Skip to the content

Increase your pension with a purchase

Your defined benefit pension from the CAAT Plan is the cornerstone of your retirement income. It will provide you with a lifetime of monthly pension payments after you retire.

Even though your pension is calculated using a fixed formula, there is a way to increase the amount of pension you receive when you retire; by making a pension purchase.

This page provides an overview of the following:

  • What is a pension purchase?
  • Why make a purchase?
  • Who can make a purchase?
  • How much does a purchase cost?
  • What funds can be used for a purchase?
  • How much additional pension will you receive from a purchase?
  • Types of purchases
  • How to gets started with a purchase
  • Exceptions and restrictions

What is a pension purchase?

A pension purchase is a one-time contribution to DBplus that you can make using eligible funds, in respect of an eligible period of time.

The Plan calculates the amount of pension you would receive as a result of a purchase, using the pension formula and the purchase adjustment factor. 

Why make a purchase?

Purchasing additional pension is an effective way to maximize your retirement income, but there are many other benefits to consider.

Here are five reasons why making a purchase may be right for you:

1. When you make a purchase, you increase the lifetime pension you’ll receive from the CAAT Pension Plan

2. If you purchase pension in respect of a previous pension plan, you’ll be able to consolidate your pension payments, and receive them from one secure and sustainable source when you retire.

3. Making a purchase may even allow you to retire sooner than you had previously planned.

4. Any pension you purchase will continue to grow throughout your membership as it receives AIW enhancement increases.

5. When you retire, your whole pension, including the purchased portion, receives conditional inflation protection and no-cost survivor benefits, making the purchase even more valuable.

Watch the video: Is a pension purchase right for you?

A DBplus pension purchase will increase your secure retirement income. Watch the video to learn if a DBplus pension purchase is right for you.

Who can make a purchase?

As a member of the CAAT Pension Plan, you may be able to make a purchase under one of the following scenarios:

1. In the past, you worked for an employer that does not participate in the CAAT Pension Plan, but that had a Canadian registered pension. You may be able to make a purchase in respect of that membership, as long as the funds are in a registered retirement savings account (such as an RRSP).

2. You are currently a member of DBplus, but did not enrol when you started to work for your current employer (e.g. you worked part time and chose not to enrol).

3. During your membership in DBplus, there was a period of time during which you didn’t make contributions, either due to a leave of absence, or other eligible leave.

Refer to “Types of purchases” below for further details on these pension purchase scenarios.

How much does a purchase cost?

Because purchases are made in respect of specific periods of time, the cost will vary. (Get a no-obligation estimate of the cost of a purchase by using the DBplus Purchase Tool.)

Unlike your regular contributions (where your employer also contributes on your behalf), you are responsible for the entire cost of your purchase (with some exceptions).

Maximum amounts

There are Income Tax Act maximums that apply to the amount you can purchase, which may vary depending on the type of purchase you make. Your purchase amount is limited to:

a) 18% of your T4 earnings for the period you are purchasing, or

b) the amount of funds in your registered retirement savings accounts,

whichever is lower.

If your registered accounts have an amount equal to or more than the calculated purchase amount, you can contribute the entire purchase amount.

Your purchase amount can come from multiple accounts, but if your registered accounts have an amount that is less than the calculated amount, you can only contribute up to the amount available in your registered accounts. 

What funds can be used for a purchase?

In most cases, the funds used for a purchase must come from a registered retirement savings account, such as an RRSP. 

How much additional pension will you receive from a purchase?

The amount of pension you receive as a result of the purchase depends on a “purchase adjustment factor” that is applied to all DBplus pension purchases. The purchase adjustment factor depends on the number of years you are away from normal retirement at the date of the purchase.

  • If you make a purchase when you are more than 25 years from your normal retirement date, the purchase adjustment factor is 100%.
  • If you are less than 25 years from your normal retirement date, the 100% adjustment is decreased by 1.4% per year, calculated on a day-by-day basis, reducing the purchased benefit.

This means the closer you are to your normal retirement age, the less pension your purchase will result in. For example, if you were to make a purchase and you were 20 years from your normal retirement date, the purchase adjustment factor would be 93% (100% - (1.4% x 5 years)).

