Who is covered by the Pensions
Division?
The
Pension Benefits Act, 1992 of Saskatchewan applies to all Saskatchewan members of
employer-sponsored pension plans, no matter where the plan is registered. However, there
are some important exceptions.
Plans not covered by the Act include:
- Employees profit sharing plans, deferred profit sharing
plans, retiring allowances or ordinary (not locked-in) registered retirement savings
plans.
- Federally-regulated pension plans, for example airlines,
railways, grain handlers, radio broadcasting stations and banks.
- Pension plans for federal government employees, including
the RCMP and armed forces.
- Some pension plans created by legislation of the Government
of Saskatchewan for its own employees.
What are my options if I quit or am fired?
Your options depend on your personal circumstances at the
date you terminate employment.
Vesting means that you have an unconditional entitlement
under the plan to receive a pension as a result of satisfying age or service requirements.
Saskatchewan legislation states the maximum period that members must work before becoming
vested. For benefits earned before January 1, 1994 you are vested if your age plus
continuous service or membership with the plan totals 45 years or more, with a minimum of
1 year of continuous service or membership. Benefits earned after January 1, 1994, are
vested when you have completed two years of continuous employment. Some plan sponsors
allow members to vest earlier than required by legislation. You must satisfy the vesting
rule at the date of your termination of membership
If you are not vested when you terminate, you will not
receive a pension from the plan. However, if you contributed to the plan, you will receive
a refund of those contributions together with interest.
If you are vested but not yet eligible to receive a pension
from your plan, you have the right to transfer an amount equal to the value of your
pension from the plan to a locked-in retirement account (LIRA). A LIRA is better known as
a locked-in RRSP. "Locked in" means that the money in the LIRA cannot be
withdrawn or surrendered. It must be used to provide you with a pension.
If you are vested and eligible to start your pension, the
plan does not have to allow you to transfer money out. The plan could require you to
receive a pension directly from the plan.
What are my options on retirement?
You are eligible to receive a pension when you reach the
normal retirement date specified by your pension plan.
However, you may retire any time you are within 10 years of
the normal retirement date. For example, if your plan has a normal retirement date of 65
years of age, you have the right to retire and begin to receive a pension at any time
after reaching age 55.
By selecting an early retirement option you may reduce the
amount of pension you will receive.
If you have transferred money from your plan to a LIRA,
then your pension can commence at the earliest of:
- age 55; or
- an early retirement age provided by the plan where the money
originated
A pension is a life annuity. If you have a spouse, pension
legislation requires that your pension be offered in a "joint and survivor"
form. This provides your surviving spouse with a lifetime pension of at least 60% of the
pension that was being paid to you. The amount of the pension payable to you at retirement
may be reduced to ensure that continuing payments can be made throughout your lifetime and
your spouse's lifetime.
You may receive a pension that does not offer this survivor
benefit if your spouse signs the waiver prescribed by The Pension Benefits Act,
1992, (Form 3 - Spouse's Waiver of 60%
Post-Retirement Survivor Benefit) prior to the commencement of your
pension. Therefore, your spouse must sign a waiver prior to the purchase of a single life
annuity or an annuity with a survivor benefit of less than 60%.
As an alternative, you may also transfer your pension money
to a registered retirement income fund (RRIF) that meets the requirements of Section 29.1
of The Pension Benefits Regulations, 1993. Your spouse must sign the
consent form (Form 1 - Spouse's Consent to Transfer to a
Registered Retirement Income Fund Contract) prescribed by the Regulations
before you can make the transfer.
You must designate your spouse as beneficiary of a RRIF.
Your spouse may waive his or her status as beneficiary by signing the waiver
form (Form 2 - Spouse's Waiver of Designated Beneficiary Status)
prescribed by The Pension Benefits Regulations, 1993.
If you are a member or former
member of a defined contribution plan that offers a Variable
Benefit from the plan, at retirement you may also establish a
Variable Benefit Account. A Variable Benefit is similar in
nature to the RRIF. Your spouse must sign a consent form (Form
2.01 - Spouse's Consent to Transfer to a Variable Benefit Account)
prescribed by the Regulations before you can establish a
Variable Benefit Account. In addition, your spouse must
waive entitlement to the 60% survivor benefit provided by the Act
by signing a waiver form (Form 3 -
Spouse's Waiver of 60% Post-Retirement Survivor Benefit).
You must designate your spouse as
beneficiary of your Variable Benefit Account. Your spouse
may waive his or her status as beneficiary by signing the wavier
form (Form 2.02 - Spouse's
Waiver of Designated Beneficiary Status Under a Variable Benefit
Account).
Please refer to our bulletin Retirement Options for further details
concerning your options at retirement.
Are there are any exceptions to the locking-in rules?
If pension money is locked-in, funds cannot be taken out of
the pension plan as a lump sum cash payment. Locked-in money can only be used to provide
you and your spouse with retirement income.
No one has the authority to grant an exception to the
locking-in rules regardless of the circumstances. There are only two exceptions to the
locking-in rules:
No one has the authority to grant an exception to the
locking-in rules regardless of the circumstances. The only two exceptions to the
locking-in rules are:
- A pension plan may provide for the payment of a pension over a fixed
term or as a lump sum if you have a considerably shortened life expectancy. Your condition must be
certified by a duly qualified medical practitioner who has been approved by the plan
administrator. Your administrator is responsible for
applying this provision.
- A pension plan may make a payment in lieu of a pension if your
pension is considered to be too small to administer on a practical basis. Your pension is
too small if:
- the commuted value, a lump sum payable today equal to a
future series of payments, of your pension under a
defined benefit provision or the total value of your defined
contribution account does not exceed
20% of the Year’s Maximum Pensionable Earnings (YMPE); or
- your annual pension under a
defined benefit provision does not exceed
4% of the YMPE.
The YMPE is the maximum amount of annual earnings from
employment on which Canada Pension Plan contributions (deductions) and benefits are
calculated. The federal government adjusts the YMPE every year according to a formula
based on average wage levels in Canada.
Are pension assets divided on spousal relationship
breakdown?
A division can occur only on the breakdown of a spousal
relationship and in accordance with a court order or interspousal agreement made pursuant
to The Family Property Act.
A division cannot occur if there has not been a breakdown in a spousal relationship. The
pension plan administrator cannot act on any other direction than that given by an order
or agreement.
The division of pension benefits is not mandatory. The
couple may prefer, or the courts may order, a division of family property in such a manner
that the member's or former member's pension benefits remain intact.
The member must maintain a prescribed minimum interest in
the plan so as to not unduly change the employee-employer relationship. A division of
pension benefits must not reduce the commuted value of the member's benefits to less than
50% of the commuted value of the member's benefits prior to the division.
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