Employer Q&A Corner

CAAT strongly encourages employers to submit Pension Applications up to three months in advance, to ensure members receive their first pension payment on their desired pension start date. This gives CAAT enough time to review each application and process the calculation, especially for popular retirement dates (e.g., June 30). It also gives the member sufficient time to review their Retirement Option package and make an election.

Given the timing, we recognize that the member’s exact earnings will not be available up to their last day worked. 

• Employers with DBprime and DBplus: Estimate the member’s earnings up to the retirement date. When the member’s actual final earnings are known, submit a revised Pension Application, checking the box “Data has been revised” and indicating the revision date.
• Employers with DBplus only: If you use payroll-based reporting, include the earnings up to the date that the application is submitted. When the final payroll data is processed after the retirement date, a final “true-up” calculation will be done to revise the member’s pension, if applicable.

Pension revisions have thresholds for recalculations:

• DBprime: The pension will be re-calculated only if the reported earnings have changed by more than $150 or if the service has changed by more than two working days.
• DBplus: The pension will be re-calculated only if the total of employer and member contributions combined has changed by $140 or more.

The answer varies by plan design:

DBplus: Vacation pay is considered pensionable earnings. Contributions should be deducted unless your Participation Agreement explicitly excludes it. We encourage all DBplus employers to review their Participation Agreement or contact their Pension Analyst if they have any questions.

DBprime: Full-time members are subject to the following conditions:

• Pensionable vacation pay:
  • If a member takes paid vacation time prior to termination or retirement, the payment received would be pensionable and the member would accrue service in respect of this time. 
  • If a member receives a payment in lieu of vacation time accrued in the year of termination or retirement, the member can choose to have this payment included in pensionable earnings and make contributions on such amount. 
• Non-pensionable vacation pay:
  • If a member receives a payment in lieu of unused vacation time accrued in the previous year, this pay is not pensionable and contributions are not deducted.
  • If a member dies and has accrued vacation pay owing, this pay is not pensionable and contributions are not deducted. 

No.

Enrollment

Depending on an employer’s Participation Agreement and applicable legislation, membership in the CAAT Pension Plan may be mandatory or optional.

If enrolment is mandatory for a particular class of employee, then the employee is required to enrol as soon as they meet the criteria for membership (e.g., the employer may have set a waiting period).

If enrolment is optional for a particular class of employee, then the employee may choose to enrol or decline enrolment. In most cases (subject to the terms of the employer’s Participation Agreement) if an employee for whom enrolment is optional declines to enrol when first eligible, they may choose to enrol at a future date if they wish. Their enrolment will not be retroactive to the date they were first eligible.

Stopping contributions

In accordance with the Plan Text, once a member has enrolled, they must continue to contribute for as long as they are employed and receiving pensionable earnings.

The exception would be members on specific leaves who, in accordance with the Plan Text, terms of a Participation Agreement, and applicable legislation, may have the option to contribute during these periods.

Access CAAT benefits

CAAT members may only access their pension upon termination of their membership. In accordance with pension standards legislation and the Plan Text, active members who are still employed by their CAAT employer cannot access their pension.

The only exception is in cases where the member has a shortened life expectancy.

Here is how to include retroactive pay in your payroll-based reporting (PBR) files:

• First, ensure the amount qualifies as pensionable earnings. If you are unsure about how to confirm this, contact your Pension Analyst.
• If the amount is pensionable, include the retroactive earnings in the year the amount is actually paid.^*
• The pension adjustment (PA) for the year of payment should also reflect these additional earnings.
• If your contribution rates vary over time, calculate the contributions based on the contribution rates in effect at the time the retroactive payment was made.

^*Since the DBplus pension formula uses the combined member and employer contributions, it is not important for retroactive earnings to be recorded in the year to which the earnings relate.

Please follow this process unless your Participation Agreement and/or MOA with the Plan indicates otherwise.

Members have a few options for obtaining a pension estimate:

The best and fastest method is the pension estimator available in the member portal, My Pension. My Pension provides access to the member’s most recent data, so the results are available immediately.

For employers that work with an administration partner, estimators are available on the CAAT website. See Estimate your pension. To use these estimators, members enter pension data from their last annual member statement to attain their total pension benefit accrual which includes their past plan and DBplus.

Members who are looking for their accrued pension can always refer to their most recent Annual Pension Statement. Note that a statement is always based on data at the most recent year-end, so the amount will not reflect any pension they have earned since that year-end date.

Following a new hire, there is a 31-day grace period for enrolment. If the new hire returns their enrolment application within 31 days following being hired, their start date is the date of hire.

If they return their application after 31 days, they should be enrolled as of the beginning of the next payroll cycle. The employer can backdate the enrolment date to the beginning of the current pay period, if the employer and the enrolling member both agree to do so.

Contributions must start from the date of membership on earnings earned after that date.

If the delay in enrolment processing was caused by the employer, retroactive contributions are to be made by both the employee and the employer.

There are a few rules in tax legislation that impact CAAT Pension Plan eligibility for rehired retired members. First, a member cannot receive a pension and continue to earn additional pension at the same time from the same pension plan. Second, a member must start their pension no later than the end of the year in which they reach age 71. With this in mind, to determine eligibility for a rehired retiree, ask these three questions:

#1: Is the date of rehire after November 30th of the year the member turns 71?

• If yes, the retired member is no longer eligible to contribute to the Plan. The retiree must continue receiving their pension, even if they resume work.

#2: Is the rehired retiree under age 65 and hired in a position eligible for DBprime participation?

• If yes, the member’s pension must be suspended and they must begin contributing again to the Plan.

#3: Did you say “no” to questions 1 and 2 above?

If the answer to questions 1 and 2 was no, then the employee has a choice. They can either

• suspend their pension payments and start contributing to the Plan again,* or
• continue receiving their pension and not contribute to the Plan.

^* Members considering suspending their pension should contact the Plan to understand the comparison between the benefit of rejoining the Plan and the benefit from their existing pension. CAAT also encourages members to seek independent financial advice.

Contact your employer PA if you have any questions on the above and want more information.

Currently CPP incorporates an earnings ceiling called the year's maximum pensionable earnings (YMPE). On January 1, 2024, CPP will introduce a second earnings ceiling known as the year's additional maximum pensionable earnings (YAMPE). Employees who have income above the first earnings ceiling will contribute to CPP an additional percentage of their employment income above the first earnings ceiling up to the second earnings ceiling. This additional CPP contribution is part of the CPP enhancement known as "second CPP contributions."

The CPP changes will not impact the CAAT Pension Plan contribution formula for DBprime. The formula will continue to use the first earnings ceiling, the YMPE. You can find the YMPE Read this if: you are an employer with members in DBplus and you report data using Payroll Based Reporting (PBR) on the Canada Revenue Agency's website.

DBplus does not use the YMPE to determine contributions, so contributions to DBplus will continue to be based on eligible earnings as defined by the Plan, subject to any Participation Agreement, Memorandum of Agreement and/or merger agreement that a participating employer has with the Plan.

CAAT wants to ensure that part-time and contract employees are aware of the valuable defined benefit pension that’s available to them. You can direct your employees to the Enrolment made easy section of our website, which gives them an overview of what they can expect if and when they join.

We'd love to help you keep your employees informed. CAAT's mission to expand pension coverage to more Canadians absolutely includes your part-time and contract employees. So, please reach out directly to your employer Pension Analyst to get that conversation started and to ask any other questions you may have.