A B C D E F G H I J K L M N O P Q R S
T U V W X Y Z
ACCRUED PENSION - amount
of pension credited to a plan member according to service, earnings, etc., up to a given
date.
ACTUARY - a professional in the pension
and insurance fields responsible for calculating risks and premiums. In Canada, full
professional recognition requires membership in the Canadian Institute of Actuaries.
ADDITIONAL VOLUNTARY CONTRIBUTIONS -
contributions to a plan made voluntarily by an employee in addition to those contributions
required to be made to attain a pension. Extra benefits may be purchased by additional
contributions but no additional cost is borne by the employer. Additional voluntary
contributions are not locked-in by legislation.
AD HOC ADJUSTMENT - amount added to a
pension after retirement or termination to compensate for increases in the cost of living
on an irregular basis and not as a result of a prior commitment or contract.
ADMINISTRATOR - the person or persons who
administer the pension plan, i.e., who arrange for pension payments, funding of the plan,
etc. For most plans, the employer is responsible for administration (although the employer
may hire a third party to administer the plan on its behalf). Some plans are administered
by a board of trustees or similar body.
ANCILLARY BENEFITS - benefits in addition
to regular pension benefits and survivor benefits, such as bridging benefits and enriched
early retirement benefits.
ANNUITY - periodic payments (usually
monthly) provided by the terms of a contract for the lifetime of an individual (the
annuitant) or the individual and his or her designated beneficiary. An annuity may be a
fixed or varying amount, and may continue to be paid for a period after the annuitant's
death.
ASSET MIX - refers to the proportions of
various types of investments held by a pension fund, usually expressed as a percentage of
total investments held in bonds, stocks, real estate, etc.
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BENEFICIARY - a person who
on the death of a plan member or former member, may become entitled to a benefit under the
plan.
BENEFIT - generally, any form of payment
to which a person may become entitled under the terms of a plan, but often refers
specifically to the pension normally provided by the plan formula.
BENEFIT FORMULA - provision in a pension
plan for calculating a member's defined benefit according to years of service and
earnings, fixed dollar amount, etc.
BEST FIVE-YEAR AVERAGE - a benefit formula
that determines the amount of a member's pension by applying the member's average earnings
during the five years when earnings were highest.
BRIDGING BENEFITS - a temporary benefit
provided to members who retire prior to the age when CPP benefits are normally payable
(age 65) in order to supplement pension income until the CPP benefits are payable.
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CAREER AVERAGE PLAN - a
defined benefit plan that applies the unit of benefit to earnings of the member in each
year of service, and not to the final or final average earnings.
COMMUTED VALUE - the amount of a lump sum
payment payable today estimated to be equal in value to a future series of payments.
CONTINUOUS SERVICE OR MEMBERSHIP OR EMPLOYMENT
- period during which an employee is continuously employed by the same employer or
continuously participates in his or her employer's pension plan, including periods of
temporary absence or suspension or periods of layoff. To be distinguished from credited
service.
CONTRIBUTORY PLAN - a pension plan which
requires the employees to make contributions by payroll deduction in order to qualify for
benefits under the plan.
CREDITED SERVICE - length of service used
in the plan formula to calculate a defined benefit.
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DEFERRED MEMBERS -
terminated employees who are eligible for a deferred vested pension. Considered by
legislation to be former members.
DEFERRED VESTED PENSION - a specified
pension determined at the time of termination of employment or termination of a plan but
not payable until some later date.
DEFINED BENEFIT PLAN - a pension plan that
defines the pension to be provided (based on service, average earnings, etc.) but not the
total contributions. If the plan is contributory, the rate of employee contributions may
be specified, with the employer paying the balance of the cost. To be distinguished from a
defined contribution plan.
DEFINED CONTRIBUTION PLAN - a plan under
which the amount of the employer contribution per plan member and, where applicable, the
amount of the employee contribution is specified in advance and the benefits to be
received by the pensioner is calculated at the date of retirement based on the accumulated
contributions and the return on the investment of the contributions.
DIVISION OF PENSION CREDITS - also known
as "credit splitting", a provision in a pension plan or pension legislation
whereby one spouse on spousal relationship breakdown, may obtain a share of pension
credits earned by the other partner during the spousal relationship.
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ELIGIBILITY REQUIREMENT -
a condition such as length of service that must be met before an employee is permitted or
required to join a pension plan. Term may refer to the eligibility for certain benefits.
EMPLOYEE - means an individual, employed
to do work or to provide a service, who is in receipt of or entitled to remuneration for
the work or service.
