The University of Waterloo’s registered pension plan (RPP) and University Pension Plan (UPP) both offer a defined benefit pension plan to members. They use different governance models, funding approaches and benefit features. Below is an overview of these key differences. Note that this section provides an overview of the two plans but does not cover every plan detail. Plan terms provide complete information regarding the specifics of each plan.
A glossary of pension terminology has been included for your convenience. You can also refer to the frequently asked questions for more information.
Plan type and governance
The current Waterloo registered pension plan (RPP) and University Pension Plan (UPP) are both defined benefit plans, which provide retirement income paid monthly for life based on an individual’s earnings and service, but they differ in how they are structured and managed.
|
Feature |
Current Waterloo RPP |
UPP |
|---|---|---|
|
Plan type |
A single employer pension plan (SEPP) |
A jointly sponsored pension plan (JSPP) |
|
Governance |
The University (employer) manages the plan with oversight by relevant volunteer committees (e.g., Pension and Benefits Committee, Pension Investment Committee) |
Joint governance model where employers and employees have equal sponsor representation in decisions about the plan’s terms and conditions. |
|
Funding risk |
Primarily employer-backed |
Shared between UPP participating employers and members * |
|
Benefit accrual |
UWaterloo formula set out in the pension text |
UPP standardized formula across universities and other participating employers |
|
Participation |
Voluntary until the age of 35, after which it becomes mandatory for all regular full-time and regular part-time employees. |
Mandatory for all continuous** full-time employees. Optional for part-time employees.*** |
* Individual universities retain responsibility for funding any deficits on pre-conversion benefits for a period of time after joining UPP.
** Definition of Continuous: This applies to full-time continuing employees and those in full-time term or contract appointments that exceed one year.
*** Part-time employees can choose to elect to become a member of UPP should they meet specific criteria to join.
Contributions
Both the Waterloo pension plan (RPP) and University Pension Plan (UPP) require mandatory contributions, but they use different contribution structures that reflect their underlying design and governance models.
|
Feature |
Current Waterloo RPP |
UPP |
|---|---|---|
|
Contribution |
7.8% of annual pensionable earnings up to the year’s maximum pensionable earnings (YMPE), plus 11.2% of annual pensionable earnings above the year’s maximum pensionable earnings (YMPE). |
9.2% of annual pensionable earnings up to the year’s additional maximum pensionable earnings (YAMPE), plus 11.5% of annual pensionable earnings above the year’s additional maximum pensionable earnings (YAMPE). |
|
Earning calculation |
Pension is based on the average of your highest 60 consecutive months of pay. |
Pension is based on the average of your highest 48 months of pay, which do not need to be consecutive. |
|
Benefit accrual rate |
1.4% of average earnings up to the average YMPE 2% of average earnings above the average YMPE |
1.6% of average earnings up to the average YAMPE 2% of average earnings above the average YAMPE |
Under UPP, members contribute a higher percentage of earnings than under the Waterloo RPP. However, if you retire at age 65, all eligible University of Waterloo employees would be expected to receive a higher pension under UPP compared to the Waterloo RPP, based on the UPP calculation of average earnings, and the higher benefit accrual rate.*
UPP selects your 48 best months of earnings across your entire career, rather than your best 60 months (five years) in a row. Because the period is shorter and more flexible, this typically results in higher (and never lower) average earnings used to calculate your pension. Because UPP uses higher average earnings overall, in addition to a higher benefit rate, this will result in a higher overall pension from the UPP, unless your pension is restricted by the Income Tax Act maximum (in which case there would be no difference).
| UPP’s pension formula: | ||||||
|---|---|---|---|---|---|---|
|
Highest average earnings below the average YAMPE x 1.6% |
+ |
Highest average earnings above the average YAMPE x 2.0% |
x |
Years of pensionable service |
= |
Annual UPP pension |
Your individual contributions and pension amount are based on several factors. Contributions are set percentages of your salary, while pension amounts depend on salary, years of pensionable service, and retirement age. Because these factors differ from person to person, the exact impact of joining UPP will vary for each member. More detailed member scenarios are being developed and will be shared to show what this would look like.
* Assuming the same earnings and service. Pension benefits are subject to limits under the Income Tax Act (ITA).
Post retirement indexation
Pension indexation is an annual adjustment to retirement benefits, often referred to as inflation protection or cost-of-living adjustment (COLA). Any increases to pension payments are based on the terms of the particular pension plan. Both the Waterloo RPP and UPP offer inflation protection for pensions in pay, as detailed below.
|
Feature |
Current Waterloo RPP |
UPP |
|---|---|---|
|
Indexation guarantee |
Guaranteed each year. |
Increases are conditional and not guaranteed. |
|
Adjustment rate and cap |
Adjustment is 75% of the increase in Consumer price index (CPI), up to a maximum 3.75% annual increase. Pensions accrued prior to January 1, 2014, are indexed at 100% of the CPI, subject up to a maximum 5% increase in any calendar year. |
Target adjustment is 75% of the increase to CPI, with no maximum limit on annual increases. |
|
Other |
When the calculation result exceeds the limit (3.75% or 5.0% as described above), the Pension & Benefits Committee will determine whether an adjustment in excess of the limit will be included in the COLA calculation, taking into consideration the fund's ability to afford the cost. Any increase over the maximum, if not granted, is carried forward to a future year. In addition to post-retirement indexation, benefits earned may be subject to an increase in the deferral period, between termination and retirement in certain situations. |
Any increase will be determined by UPP’s Joint Sponsors. Increases are granted each year at 75% of the increase in CPI but may differ based on the Plan’s Funding Policy and overall financial health. Once indexation is granted, increases are permanent and pensions in pay never decrease. |
Early retirement
Both the Waterloo RPP and UPP offer early retirement options. Under both plans, members can retire and start their pension as early as 55, with a reduction. The impact of early retirement reductions will vary based on when you choose to start your pension and on your service with the University.
|
Feature |
Current Waterloo RPP |
UPP |
|---|---|---|
|
Normal retirement date |
65 |
65 |
|
Early retirement |
You can begin to take an unreduced pension at age 62. You may retire as early as 55, at a reduction of 6% per year from age 62. |
You can begin to take an unreduced pension at age 60 if your age plus your years of eligibility service (pre and post conversion service combined) equals at least 80 points. You may retire as early as 55 with a reduction of 5% per year from age 65 |
Survivor benefits
Both Waterloo’s RPP and UPP provide pension options that can help protect a spouse after a member passes away.
If you are single at retirement, both plans offer the same level of protection: a lifetime pension for the member with a 10-year guarantee. If a member passes away within 10 years of retirement, the balance of payments will be made to their beneficiaries or estate.
If you have an eligible spouse at retirement, pension legislation requires a minimum 60% lifetime survivor pension for your spouse, unless your spouse waives that right. Members in both plans may also elect higher survivor protection options, such as 80% or 100% of the member’s pension continuing to the spouse.
Providing a higher survivor benefit results in a reduction to your pension amount to reflect the additional lifetime protection for your spouse. This adjustment varies depending on the survivor option selected and the plan’s standard pension form.
The plans differ in how this spousal survivor protection is built into the standard pension form:
- Under Waterloo’s RPP, the standard form of benefit includes a lifetime pension for the member with a 10-year guaranteed period. An adjustment is applied to provide a lifetime survivor benefit to a spouse (such as 50%, 60% or 100%) or a different guarantee period (such as 5 years or 15 years).
- Under UPP, the standard form of benefit includes a lifetime pension for the member with a built-in 50% lifetime survivor pension for a spouse at no reduction to the member’s pension. Adjustments are made when members elect different optional pension forms.