Registered pension plans must define a “normal” retirement date that cannot be later than one year after the attainment of age 65, but you are not required to retire when you reach the normal retirement date.
As you plan for your retirement from the University of Waterloo, there are a number of things you need to consider. Once you have decided that you are ready to retire, there are some specific actions required of you.
The following bulleted list is not intended to be a sequence of activities nor an exhaustive list of considerations but rather a guide of some key issues; additional personal or department specific considerations might apply to you.
If you are age 55 or older, your termination is considered a retirement regardless of your length of service. You can elect either an immediate or deferred pension.
If you are under age 55, your pension options are either a commuted value of your accrual or a deferred pension.
If you elect a deferred pension, please ensure that the University is kept informed of your personal email and/or mailing address to ensure you receive your annual pension statement. This will also enable your pension to be put into pay no later than your attainment of age 65. Pension payment can commence prior to age 65, subject to the following reductions:
The formula used to calculate your pension depends on your final average earnings, your credited service and the average year's maximum pensionable earnings.
Final average earnings (FAE) - average of your annualized base earnings during the 60* continuous months of highest earnings during your last 10 years of employment at the University. *Prior to January 1, 2016, the averaging period was in transition due to a plan amendment effective January 1, 2014.
Credited service - the total number of years and complete months of continuous employment with the University during which you have made required contributions to the University’s pension plan.
Average year's maximum pensionable earnings (average YMPE) - under the Canada Pension Plan (CPP) there is a maximum amount each year on which you make contributions to the CPP. This is referred to as the year's maximum pensionable earnings or YMPE. The average YMPE is determined by averaging the YMPE in the year of retirement plus the YMPE in the four preceding years.
The pension determined by the formula is a single life pension commencing on your normal retirement date (age 65) and payable for your lifetime, with a 10 year guarantee. This is referred to as the normal form. The monthly pension is payable to you as long as you live, with 120 monthly payments guaranteed. The guarantee means should you die within the first ten years following retirement, a lump sum will be paid to your named beneficiary equal to the value of the remaining guaranteed payments. If your beneficiary is your spouse, your spouse will have the option to receive the monthly pension until the end of the guarantee period.
Just before you retire you will be provided an option package that will outline the amount of pension for each of the various forms of pension available to you under Waterloo’s pension plan. Once pension payments have started, you are not permitted to change the form of pension you have chosen. To assist you with this important decision, you will have the opportunity to schedule a personal meeting with a member of the pension team prior to your retirement to review your pension options and obtain answers to any questions you may have. (Refer to Retirement Process section below.)
Alternate forms of pension include:
You can elect a guarantee period of 5 years or 15 years, which will increase or decrease your monthly pension respectively, compared to the formula pension. You can also elect no guarantee period, which means no payments will be made after your death even if you die shortly after you retire. The pension amount with no guarantee is larger than the formula pension because there is no guaranteed payout; a special waiver must be signed to select this option.
Pension legislation requires that, unless you and your spouse sign a waiver, you must elect a form of pension that, in the event of your death, will provide your spouse a survivor pension equal to at least 60% of your pension. This form is a joint and survivor pension. The amount of a joint and survivor pension will be lower than the formula pension because it is based on actuarial and mortality assumptions of two lives (you and your spouse) instead of just one (you).
One type of the joint and survivor form of pension reduces on the member’s death. In the event of your death, your spouse will receive a survivor pension equal to a percentage of the pension you were receiving immediately prior to your death. When you retire you choose a percentage equal to 50%, 60%, 75%, or 100% (no reduction). If your spouse dies before you, the pension will continue to be paid to you, without reduction, until your death and then payment will stop.
The other type of the joint and survivor form of pension reduces on the first person’s death, regardless whether it is the member or the member’s spouse. This means that the pension will reduce to 60% on either your death or your eligible spouse’s death.
A survivor pension can only be paid to the person who was your spouse when you retired.
If you have a spouse when you retire and you elect to receive a form of pension that does not provide at least a 60% survivor pension, you and your spouse must sign a waiver form.
The Income Tax Act (ITA) limits the maximum annual pension that can be paid from a Registered Pension Plan (RPP). An additional pension in excess of the Income Tax Act limit is provided from a non-registered plan.
Post-retirement cost of living adjustments, also referred to as COLA or indexation, are applied to pensions in pay on May 1 of each year. COLA is based on the year over year increase in the Consumer Price Index. Previous years can be found under the COLA history section.
Effective May 1, 2014, guaranteed indexation is applied as follows:
If CPI exceeds of 5% in any year, the plan guarantees an increase in a member's pension based on CPI of 5%; an increase above 5% will be determined by the Pension & Benefits Committee taking into consideration the fund's ability to afford the cost.
Please contact us at hrhelp@uwaterloo.ca with any questions or comments.
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The University of Waterloo acknowledges that much of our work takes place on the traditional territory of the Neutral, Anishinaabeg and Haudenosaunee peoples. Our main campus is situated on the Haldimand Tract, the land granted to the Six Nations that includes six miles on each side of the Grand River. Our active work toward reconciliation takes place across our campuses through research, learning, teaching, and community building, and is centralized within our Office of Indigenous Relations.
