Helping you understand your pension
Get familiar with some frequently used words in the pension world.
What does that word mean?
Have you ever wondered what that pension lingo meant or how it applied to your pension plan? We understand it may be confusing – and we’re here to help!
We’ve taken some of the most common words when it comes to explaining pensions and broken them down into simple language below.
Visit the linked pages found in the definitions below for more information on the term.
Detailed legal definitions for some of these words can be found in the Plan Text, which can be accessed at your employer’s Human Resources department or downloaded from www.caatpension.ca. If the information here differs from the Plan Text, the Plan Text will govern.
Annual Statement: as a member of the CAAT Pension Plan, you receive an annual statement with information about your pension. It summarizes how much pension you earned at the end of the previous year and how your pension has increased since your previous statement.
Canadian Pension Plan (CPP): is a federal government retirement program that provides you with a monthly taxable payment to help supplement your income in retirement. This payment is made to CPP eligible individuals who are at least 60 years of age and contributed to the CPP during their employment.
Contributions: the amount of money deducted from your paycheque that goes towards building your pension. Your employer also makes contributions, increasing your investment in your future.
Contribution Rate: is the percentage of your eligible earnings you contribute to building your CAAT pension.
Commuted Value: is the lump sum dollar value of the pension you have earned in a pension plan, expressed in today’s dollars.
Deferred pension: is a pension you delay collecting until you’re ready for retirement. If you terminate your employment before you reach your normal retirement date (age 65), you may have the opportunity to keep your pension with CAAT and start collecting it later. You can start collecting your deferred pension anytime after you become retirement eligible, or as late as age 65.
Defined Benefit Pension: a type of pension plan – like CAAT’s! – that provides you with a predictable retirement income that you receive each month for life. The pension is calculated using a formula, so you know how much you’ll receive before you retire.
Designated Beneficiary: is any individual you choose to receive any applicable death benefits if you don’t have an eligible spouse or eligible children when you die.
Eligible retirement savings vehicles: Canadian tax-sheltered registered retirement accounts or registered pension plans which funds can be transferred to or from a GROWTHplus Investment Account. Examples of non-locked-in vehicles include registered retirement income funds (RRIF) and RRSPs. Examples of locked-in vehicles include locked-in retirement accounts (LIRA), life income funds (LIF), and commuted value transfers from another defined benefit pension plan.
Enrolment: is the process of becoming a member of the CAAT Pension Plan.
GROWTHplus administration fee: An administration fee, designed to allow the Plan to recover administration costs associated with providing and maintaining GROWTHplus, will be applied to the return that your account earns. The administration fee is currently set at 0.3%. It is equivalent to $3 annually for every $1,000 you have in GROWTHplus. The GROWTHplus Administration Fee may change from time to time, but no more often than annually.
GROWTHplus eligible spouse: Your spouse is the person to whom you are legally married or in a common-law relationship, as defined by your jurisdiction of employment. CAAT Pension Plan considers your spouse to be the eligible spouse for the GROWTHplus survivor benefit if they meet the definition of spouse in your jurisdiction of employment at your time of death, and they have not provided a valid waiver of the GROWTHplus survivor benefits. You can find more information about the differences between jurisdictions on our website.
GROWTHplus Investment Account (GROWTHplus): GROWTHplus is an optional savings account for you to grow your taxsheltered retirement savings and benefit from CAAT’s investment returns. With GROWTHplus, you can grow your savings together with the secure defined benefit (DB) pension you have with CAAT. GROWTHplus is in addition to your secure lifetime pension paid by CAAT. It does not replace or change the pension you earn or receive today.
Joint governance model: is a pension plan administration model (and one that CAAT uses!) where both members and employers equally share the risks and responsibilities of the plan.
Locked-in funds: Funds that are transferred from a locked-in registered retirement savings vehicle remain locked-in. Locked-in funds that were originally earned in a registered pension plan are intended to be used as income in retirement. They are subject to pension locking-in rules based on your jurisdiction of employment in the CAAT Plan.
Modern defined benefit pension: a defined benefit pension, like CAAT’s, which adapts to a variety of workplace needs. It has a joint governance structure and a strong funding policy.
My Pension: CAAT’s secure portal for you to view and manage information about your pension including things like your annual statements, your personal information, confidential documents and more.
Non-locked-in funds: Funds that are transferred from a non-locked-in registered retirement savings vehicle remain non-locked-in.
Normal retirement date: is the age at which all CAAT members become eligible to retire with an unreduced pension. Your Normal Retirement Date is the last day of the month in which you celebrate your 65th birthday.
Old Age Security (OAS): is a monthly payment from the federal government to Canadians aged 65 and older who meet eligibility requirements. It's there to give you a bit of extra income during your retirement years. If your net income in the previous year is above the annual threshold set by the government, your OAS benefits could be reduced as a result of the OAS recovery tax (usually referred to as a “clawback”).
Pension Estimate: A projection of how much your pension could be if you continue to work with a CAAT participating employer until you retire. It’s based on a lot of assumptions about your future e.g. how much you will earn from your employer. It’s to help you plan, and you can estimate your pension anytime on My Pension.
Pension: A pension is like a paycheque that you get when you retire. Your CAAT pension is paid every month after you retire, for the rest of your life.
Pension or Service Purchase: is a way to fill in gaps for periods of eligible employment that you weren’t contributing to a pension plan. When you make a purchase you “buy back” that gap and that purchase increases the pension you receive in retirement.
Planner: is CAAT’s member blog, packed with helpful articles covering everything from your pension to retirement and beyond. It's your go-to resource for staying informed about the pension you are earning at CAAT.
Retirement: occurs when you leave the workforce and begin collecting your pension. As a CAAT member, you have flexibility to choose when it’s time to retire.
Spouse: is the person who you are legally married to or in a common law relationship with, as defined by your jurisdiction of employment.
Stages of Membership: An individual who participates in the CAAT Pension Plan who is entitled to a payment from the Plan now or will be in the future. There are different stages of membership. You’re an active member if: you’re working and contributing to the CAAT Plan, or you are in the ‘extension of membership’ period. You’re a former member if: you left your job with a CAAT employer and deferred your CAAT pension to be collected at age 65. You’re a retired member if: You are currently collecting your CAAT pension.
Survivor benefits: When you die, CAAT pays a pension to your eligible surviving spouse. Plus, there may be other benefits available. We refer to all of these as survivor benefits.
Year’s Maximum Pensionable Earnings (YMPE): The YMPE is a CPP limit used to calculate your contributions to the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) in any given year. This limit is also used to calculate your DBprime contributions and pension.