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Retirement Services - Alberta Pension Legislation
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Employment Pension Plans Act
Original: January 1, 1967
Reform: January 1, 1987
Year last amended: 2003
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Index
Benefit Splitting
Cash Availability at Termination of Employment
Definition of Spouse
Early Retirement
Eligibility
Employee Excess Contributions
Flexible Pension Plan
Indexing of Pensions
Integration with Governmental Plans
Minimum Employer Contribution – 50% Rule
Minimum Interest Rate on Employee Contributions
Normal Retirement
Options Available on Pre-Retirement Death
Portability at Termination of Employment for a Member Entitled to a Deferred Annuity
Post-Retirement Death Benefits
Postponed Retirement
Pre-Retirement Death Benefits
Sex Discrimination
Vesting and Locking-In
Vesting at Normal Retirement Date
Disclaimer
Benefit Splitting
(Breakdown of Marriage or of Conjugal Relationship)
Benefits may be split in accordance with a Matrimonial Property Order or Agreement under the Matrimonial Property Act
After the split, the member’s residual benefits may not be less than 50% (excluding optional ancillary contributions and additional voluntary contributions)
The non-member spouse’s entitlement is subject to same locking-in rules as those applicable to the member
The plan administrator may change a fee (subject to a prescribed maximum), for division and distribution services.
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Cash Availability at Termination of Employment
Plan must provide for refund of:
- 25% of commuted value of deferred pension (pre-1987 benefits); and must provide for
- Commuted value of pension if annual pension* is less than 4% of YMPE or if commuted value of pension* is less than 20% of YMPE.
Defined Contribution Plan assets as well as LIRA, LIF and LRIF assets may be unlocked at age 65 or older if total value is less than 40% of YMPE.
Spousal consent required, where applicable.
If plan permits, non-residents may transfer to a LIRA and then seek unlocking of pension funds.
*Excluding the refund made in 1) above
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Definition of Spouse
On the date of the member’s retirement or on the day of the member’s death, if earlier, “Spouse” means in relation to another person,
- a person who, at the relevant time, was married to that other person and had not been living separate and apart from that other person for 3 or more consecutive years, or
- if there is no person to whom (1) applies, a person who immediately preceding the relevant time, had lived with that other person in a conjugal relationship
(a) for a continuous period of at least 3 years, or
(b) of some permanence, if there is a child of the relationship by birth or adoption.
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Early Retirement
Within 10 years of normal retirement date (NRD). Phased-in retirement permitted within 10 years of NRD if reduced work hours agreed upon with employer.
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Eligibility
Full-time and part-time employees: 2 years of continuous service and annual earnings of at least 35% of YMPE in each of 2 consecutive calendar years immediately preceding membership.
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Employee Excess Contributions
- Reimbursed
- Used to increase pension or to purchase a deferred life annuity
- Transferred to: another pension plan, an RRSP or a RRIF
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Flexible Pension Plan
Optional ancillary benefits (OABs) permitted include:
- Inflation protection
- Enhanced early retirement benefit
- Enhanced spousal survivor benefit
OACs are not subject to the 50% minimum employer contribution rule. OACs not subject to locking-in. Plan may require forfeiture of unused OACs.
Plan text must explain the ancillary benefits available, the maximum benefits allowable and the risk forfeiture as well as how plan assets are invested and interest applied on OACs.
Interest must be credited on OACs at the fund rate.
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Indexing of Pensions
(Defined Benefit Plans)
No requirement.
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Integration with Governmental Plans
(Defined Benefit Plans)
Reduction on account of the OAS:
Pro-rata formula required (35 years) for years of service before 1987.
Prohibited for years of service after 1986.
Reduction on account of the CPP/QPP:
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Minimum Employer Contribution – 50% Rule
(Defined Benefit Plans)
At least 50% of commuted value of pension benefits accrued from January 1, 1993
Applicable on date Defined Benefit Plan converts to Defined Contribution (i.e., a settlement of excess contributions has to be made at that time).
Not applicable to benefits acquired with optional ancillary contributions.
