Payroll pension plan

Established May 1, 2000

Section 1 - Introduction

1.01 The University of Waterloo (the "University")

Maintains the University of Waterloo Pension Plan for faculty and staff, registered under the Income Tax Act (Canada) (the "Registered Plan"). The University of Waterloo Payroll Pension Plan (the “Payroll Pension Plan”) is hereby established by the University as of May 1, 2000. The purpose of the Payroll Pension Plan is to provide members of the Registered Plan who are employees of the University with a pension benefit that is not required to take into account the limitations on pensions imposed on registered pension plans under the Income Tax Act (Canada), but is subject to an overall limit determined by the Pension Committee, from time to time, with approval of the University.

Back to top

Section 2 - Definitions

Except as otherwise provided in this Payroll Pension Plan (“PPP”), all capitalized terms used in the Payroll Pension Plan that are defined in the Registered Plan have the meanings given to those terms in the Registered Plan. In addition, in the Payroll Pension Plan, the following words and expressions have the meanings given below:

2.01 "Actual Defined Benefit (DB) Pension" of a Participant

Means the annual pension that would be payable to the Participant under the Registered Plan based on the Participant’s Credited PPP Service, Final Average Earnings, and average Year’s Maximum Pensionable Earnings at the Participant’s retirement, or termination or death prior to retirement, as applicable. The Actual DB Pension shall be initially calculated in the normal form of pension and then converted to the actual form of pension elected by the Participant. The Actual DB Pension shall be calculated without regard to the pension attributable to the Participant’s Excess Contributions, Additional Voluntary Contributions, and/or Optional Ancillary Contributions.

2.02 "Actual Excess Contributions"

Means the Participant’s Excess Contributions under the Registered Plan in respect of his or her Credited PPP Service.

2.03 "Actual Excess Contributions Pension"

Means the additional annual pension that would be payable to the Participant in respect of his or her Actual Excess Contributions under the Registered Plan if the Participant elected to apply such contributions to provide a pension. For greater certainty, the Participant’s Actual Excess Contributions shall include Credited Interest to the date of pension commencement, if applicable, and then converted to the additional annual pension. The Actual Excess Contributions Pension shall be calculated using the same actuarial basis used under the Registered Plan, and using the actual form of pension elected by the Participant.

2.04 "Commuted Value"

Means, in relation to benefits that a person has a present or future entitlement to receive, a lump sum amount which is the actuarial present value of those benefits computed using actuarial methods and assumptions that are adopted by the University from time to time, in consultation with the Actuary, in accordance with the minimum basis prescribed by the Canadian Institute of Actuaries for determining commuted values of deferred vested entitlements under registered pension plans, and provided that the methods and assumptions shall not adjust the lump sum to produce an after-tax equivalent.

2.05 "Credited PPP Service"

Means Credited Service as defined under the Registered Plan, but excluding any portion arising from Credited Past Service pursuant to Article 12 of the Registered Plan.

2.06 "Participant"

Means an Employee employed by the University who is eligible to participate in the Payroll Pension Plan pursuant to Section 3. For the purpose of the Payroll Pension Plan a "Participant" does not include an employee of an organization associated with the University as may be designated as such from time to time by the University for the purpose of the Registered Plan.

2.07 "Payroll Pension Account"

Means the account established within the University's operating revenue fund for the purpose of receiving the University's transfer made in respect of the Payroll Pension Plan pursuant to Section 4.02, and for the purpose of paying the Payroll Pension Benefits to Participants.

2.08 "Payroll Pension Benefits"

Means the benefits payable under this Payroll Pension Plan.

2.09 "Payroll Pension Plan"

Means the University of Waterloo Payroll Pension Plan, as amended from time to time.

2.10 "Registered Plan"

Means the University of Waterloo Pension Plan for Faculty and Staff, as amended from time to time.

2.11 Amendment (PDF) "Target Defined Benefit (DB) Pension" of a Participant

Means the annual pension that would be payable to the Participant under the Registered Plan if the Registered Plan were read without reference to the maximum pension and pension adjustment limit provisions of the Registered Plan. The Target DB Pension shall be based on the Participant’s Credited PPP Service, Final Average Earnings, and average Years Maximum Pensionable Earnings at the Participant’s retirement, or termination or death prior to retirement, as applicable. The Target DB Pension shall be initially calculated in the normal form of pension and then converted to the actual form of pension elected by the Participant. The Target DB Pension shall be calculated without regard to the pension attributable to the Participant’s Excess Contributions, Additional Voluntary Contributions and/or Optional Ancillary Contributions under the Registered Plan.