Only you can decide if a purchase is a good idea for you, and if it’s a cost-effective way to increase your pension. Why not try the DBplus Purchase Tool? Within minutes, you’ll get an estimate of the cost of a purchase, and the impact it will have on your pension. Once you’ve used the tool there is no obligation to make a purchase but you can use the results to decide whether a purchase is right for you.

Types of purchases

Now that you know how purchases work, review the following scenarios to see if you have eligible periods of time that can be purchased.

You can purchase the period of membership with any Canadian registered pension plan as long as the funds have been transferred to a registered retirement savings account, such as an RRSP.

Who contributes: You are responsible for 100% of the purchase cost. Your employer does not contribute on your behalf.

Eligible funds: The funds for the purchase must come from a registered retirement savings account, such as an RRSP. If your previous membership was in a defined benefit plan, you must have transferred the value of that pension into such an account.

Maximum contribution: The maximum amount you can contribute for the purchase is based on 18% of your T4 earnings for the period you are purchasing, or the amount of funds in your registered retirement savings accounts, whichever is lower.

Timing of purchase: The amount of pension you receive is calculated using the purchase adjustment factor based on how close you are to the normal retirement date.

Purchase process: To start the purchase process, visit the DBplus Purchase tool and follow the instructions to get an estimate of the cost and the forms you’ll need to complete.

Exceptions

  • Periods of membership in Group RRSPs and Deferred Profit Sharing Plans are not eligible for purchase in DBplus.
  • If your pension benefit is in a defined benefit pension plan, and still in your previous employer’s pension plan, you must transfer it to a registered retirement savings account before you can make the purchase in the CAAT Plan.
  • You cannot purchase pension earned prior to 1992 with another employer’s pension plan if it was a defined benefit plan.

If you were away from work on an approved leave of absence during which you did not contribute to the Plan, you can make a purchase for this period when you return to work.

The contributions are calculated using your deemed earnings during the leave period, and the contribution rate in effect during the leave.

Who contributes: You are responsible for 100% of the purchase cost. Your employer does not contribute on your behalf.

Eligible funds: The funds for the purchase must come from a registered retirement savings account, such as an RRSP.

Maximum contributions: The maximum amount you can contribute for the purchase is equal to the total member and employer contributions for the period, up to the allowable limits under the Income Tax Act, or the amount of funds in your registered retirement savings accounts, whichever is lower.

Timing of purchase: The purchase adjustment factor depends on the timing of your purchase:

  • If you make the purchase within six months after you return to work: The amount of pension you receive is calculated with a purchase adjustment factor of 100%, no matter how close you are to the normal retirement date (this is the same as having no purchase adjustment factor).
  • If you make the purchase more than six months after you return to work: The amount of pension you receive is calculated using the purchase adjustment factor based on how close you are to your normal retirement date.

Purchase process: To start the purchase process, contact your employer HR department.

Making the purchase during your leave through your employer (if applicable):

If your employer provides Supplementary Unemployment Benefit (SUB) Plan payments, your contributions may be deducted directly from these payments during the leave period. Your pension will continue to grow during your leave.

  • Who contributes: You make the purchase through regular deductions and your employer will make contributions on your behalf.
  • Purchase process: If this situation applies to you, contact your HR department for details.

If you are not entitled to such payments, or do not wish to have contributions deducted from your payments, you can make the purchase when you return to work. The process depends on the timing of your purchase:

Making the purchase within six months after you return to work:

The amount you can purchase is based on your deemed earnings during the period of leave, and the contribution rate in effect during the leave.

  • Who contributes: Both you and your employer contribute towards this type of leave.
  • Eligible funds: You can use cash for this type of purchase.
  • Maximum contributions: The maximum amount you can contribute for the purchase is equal to the total member and employer contributions for the period, up to the allowable limits under the Income Tax Act, or the amount of funds in your registered retirement savings accounts, whichever is lower.
  • Timing of purchase: The amount of pension you receive is calculated with a purchase adjustment factor of 100%, no matter how close you are to the normal retirement date (this is the same as having no purchase adjustment factor).
  • Purchase process: To start the purchase process, contact your employer HR department.

