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 65th 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.
Once you know you are ready to retire, there are a number of things you need to consider.
- Discuss your intention to retire with your manager
- Once you've decided on a retirement date, inform your manager of your intention to retire and at what date. We recommend a letter in writing. Ensure to allow sufficient notice in order for your manager to recruit for your replacement.
- Indicate to your manager how you would like to use up any outstanding vacation time, including any pro-rated accrual in the year of retirement (you can choose to use up the time prior to the retirement date or be reimbursed in cash, less tax).
- Important note: Ensure that the agreed upon vacation time you will take prior to retirement is booked within Workday.
- Contact the pension area of Human Resources
- This should be done 6 to 8 weeks in advance of your retirement date. Confirm that you have officially notified your department of your intention to retire.
- An appointment for you final sign-off will be booked at this time.
- Resigning in Workday
- You or your manager must then complete the appropriate actions within Workday in place of completing a Notice of Termination form. The business process will inform HR of your intention to retire. Vacation payouts will be automatically calculated based upon the requests completed in Step 1 above. Keep in mind that this needs to be completed prior to the payroll cutoff date for your final pay.
- Sign-off appointment
- Come to Human Resources located at East Campus 1 during your specified appointment time. If you require parking, ensure your vehicle information has been provided.
- Your pension election will be required at this time. Appropriate forms will be completed. We recommend that your spouse attend this meeting.
- You will need to bring along a “void” cheque and proof of age for both you and your spouse (if applicable). This should be government issued photo identification such as a passport or drivers license.
- Final pension figures cannot be prepared until approximately one month prior to the retirement date. You can obtain estimates from myPENSIONinfo.
- Your post retirement benefit entitlement eligibility will be discussed at this meeting as well.
- 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 (age 65) government benefits at retirement, you need to apply for these benefits well in advance of your actual retirement date (approximately 6 months).
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.
Alternate forms of pension at retirement
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 Adjustment (COLA)
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.