Except as otherwise stated above, the Target DB Pension shall be subject to the same terms and conditions as a pension payable from the Registered Plan, including the terms concerning the normal form, optional forms and spousal rights, and the actuarial basis used for converting to optional forms shall be the same as that of the Registered Plan.

The Target DB Pension shall be subject to a maximum of $2,650 per year of Credited PPP Service, provided that such maximum shall be subject to an actuarial increase in the event of a postponed retirement pursuant to Section 6.03(b) of the Registered Plan (“Maximum Target DB Pension”).

The Maximum Target DB Pension is applied:

  • after increases in the Target DB Pension for increases in accordance with Section 7.03 of the Registered Pension, if applicable,
  • after reductions for early retirement or early commencement of a deferred pension, if applicable, and
  • prior to conversion to any optional form of pension, if applicable.

2.12 "Target Excess Contributions"

Means the Participant’s Excess Contributions under the Registered Plan in respect of his or her Credited PPP Service, calculated as if the maximum pension provision in Section 6.07 of the Registered Plan was equal to the Maximum Target DB Pension.

2.13 "Target Excess Contributions Pension"

Means the additional annual pension that would be payable to the Participant in respect of his or her Target Excess Contributions if the Participant elected to apply such contributions to provide a pension. For greater certainty, the Participant’s Target Excess Contributions shall include Credited Interest to the date of pension commencement, if applicable, and then converted to the additional annual pension. The Target Excess Contributions Pension shall be calculated using the same actuarial basis used under the Registered Plan, and using the actual form of pension elected by the Participant.

In this Payroll Pension Plan, words importing the singular number include the plural number and vice versa, and Section references refer to Sections of the Payroll Pension Plan, unless otherwise noted.

Back to top

Section 3 - Eligibility

3.01 Application

This Plan shall not apply to Members of the Registered Plan who retired, or terminated or died prior to retirement, prior to September 30, 1999.  Furthermore, no payments shall be made under this Payroll Pension Plan prior to May 1, 2000.

3.02 Eligibility

(a) Each Employee employed by the University shall become a Participant in the Payroll Pension Plan on the later of

  • September 30, 1999, or
  • the date he or she becomes a Member of the Registered Plan.

(b) Notwithstanding paragraph (a) above, upon becoming a Member of the Registered Plan, such Employee may elect not to participate in the Payroll Pension Plan by providing to the University, in a form acceptable to the University, a written election to that effect. Such an election can be revoked only with the approval of the University.

Back to top

Section 4 - Contributions and provision of payroll pension benefits

4.01 Participant Contributions

Participants are neither required nor permitted to contribute to the Payroll Pension Plan.

4.02 University Contributions

(a) The University shall transfer to the Payroll Pension Account each year an amount equal to a percentage, based on the recommendation of the Pension Committee with approval of the University, of the aggregate Employee contributions made in each year under Section 4.01 of the Registered Plan.

(b) The University transfers to the Payroll Pension Account:

  • shall not constitute trust property;
  • will be available to satisfy the claims of the University's creditors, if necessary;
  • may be applied to any other purpose that the University may determine from time to time;
  • form part of the other assets of the University; and
  • shall not be subject to the direct claim of any Participants of the Payroll Pension Plan.

4.03 Investment of the Payroll Pension Account

The assets held in the Payroll Pension Account shall be invested in a manner recommended by the Pension Committee with the approval of the University.

4.04 Provision of Payroll Pension Benefits

(a) The Payroll Pension Benefits shall be paid from the Payroll Pension Account as they become due and payable.

(b) In the event the Payroll Pension Account at any time does not have sufficient assets to meet the obligations of the Payroll Pension Plan then due and payable, the shortfall shall be paid directly by the University.