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Minimum Interest Rate on Employee Contributions
Defined Contribution Plan: Fund rate of return based on market value of investments
Defined Benefit Plan: Fund rate of return or the average yield on personal 5 year term deposits with chartered banks over a recent period not exceeding 12 months.
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Normal Retirement
At the age or date (in relation to a prescribed age) determined by pension plan provisions.
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Options Available on Pre-Retirement Death
Spouse
Not locked-in funds: Cash, RRP, RRSP, RRIF
Locked-in funds: RRP, LIRA, LIF, LRIF, Annuity
Dependent child/grandchild: Cash, Fixed Term annuity to age 18
Other beneficiary: Cash
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Portability at Termination of Employment for a Member Entitled to a Deferred Annuity
Defined benefit plan: more than 10 years before normal retirement date.
Defined contribution plan: at any age.
Options:
- Transfer to: another pension plan, a LIRA
- Purchase of a life annuity contract if the plan so provides.
- If the plan so provides and if at least age 50, transfer to: a LIF, an LRIF.
Transfer out of plan may be required by plan rules if value of benefits is less than 20% of YMPE.
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Pre-Retirement Death Benefits
Defined Benefit Plans: If surviving spouse, pre-1987 member’s contributions with interest + 1986-1999 benefits: the greater of 60% of commuted value of vested benefits and value of member’s contributions with interest. Locked-in if deceased member’s right to a deferred pension was vested and locked-in.
Post-1999 benefits: 100% of commuted value of vested benefits (locked-in if there is a surviving spouse and vested benefits were locked-in), plus value of member’s excess contributions paid after 1986.
Defined Contribution Plan: If surviving spouse, pre-1987 member’s contributions with interest +1987-1999 contributions: 60% of value of vested employer’s contributions with interest and value of member’s contributions with interest. Locked-in if deceased member’s right to a deferred pension was vested and locked-in.
Post-1999 contributions: 100% of value of member and vested employer contributions with interest (locked-in, if there is a surviving spouse and employer contributions were vested and locked-in).
If no surviving spouse, commuted value of vested benefits to the designated beneficiary, or failing that, to the estate (not locked-in).
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Post-Retirement Death Benefits
Joint pension continues at 60% after death of either spouse. Possibility to waive joint pension by spouse within 90 days of pension commencement.
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Postponed Retirement
(At the latest December 31 of the year in which the member reaches age 69)
Membership may continue except if the member is receiving a pension.
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Pre-Retirement Death Benefits
Defined Benefit Plans: If surviving spouse, pre-1987 member’s contributions with interest + 1986-1999 benefits: the greater of 60% of commuted value of vested benefits and value of member’s contributions with interest. Locked-in if deceased member’s right to a deferred pension was vested and locked-in.
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Sex Discrimination
Sex discrimination required - annuity rate based on sex
Sex discrimination prohibited - unisex annuity rate
Sex discrimination allowed - annuity rate based on sex or unisex annuity rate
Years of Service before 1987: discrimination allowed.
Years of Service before 1986: discrimination allowed.
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Vesting and Locking-In
(Excluding voluntary contributions and optional ancillary contributions)
Benefits accrued from 1967 to 1986: age 45 plus 10 years of continuous service.
Benefits accrued from 1987 to 1999: 5 years of continuous service.
Post-1999 benefits: 2 years continuous plan membership.
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Vesting at Normal Retirement Date
Entitlement to a pension vests at normal retirement date with respect to years of membership after 1986, regardless of whether the minimum vesting and locking-in requirements are met.
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Disclaimer
The information contained in this summary applies only to single employer Registered Pension Plans (RPPs). In addition, this information states the minimum rules provided under the pension legislation that governs RPPs. However it does not state the maximum rules under the Income Tax Act (Canada) and its Regulations that also apply to RPPs.
The legislation and the regulations of this jurisdiction prevails over this summary. While every effort has been made to ensure the accuracy of the information, no warranty or guarantee is expressed or implied as to the accuracy, adequacy or completeness of the information, and the CUMIS Life Insurance Company is not responsible for any errors, omissions, or from the results from the use of such information.
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