Retirement

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.

• Normal retirement: The normal retirement date under Waterloo’s pension plan is the first of the month following the month you turn 65. If your birthday is the first of a month, then your 65^th birthday is your normal retirement date.
• Early retirement: Retirement is possible as early as age 55. At or after age 55, you may elect early retirement, but your formula pension will be reduced by ½% for each month your early retirement date precedes age 62. For the years between 62 and 65, no early retirement adjustment is applied.
• Late retirement: If you continue working past the age of 65 you must continue contributing to Waterloo’s pension plan and you will continue to accumulate credited service. However your Waterloo pension must begin no later than December 1 of the year you turn 71. This is a legislative requirement. Employees who continue working past the end of the year they turn 71 will receive their Waterloo pension in addition to their salary.

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.

• Pension Options
  • Options that exist depend on your age when your employment with the University of Waterloo comes to an end, as follows:
    • 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 mailing address to enable annual statements to be delivered to you. 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:
    • If you were age 55 or older on your termination date, ½% per month prior to age 62.
    • If you were under 55 on your termination date, ½% per month between age 55 and 60, plus 1/3% per month between age 60 and 65.
       
• Eligibility for Post-retirement Benefits
  • If you elect an immediate pension, you are eligible for post-retirement benefits (i.e. extended health, life insurance, tuition benefit) if you were participating in the full benefits program for at least ten years immediately prior to the date of your retirement. Eligibility for post-retirement benefits is under review by the Pension and Benefits Committee and it is strongly advised that employees discuss eligibility for post-retirement benefits with Human Resources before completing the retirement intention on Workday. 
    • In addition to the life insurance and extended health benefits which apply to active employees participating in the temporary benefits program, the full benefits program for active employees includes dental, sick leave, and long term disability (LTD) benefits. Active employees participating in the full benefits program are also eligible for some policy benefits including tuition (for themselves and eligible children) and maternity/parental leave benefits. Only extended health, life insurance, and tuition are benefits extended to eligible retirees.
    • In most cases, you should be able to confirm the date that you started participating in the full benefits program by reviewing your LTD coverage begin date in Workday. Navigation assistance is available through the Workday user guides posted online.     
    • Your potential date of eligibility for post-retirement benefits might be an important element for you to consider in your retirement planning. We recommend that you contact Human Resources for confirmation of eligibility or if you require assistance with understanding or navigating the information in Workday.  
  • If you decide to retire in advance of achieving eligibility for post-retirement benefits, you will be required to sign an acknowledgement form that clearly indicates that you have made an informed decision.
     
• Discuss your intention to retire with your manager
  • Once you have decided to retire, please inform your manager of your intention and the effective date.
    • Pension payments are deposited into your bank account on the 1st of each month by CIBC Mellon (the University’s pension trustee); as such, the effective date is the last day of the month prior to your first month of retirement.
    • It is recommended that you provide notice of your retirement in writing (i.e. letter, memo, email). Ensure sufficient notice to enable your manager to recruit for your replacement. 
  • For Faculty, please take any outstanding vacation in advance of your retirement date as there is no cash reimbursement option for unused vacation days. 
  • For Staff, indicate to your manager how you would like to use any outstanding vacation time, including any pro-rated accrual in the year of retirement.
    • You can choose to use vacation days (i.e. take time off) prior to your retirement date or be reimbursed for unused vacation days in cash, less applicable tax.
    • Important note for non-unionized Staff: Please ensure that the agreed upon vacation time that you will take prior to your retirement is submitted and approved by your manager within Workday.
       
• Coding your Resignation in Workday
  • You or your manager must code your employment end date in Workday. Pension payments are deposited into your bank account on the 1st of each month, therefore the last day of the month prior should be coded as your employment end date in Workday, with “retirement” as the reason
  • For non-unionized Staff employees, vacation payout on your last pay, if any, will be automatically calculated based on vacation requests that have been entered and approved in Workday.  Keep in mind that this needs to be completed at least two weeks prior to the date of your final pay deposit.
     
• Contact the pension team in Human Resources
  • Although the above Resignation process in Workday will inform Human Resources of your intention to retire, it is recommended that you specifically contact the pension team two (2) months in advance of your retirement. This will enable the pension team to prepare your final pension numbers and schedule a “Sign-off appointment” with you in the first 2 weeks of the month prior to your retirement.
    • Faculty members should contact Sue McGrath, ext. 42046
    • All other employees should contact Michelle St-Amour, ext. 43573
  • During the meeting, you will be asked to confirm that you have officially and in writing, notified your manager of your intention to retire.
     
• Sign-off appointment 
  • These appointments will be held in Human Resources, located at East Campus 1 or alternatively, virtual meeting options exist. If you require parking, please ensure that your vehicle information has been provided at the HR Reception area.
  • Your pension election will be required at this time, and all necessary forms will need to be completed. We recommend that if you have a spouse, that he/she attends this appointment. You will need to bring a “void” cheque and proof of age for both you and your spouse (if applicable). This should be a government issued photo identification such as a passport or driver’s license.
  • Final pension figures cannot be prepared until approximately one month prior to your retirement date; however, you can obtain an estimate from myPENSIONinfo.
     
• Speak with your department about last day procedures
  • You may need to hand in equipment, keys etc. Parking keys should be returned to Parking Services.
     
• Apply for government benefits
  • If you plan to commence your Canada Pension Plan (as early as age 60) and Old Age Security (as early as age 65) government benefits at retirement, you need to apply for these benefits to commence. We recommend that you apply approximately 6 months in advance of your retirement date.

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:

• Single life pension with a 5 or 15 year guarantee, or no guarantee

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.

• Joint and survivor pension

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:

• pension earned as of December 31, 2013 will be indexed at 100% of consumer price index (CPI) to a maximum of 5%,
• pension benefit earned as of date of retirement less the pension benefit earned as of December 31, 2013 will be indexed at 75% of CPI to a maximum of 5%.

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.