Back to top

Section 5 - Payroll pension benefits

5.01 Retirement Benefits

A Participant who retires on his or her Normal, Early, or Postponed Retirement Date, as applicable, is entitled to receive under this Payroll Pension Plan, commencing at such time, an annual pension equal to the amount, if any, by which (A) exceeds (B), where:

(A) is the sum of the Participant’s Target Defined Benefit (DB) Pension and the Participant’s Target Excess Contributions Pension, and

(B) is the sum of the Participant’s Actual DB Pension and Actual Excess Contributions Pension.

5.02 - Commutation Option

(a) A Participant who is entitled to a pension under the Registered Plan and who has elected to transfer the Commuted Value of his or her benefit under the Registered Plan, is entitled to a lump sum payment from the Payroll Pension Plan equal to the amount, if any, by which (A) exceeds (B), where:

(A) is the sum of the Commuted Value of the Target DB Pension and the Target Excess Contributions, and

(B) i s the sum of the Commuted Value of the Actual DB Pension and the Actual Excess Contributions.

(b) A Participant who receives a distribution under paragraph (a), shall deliver to the University, in a form acceptable to the University, a written waiver from the Participant's Spouse at the date of the election.

Back to top

Section 6 - Cost of living adjustments

6.01 Post-Retirement Cost Of Living Adjustments to Payroll Pension Benefits in Payment

Payroll Pension Benefits shall be adjusted after commencement for cost of living increases in the same manner as provided under Section 7.02 of the Registered Plan.

Back to top

Section 7 - Form of payroll pension benefits

7.01 Normal Form and Optional Forms of Payroll Pension Benefits

The Payroll Pension Benefits payable to a Participant pursuant to Section 5.01 or Section 9.02, as applicable, shall commence to be paid at the same time as, and shall be paid in the same form as, the pension payable to the Participant under the Registered Plan.

Back to top

Section 8 - Death benefits

8.01 Death In Service Before Retirement

If a Participant dies in service, he or she shall be deemed to have terminated employment as of the date of death and the Commuted Value of the deferred life annuity to which the Participant would have been entitled under Section 9.01 in respect of Credited PPP Service after December 31, 1986 shall be payable to the individual to whom the death benefit is payable under the Registered Plan, be it the Participant's Spouse, Beneficiary or estate.

8.02 Death After Termination of Employment

If a Participant who terminated employment and who is entitled to benefits under this Payroll Pension Plan dies before commencement of his or her pension, the Commuted Value of the portion of the Payroll Pension Benefit which is in respect of the Participant's Credited PPP Service after December 31, 1986, shall be payable to the individual to whom the death benefit is payable under the Registered Plan, be it the Participant's Spouse, Beneficiary or estate.

8.03 Optional Annuity Payments

Where a Spouse has elected to receive the death benefit under the Registered Plan in the form of an annuity payment, the Spouse shall also receive the death benefit payable under this Payroll Pension Plan in the form of an annuity payment, on the same terms and conditions as elected under the Registered Plan.

8.04 Death After Retirement

On the death of a Participant after retirement, benefits will be paid in accordance with the optional form selected by the Participant.

Back to top

Section 9 - Termination benefits

9.01 Deferred Pension

On termination of employment with the University other than by death or retirement, a Participant who has elected a deferred pension in respect of his or her entitlement under the Registered Plan is entitled to receive a deferred pension under this Payroll Pension Plan.

9.02 Amount of Deferred Pension

Upon such termination of employment, the Participant is entitled to receive under the Payroll Pension Plan an annual pension, determined at the pension commencement date, equal to the amount, if any, by which (A) exceeds (B), where:

(A) is the sum of the Participant’s Target Defined Benefit (DB) Pension and Target Excess Contributions Pension, and

(B) is the sum of the Participant’s Actual DB Pension and Actual Excess Contributions Pension.

For greater certainty,

  • the Actual DB Pension shall include increases in accordance with Section 7.03 of the Registered Plan between the date of termination of service and the pension commencement date elected by the Participant, and
  • the Target DB Pension shall include increases in accordance with Section 7.03 of the Registered Plan between the date of termination of service and the pension commencement date elected by the Participant (subject to the Maximum Target DB Pension),
  • and the Actual DB Pension and the Target DB Pension shall be reduced for early commencement, if applicable.