EMPLOYER - refers to the person or
organization from whom an employee receives remuneration, and includes any or all of the
employers that are required to contribute to a specified multi-employer pension plan.
EMPLOYMENT PENSION PLAN - a pension plan
offered by an employer or supported by a group of employers for the benefit of employees.
The term includes plans covering employees of governments and the private sector, but does
not include the Canada Pension Plan or other public programs.
ENRICHED EARLY RETIREMENT BENEFITS - a
pension paid on retirement prior to the normal retirement date, which is not reduced to
the extent it should be to fully account for the longer period of time over which the
pension is likely to be paid.
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FINAL PAY PLAN - a term
commonly used for a pension plan in which benefits are based on earnings in a member's
last years of service.
FLAT BENEFIT PLAN - a defined benefit plan
that specifies a dollar amount of pension to be credited for each year of service.
FORMER MEMBER - means a person whose
membership in a plan has terminated and who retains a present or future entitlement to a
benefit pursuant to a plan. A pensioner would be considered a former member, as would a
person who is entitled to a deferred vested pension. However, a person who transferred
pension money to a Locked-in Retirement Account is not a former member because he or she
no longer retains an entitlement under the plan.
FULLY FUNDED - a term describing a plan
which, at a given time, has sufficient assets to provide for all accrued benefits.
FUNDING - systematic monthly payments into
a pension fund which, with investment earnings on these funds, are intended to provide for
benefits as they become payable.
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GUARANTEED ANNUITY - an
annuity which will be paid for the lifetime of a person or for a certain period whichever
is longer, but in any event for a minimum period, e.g., if an annuitant with a five year
guarantee dies after three years, payment will be continued to a beneficiary or the estate
for two years.
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INDEXING - a provision in
a pension plan calling for periodic adjustments to benefits (usually after retirement)
according to a formula based on a recognized index of price or wage levels such as the
Consumer Price Index.
INVESTMENT MANAGERS - plan sponsors
frequently are assisted by investment managers who help them decide how the pension funds
should be invested. These managers are supervised by the plan sponsor.
INVESTMENT RETURN - earnings of a pension
fund including interest, dividends, and capital gains and losses.
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JOINT AND SURVIVOR PENSION OR
ANNUITY - an annuity payable until the death of the retired employee, and
continuing thereafter to the surviving spouse until that person's death. Required to be
provided as an option at time of retirement.
LOCKING IN - legislative requirement that
pension benefits cannot be withdrawn or otherwise forfeited on termination of employment
if the employee is vested.
LOCKED-IN RRSP - see Locked-in Retirement
Account
LOCKED-IN
RETIREMENT ACCOUNT (LIRA) - an RRSP upon which certain contractual conditions
have been placed. The key conditions include:
- money must be locked-in and must be used to provide a
pension;
- non-assignable and exempt from seizure;
- pension payable at age 55 or an earlier date if permitted by
the pension plan from which the money was transferred;
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MEMBER - an employee on
whose behalf an employer is required to make contributions to a pension plan and who has
not terminated his or her membership or commenced his or her pension.
MONEY PURCHASE PLAN - see Defined
Contribution Plan.
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NEGOTIATED COST DEFINED BENEFIT
PLAN - a defined benefit plan in which employer contributions are fixed (usually
by negotiations) and benefits are not guaranteed.
NON-CONTRIBUTORY PLAN - a pension plan in
which all required contributions are made by the employer.
NORMAL RETIREMENT DATE - the date at which
the member becomes entitled to retirement benefits without reduction or increase.
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PENSION - generally any
periodic payment payable for the lifetime of a person who has become entitled to such a
benefit pursuant to the terms of a pension plan.
PENSION BENEFITS ACT, 1992 -
Saskatchewan's legislation regulating employment pension plans.
PENSION PLAN - a plan, scheme or
arrangement organized and administered to provide pensions for members and former members
pursuant to which an employer is required to make contributions.
PLAN SPONSOR - refers to the employer
sponsoring the pension plan for employees.
PORTABILITY - options available to certain
members on termination of employment.
PRESCRIBED RRSP - see Locked-in Retirement
Account. The term "prescribed" means the details surrounding the RRSP are
provided in The Pension Benefits Regulations, 1993.
