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Leaving your job

All CAAT Pension Plan members are entitled to a pension at retirement. If you terminate your employment with a CAAT Plan employer, the CAAT Plan termination options provide both flexibility and security so you can make the best choices for your retirement income.

When you terminate before age 65, your membership is automatically extended for 24 months from the date you last made contributions to the Plan. During the 24-month membership extension, you have a number of options for your pension, and at the end of the 24-month period, you gain additional options.

During the 24-month membership extension

During the 24 months, you have options which will help you build your pension throughout your career. If you begin working at another CAAT employer, you resume contributing and earning a pension. You also have the option to transfer to another employer's pension plan.

Begin working at another CAAT employer

If you begin working for another employer that participates in the CAAT Plan, you are required to resume contributing to the Plan as soon as your employment starts. Be sure to notify your new employer that you are a member of the CAAT Pension Plan so that appropriate member and employer contributions can begin, and you can resume earning a pension immediately.

Transfer to another employer’s pension plan

If you begin working with another employer that has a Canadian registered pension plan, you can transfer your CAAT Plan pension to your new employer’s plan, providing that plan will accept the transfer. You can choose this option at any time during the 24-month extension provided you have not started your pension and are under age 65.

After the 24-month membership extension

At the end of the 24-month membership extension, the following options are available, in addition to the portability options above you have the option to choose a secure, lifetime pension from the CAAT Plan, or a commuted value transfer.

Choose a lifetime pension from the CAAT Plan

You can keep your pension in the CAAT Plan, and receive lifetime income in retirement. This is called a deferred pension. Your deferred pension is the pension you earned up to the date you terminated your employment plus more. During the 24-month membership extension, it receives AIW increases, and after that, inflation protection increases, even before you start collecting your pension. Not only that, but you’ll also have all the other advantages of a lifetime pension, such as survivor benefits for your spouse. Your pension remains in a secure, fully funded pension plan, ready for you when you retire.

It doesn’t matter how far you are from retirement, your pension will be waiting for you when you’re ready to collect it.

Deferred pensions offer flexibility

You can start your deferred pension at age 65, or as early as age 50. If you start before age 65, your pension will be reduced by 5% per year for each year you are from age 65. This permanent reduction to your payment reflects the fact that you will receive it longer.

Commuted value transfer

You can choose to transfer the commuted value of your benefit out of the Plan. The commuted value is a lump-sum payment of the ‘present value’ of a member’s earned pension. In other words, it is the amount of money that would have to be invested today, based on current interest rates, to be equivalent in today’s dollars to the member’s future pension stream. Commuted value assumptions and calculation methodology are prescribed by legislation.

You must be under age 50 to choose the commuted value option.

The commuted value is calculated at the end of the 24-month extension using the interest rates in effect at that time. You have six months from the end of your 24-month extension of membership in which to choose the commuted value, after which time, the option is not available.

If you choose to take the commuted value out of the Plan, you will have to transfer the funds into a locked-in retirement account. The funds must remain locked-in and can only be used to provide retirement income. For information about the types of locked-in retirement accounts available to you, we suggest you seek independent advice from a financial advisor.

In addition, you cannot withdraw money from a locked-in retirement account before age 55, and all funds must be withdrawn or converted to an annuity or a Life Income Fund by age 71.

If your pension benefits are subject to federal jurisdiction, your spouse must provide consent prior to a commuted value transfer, in accordance with the applicable legislation.

If you opt to transfer your commuted value out of the Plan, you will receive no further benefits from the CAAT Plan. You will be entirely responsible for subsequent investment returns, including the management fees and risks associated with managing your retirement income. If your investments do not perform well you may end up with a retirement fund that is smaller than what you had when you left the Plan. There is an additional risk of outliving your savings.

Limits on commuted values

The Income Tax Act (ITA) places a limit on the amount of commuted value that you can transfer directly to a locked-in RRSP. If you choose the commuted value option and the ITA limit applies, you can take the excess in a lump sum which is taxed at your current marginal tax rate. If the withholding tax is too low, you will be assessed additional tax payments when you file your income tax for the year of the transfer.

Deferred pension vs commuted value - it's your choice

Before making the choice between a lifetime of pension payments and a one-time commuted value payment, it’s important to take into consideration all the factors that affect your retirement.

A deferred pension is the ideal option for a member who wants the security of a pension that’s backed by a well-governed, professionally-managed defined benefit pension plan.

It doesn’t matter how far you are from retirement, your pension will be waiting for you when you’re ready to collect it.

Your deferred pension offers lifelong benefits before and after you retire:

  • Start your pension at a time that’s right for you - there’s no need to follow the markets or worry about the impact the economy will have on your retirement date. Your pension amount is guaranteed regardless of the markets, interest rates, or other external factors.
  • You can collect a reduced pension starting at age 50.
  • Your deferred pension starts receiving inflation protection increases (when they apply) to partially offset the impact of inflation even before you start your pension.
  • You retain the flexibility to transfer your pension to another employer’s pension plan in the future (if the other employer permit transfers).
  • At retirement, you’ll receive a steady and reliable stream of monthly pension payments, for life.
  • You can’t outlive your pension – you’ll receive your monthly payments as long as you live.
  • Survivor benefits are available to your survivors whether you die before retirement or after you start collecting your deferred pension. 

When you forfeit the deferred pension in favour of the commuted value you also give up valuable other benefits.

The commuted value does not include:

  • The right to a guaranteed pension, paid for the rest of your life, including the option to start receiving that pension as early as age 50 (with a reduction).
  • A lifetime pension for your surviving eligible spouse.
  • Future inflation protection increases to help protect the purchasing power of your pension.
  • The flexibility to transfer your pension directly from the CAAT Plan to another employer’s pension plan in the future.

If you prefer a secure, lifetime pension, no action is required

Your pension remains in the CAAT Pension Plan, available for you to start at age 65 (or as early as age 50, with a reduction).

The choice between a commuted value transfer and a deferred pension is an important one, with a variety of risks and benefits to consider. 

If your jurisdiction of employment is Quebec you may have other options available. Contact the Plan for more information if required.

Securely transmit your documents to CAAT

Use the CAAT Pension Plan’s Secure Document Online Courier, "S-Doc," to share files such as signed Option Documents securely with the CAAT Pension Plan while protecting your personal and confidential information. 

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Questions? Contact Us

The CAAT Plan's member services team are available to answer any questions you may have.