9.03 Commutation Option

(a) A Participant who is entitled to a pension under the Registered Plan and who has elected to transfer the Commuted Value of his or her benefit under the Registered Plan, is entitled to a lump sum payment from the Payroll Pension Plan equal to the amount, if any, by which (A) exceeds (B), where:

(A) is the sum of the Commuted Value of the Target DB Pension and the Target Excess Contributions, and

(B) is the sum of the Commuted Value of the Actual DB Pension and the Actual Excess Contributions.

(b) A Participant who receives a distribution under paragraph (a), shall deliver to the University, in a form acceptable to the University, a written waiver from the Participant's Spouse at the date of the election.

Back to top

Section 10 - Expenses

All expenses related to maintenance and operation of this Payroll Pension Plan will be paid from the Payroll Pension Account, unless paid directly by the University.

Back to top

Section 11 - Administration

11.01 Responsibility for Administration

The University shall be responsible for all matters relating to the administration of the Payroll Pension Plan. The University may delegate any matters it deems appropriate to one or more agents. The University may decide conclusively all matters relating to the operation, interpretation and application of the Payroll Pension Plan.

11.02 Rules for Administration

The University may enact rules and regulations relating to the administration of the Payroll Pension Plan and may amend those rules and regulations from time to time. Such rules and regulations shall not conflict with any provision of this Payroll Pension Plan.

11.03 Disclosure

The University shall provide each Participant who has accrued a benefit under this Payroll Pension Plan with a written explanation of the terms and conditions of the Payroll Pension Plan and amendments thereto applicable to him or her.

11.04 Statement on Termination of Employment

When a Participant who has accrued a pension benefit under this Payroll Pension Plan terminates employment with the University or dies, the University shall give to the Participant, or to any other person who becomes entitled to a benefit under the Payroll Pension Plan, a written statement setting out the Participant's or other person’s entitlement, as the case may be.

Back to top

Section 12 - General provisions

12.01 No Right to Employment

The Payroll Pension Plan shall not be construed to create or enlarge any right of any person to remain in the employment of the University, nor shall it interfere in any manner with the right of the University to discharge any person.

12.02 Information to be Provided Before University Pays Benefits

Payment of benefits shall not be made until the person entitled to payment of the benefit delivers to the University:

(a) satisfactory proof of age of the person and any other person who may become entitled to payment of the pension and any other information that is required to calculate and pay the benefit; and

(b) if the benefit is payable to a Participant or Spouse, a signed declaration of marital status,

provided that after late delivery of the required documents and information, payment of a pension shall be made retroactively to the date on which the pension was to have commenced.

12.03 University Records

Wherever the records of the University are used for the purposes of the Payroll Pension Plan, the records shall be conclusive of the facts with which they are concerned, unless and until they are proven to be in error.

12.04 Severability

If any provision of the Payroll Pension Plan is held to be invalid or unenforceable by a court of competent jurisdiction, its invalidity or unenforceability shall not affect any other provision of the Payroll Pension Plan and the Payroll Pension Plan shall be construed and enforced as if such provision had not been in the Payroll Pension Plan.

12.05 Captions and Headings

The captions, headings and table of contents of this Payroll Pension Plan are included for convenience of reference only and shall not be used in interpreting the provisions of this Payroll Pension Plan.

12.06 Construction

The Payroll Pension Plan shall be governed and construed in accordance with the laws of the Province of Ontario.

12.07 Currency

All benefits payable under the Payroll Pension Plan shall be paid in the lawful currency of Canada.

12.08 No Duplication of Benefits

The University is not liable to pay in total any more than the benefits determined under the applicable provisions of Sections 5, 7, 8 and 9, whether either or both of a Participant and any other person establishes a claim against the Participant's entitlement hereunder. In particular, but without restricting the generality of the foregoing, if there is any requirement in law that a person other than the person identified by the terms of the Payroll Pension Plan is entitled to all or part of a benefit payable under this Payroll Pension Plan, then the lawful requirement shall prevail over the conflicting provision of this Payroll Pension Plan.

12.09 Small Benefits

The University may, in its sole discretion, upon determining that the benefit payable to any person under the Payroll Pension Plan is too small to justify payment in monthly instalments:

(a)pay the benefit in annual or quarterly instalments; or

(b) with the consent of the recipient, pay the Commuted Value of the benefit in a lump sum in full satisfaction of the entitlement.