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REGISTERED RETIREMENT
INCOME FUND (RRIF) - a prescribed retirement arrangement that can be established
with funds locked-in by pension legislation. The key characteristics of the RRIF include:
- the contract must be registered as a retirement income fund
pursuant to the Income Tax Act;
- a spousal consent form must be signed before assets may be
transferred to a RRIF;
- the contract must comply with the requirements of Section
29.1 of The Pension Benefits Regulations, 1993;
- the owner of the contract must be paid an income each year
(except for the first year of the contract);
- the owner determines the amount of income to be paid each
year at the beginning of the year, subject to the minimum withdrawal rules under the
Income Tax Act;
- at any time the owner of the contract may purchase a life
annuity with money in the contract, but the owner is never required to purchase an
annuity;
- the owner determines how the balance in the RRIF is to be
invested.
REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
- a personal retirement savings plan as defined by the Income Tax Act.
RETIREMENT - withdrawal from the active
work force because of age; may also be used in the sense of permanent withdrawal from the
labour force for any reason, including disability.
RETIREMENT INCOME - income from pension
and other sources to which a retired person is entitled. Term may include both private and
public pension payments, income from personal savings, government income supplements and
certain other sources of income.
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SPECIFIED MULTI-EMPLOYER PENSION
PLAN - a plan that is administered for employees of two or more employers and
that is specified by the superintendent of pensions as a specified multi-employer plan.
Generally refers to a plan in which the employee-employer relationship is not well
defined. For example, in some construction trades, workers are employed for a particular
job as opposed to being hired by a particular employer on an indefinite basis.
SPOUSE - refers to:
(i) a person who is married to a member or former member;
or
(ii) if a member or former member is not married, a person
with whom the member or former member is cohabiting as spouses at the relevant time and
who has been cohabiting continuously with the member or former member as his or her spouse
for at least one year prior to the relevant time.
The relevant time means "at the date of death"
with respect to the pre-retirement survivor benefit and "at the date of
retirement" with respect to the post-retirement survivor benefit.
SOLVENCY DEFICIENCY - refers to a
shortfall in a plan's assets relative to its liabilities at a particular point in time
assuming that the plan was terminated at that point.
SOLVENCY RATIO - the ratio of the market
value of the plan's assets to its liabilities as measured on a plan termination basis.
SUBSIDIZED EARLY RETIREMENT BENEFITS - see
enriched early retirement benefits.
SUPERINTENDENT OF PENSIONS - a person
charged with the administration and enforcement of The Pension Benefits Act, 1992.
SURPLUS - if a pension plan's assets
exceed the plan's liabilities, the difference is called a surplus.
SURVIVOR PENSION OR SURVIVOR BENEFIT - a
monthly benefit payable under a pension plan to the surviving spouse of a deceased member
or former member.
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TERMINATION OF MEMBERSHIP OR
EMPLOYMENT - severance of the employment relationship for any reason other than
death and retirement.
TERMINATION OF PLAN - this occurs when a
pension plan ceases to operate. All members are vested and entitled to receive a pension.
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UNFUNDED LIABILITY - any
amount by which the assets of a pension plan are less than its liabilities on a going
concern basis.
UPDATING (BENEFITS) - a term applied to
the occasional review and increase of accrued benefits to reflect rising wage levels where
the plan does not provide for automatic improvements as in final earnings formula.
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VARIABLE BENEFIT
– a retirement option that may be offered by a defined
contribution pension plan that can be established with funds
locked-in by pension legislation. The key characteristics of the
Variable Benefit include:
-
the pension plan
must be registered as a defined contribution pension plan pursuant
to the Income Tax Act;
-
a spousal consent
form must be signed before assets may be transferred to a Variable
Benefit Account;
-
a spousal waiver
form must be signed before assets may be transferred to a Variable
Benefit Account;
-
the plan must
comply with the requirements of Section 29.2 of The Pension
Benefits Regulations, 1993;
-
the pensioner
determines the amount of income to be paid each year at the
beginning of the year, subject to the minimum withdrawal rules
under the Income Tax Act;
-
at any time the
pensioner may purchase a life annuity with money in the Variable
Benefit Account, but the owner is never required to purchase an
annuity;
-
at any time, the
pensioner may transfer the money in the Variable Benefit Account
to a prescribed RRIF, another plan or to a LIRA (provided you are
not yet 71 years of age); and
-
the
pensioner determines how the balance in the Variable Benefit
Account is to be invested.
VESTED BENEFITS (VESTING)
- benefits to which an employee has unconditional entitlement under the plan as a result
of satisfying age or service requirements.
YEAR'S MAXIMUM PENSIONABLE EARNINGS
(YMPE) - term used in the Canada Pension Plan which refers to the earnings from
employment on which CPP contributions and benefits are calculated. YMPE is changed each
year according to a formula based on average wage levels. YMPE is published annually by
Human Resources and Social Development Canada's Income Security Division.
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