to CPP. The AYMPE is based on your year of termination or retirement and is calculated using the YMPE for that year and each of the previous four years.
The total of the years and months that you contributed to the pension plan. The longer you contribute to the Plan, the higher your pension will be.
Your DBplus pension is calculated using a formula, so you know what your annual pension will be when you retire. The pension formula is divided into two components:
The promised pension earned in the current year, calculated at the end of each year you contribute. Guaranteed annual base pension uses your total contributions and your employer's contributions on your behalf. The formula uses a pension factor as a multiplier to calculate your pension. It is set based on the Plan’s Funding Policy and is currently 8.5%.
8.5% x year’s total contributions* = your guaranteed base pension for that year
*Note that the year’s total contributions are the member's plus your employer’s contributions on your behalf.
This is the amount added to your total CAAT Pension earned in previous years. It is applied at the start of each year in which you are a contributing member, subject to the Plan's Funding Policy, and is based on the announced increase to the Average Industrial Wage (AIW) index.
The AIW index represents wage inflation in Canada, which has averaged about 2.2% over the past 20 years.
AIW enhancements, once added, become a permanent part of your promised pension. That means that the AIW enhancements are cumulative – each year’s enhancement is paid on top of the previous year’s total pension, plus enhancements.
DBplus past promised benefits** x AIW enhancement rate
**Past promised benefits accrued to the end of the previous year, including any past AIW enhancements
These easy-to-use estimators help you plan for retirement.
First, choose the estimator that's right for you, then enter some basic data to estimate your projected pension amounts.
Did you know that seventy percent of Canadians retire earlier than originally planned? The number one reason for these early retirements is health-related. The CAAT Plan’s early retirement options give you flexibility and security to retire when the time is right for you, and provide a level of comfort in case you have to retire sooner than planned.
In the CAAT Pension Plan, you can retire when the time is right for you. As a member, you have a range of retirement dates to choose from - you can retire from as early as age 50, up to the year you turn 71.
The default retirement date is age 65. It is referred to as the "normal retirement date," and it is the last day of the month in which you turn 65. At age 65, your lifetime pension is unreduced, no matter how much or how little service you have. If you choose to retire when you reach age 65, it’s referred to as a "normal retirement".
Your pension continues to grow if you keep working after age 65.
If you retire before age 65, you will be taking "early retirement" and your pension may be reduced.
If you retire early, you receive your lifetime pension, plus an additional payment called the bridge benefit, which is payable until you turn 65.
Your early retirement pension will be either unreduced, or reduced
You qualify for an early unreduced pension in DBprime as soon as you reach one of these "magic numbers":
If you do not qualify for an early unreduced pension, your pension and bridge benefit will be reduced. The reduction factor is 3% per year (0.25% per month) for each year you are away from the earliest date you are eligible for an unreduced pension (prorated by month). This is a permanent adjustment to your pension payment and your bridge benefit.
Under DBplus, you can retire at age 65 with an unreduced pension, or retire as early as age 50, with an early start adjustment. The adjustment rate varies from 3% to 5%, based on the Plan’s funding level. Initially, the reduction rate for retirements has been set to 3% for each year you are under age 65. The actual rate will depend on the Plan terms in effect at your retirement.
Different early retirement provisions apply to members who start their pension after being deferred members. Read Starting your deferred pension to learn more about these provisions.
If you continue to work beyond age 65, your retirement date is postponed. Your pension keeps growing as long as you are working and contributing to the Plan. By law, you must start your pension by December of the year you turn 71, even if you choose to continue working.
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Different early retirement provisions apply to members who start their pensions after being deferred members. Learn about the early retirement provisions that apply.
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