12.10 No Assignment

Benefits accrued or payable under the Payroll Pension Plan are not assignable except in accordance with Section 16.04(b) of the Registered Plan.

Back to top

Section 13 - Future of the payroll pension plan

13.01 Continuation of the Payroll Pension Plan

The University intends to maintain the Payroll Pension Plan in force indefinitely, but nevertheless reserves the sole right to amend, revoke, suspend, merge, or terminate the Payroll Pension Plan at any time or times.

However, neither an amendment to the Payroll Pension Plan nor termination of the Payroll Pension Plan may, subject to Section 13.02(c), cause the reduction or cessation of any benefits under the Payroll Pension Plan (and of the University’s obligation to provide such benefits) which have accrued under the Payroll Pension Plan to any Participant prior to the effective date of such amendment or termination, based on Earnings at such date.

13.02 Payroll Pension Plan Termination

(a) Should the Payroll Pension Plan be terminated at any time, each Participant shall be entitled to his or her benefits from the Payroll Pension Plan for the period up to the date of termination of the Payroll Pension Plan (using the Participant's Credited PPP Service, Final Average Earnings and average of the Year's Maximum Pensionable Earnings at the date of such Payroll Pension Plan termination). The Payroll Pension Benefits payable to, or in respect of such Participant, shall be determined and payable at the Participant’s subsequent retirement, or termination or death prior to retirement, as applicable, in accordance with the terms of the Payroll Pension Plan in effect at the date of such Payroll Pension Plan termination. For this purpose, the Actual Defined Benefit Pension and Actual Excess Contributions shall be based on the Participant’s Credited PPP Service, Final Average Earnings, and average of the Year’s Maximum Pensionable Earnings at the date of such Payroll Pension Plan termination, and the maximum pension provisions of the Registered Plan at the date of the Participant’s retirement, or termination or death prior to retirement.

(b)Should the Registered Plan be terminated, the Payroll Pension Plan shall be terminated as of the same date of termination of the Registered Plan, and the amount payable under the Payroll Pension Plan to a Participant in respect of Credited PPP Service up to the date of such termination shall be reduced to take into account any amount that was paid to the Participant under the Registered Plan by reason of a distribution of surplus assets upon termination of the Registered Plan.

13.03 No Liability By Board of Governors, Pension Committee Members, or Officers

Notwithstanding any other provision of this Payroll Pension Plan, if, at any time, the University should cease to exist, there shall be no liability whatsoever on the part of any member of the Board of Governors, any member of the Pension Committee, or officer of the University to fund the Payroll Pension Plan or otherwise provide for the benefits hereunder.

13.04 Wind-Up or Bankruptcy of the University

In the event that the University is wound up or becomes bankrupt, the Payroll Pension Plan shall be deemed fully terminated and the provisions of Section 13.02 shall apply, except that each Participant shall be entitled to the Commuted Value of his or her benefit under the Payroll Pension Plan, payable at the time of such Payroll Pension Plan termination.

Back to top

Section 14 - Transfer of employees

14.01 Transfers to an Organization Associated with the University

If an Employee employed by the University is transferred to an organization associated with the University, such Employee shall cease to be a Participant. No benefits shall be payable from the Payroll Pension Plan until such Participant subsequently retires or terminates from such organization or dies while employed by that organization.

The Participant's Actual Defined Benefit (DB) Pension and the Target DB Pension will be calculated on the basis of the:

(a) Participant's Credited PPP Service to date of transfer;

(b) Participant's Final Average Earnings based on earnings received from the University;

(c) average Years Maximum Pensionable Earnings at the date of transfer; and

(d) maximum pension permitted under the Income Tax Act at the date of the Participant's pension commencement.

14.02 Transfers to the University

If the employee of an organization associated with the University is transferred to the University, such employee shall participate in the Payroll Pension Plan.

The Participant's Actual DB Pension and the Target DB Pension will be calculated on the basis of the:

(a) Participant's Credited PPP Service from the date of transfer;

(b) Participant's Final Average Earnings, based on Earnings received by the Participant from the University;

(c) average Years Maximum Pensionable Earnings at the date of the Participant's retirement, termination or death, as applicable; and

(d) maximum pension permitted under the Income Tax Act at the date of the Participant's pension commencement.

Back to top