Making the purchase more than six months after you return to work:

  • Who contributes: You are responsible for 100% of the purchase cost. Your employer does not contribute on your behalf.
  • Eligible funds: The funds for the purchase must come from a registered retirement savings account, such as an RRSP.
  • Maximum contributions: The amount you can contribute for the purchase is limited to the calculated maximum, or the amount of funds in your registered retirement savings accounts, whichever is lower.
  • Timing of purchase: The amount of pension you receive is calculated using the purchase adjustment factor based on how close you are to the normal retirement date.
  • Purchase process: To start the purchase process, contact your employer HR department.

Contact your employer’s HR department to learn more about making the types of purchases listed below.

Any time that you:

  • worked for an employer that participates in the CAAT Plan before joining the Plan
  • were a member of the Plan, but terminated before vesting and took a refund of contributions
  • were a member of the CAAT Plan, terminated, and transferred the commuted value out of the Plan
  • had a period of grievance, if you have returned to work
  • had a period of layoff, if you have been recalled.

Any periods of statutory leaves, as defined under the applicable legislation in your jurisdiction of employment. For example, family medical leaves or emergency leaves under the Employment Standards Act (Ontario), which include:

  • Family medical leave
  • Organ donor leave
  • Family caregiver leave
  • Critical illness leave
  • Child death leave
  • Crime-related child disappearance leave
  • Domestic or sexual violence leave
  • Sick leave
  • Family responsibility leave
  • Bereavement leave
  • Emergency leave, declared emergencies
  • Pregnancy leave *
  • Parental leave *

* Note that Pregnancy, adoption or parental leaves are statutory leaves covered under the Employment Standards Act, but they have different purchase processes. Refer below to “Did you take pregnancy, parental or adoption leave resulting from the birth or adoption of a child?” for more information and to find the correct form to get started.

If your jurisdiction of employment is not Ontario, the Employment Standards Act (Ontario) does not apply to you. Contact your employer’s HR to determine if your leave is eligible under the applicable legislation based on your jurisdiction of employment.

How to get started with a purchase

Thinking of making a pension purchase?

Keep in mind that purchases take time. You can choose to make a purchase any time until you leave your job or retire, but the closer you are to your normal retirement date, the less pension you will receive as a result of the purchase, due to changes in the purchase adjustment factor.

If you wish to purchase a leave period or statutory leave, you must contact your employer HR department to get started.

If you wish to purchase a period of employment, start the process by visiting the DBplus Purchase Tool and following these four steps:

Use the DBplus Purchase Tool to get an estimate of the cost and value of a purchase to you and start the purchase process. By entering a few pieces of information about yourself and your previous employment, you’ll get an immediate estimate you can use to decide whether you wish to proceed with the purchase.

After you’ve completed your estimate, you’ll have access to the Purchase Application Form for your employer. (Click “Detailed Explanation” on the Tool to find the form.)

Both you and your employer will complete parts of the form. The information provided on the form is used by the CAAT Plan to calculate the official cost and value of a purchase based on your situation.

You’ll receive an information package showing the maximum you can contribute for the purchase, and the amount of pension your purchase will result in, as well as deadlines to complete the process.

  • The funds for a DBplus purchase must come from a registered retirement savings account such as an RRSP. You are responsible for arranging the transfer, as well as any fees that your financial institution may charge. In most cases, you are responsible for the full cost of any purchase.
  • Once you sign the purchase form, you will have 90 days to make full payment. If the payment is made after 90 days, the amount of pension you will receive will be recalculated with a revised purchase adjustment factor. If you don’t make the purchase within 90 days, you can choose to make it any time while you are a contributing member, but the amount of pension you can purchase will change.

Once your payment is received, the CAAT Plan will mail you a confirmation letter notifying you that the purchase is complete. You’ll see the new pension amount on your Annual Statement in the year after you complete your purchase.

Nearly all DBplus purchases are made using funds in tax-sheltered registered retirement saving accounts. If your funds came from these accounts, there are no tax implications for your DBplus purchase, however you will not be able to reclaim the RRSP room from the purchase – in effect, you are moving your tax-sheltered funds from one registered savings account into another.

Exceptions and restrictions

  1. Purchases under DBplus are only permitted for employment periods that occur after 1990.
  2. If you have already retired or terminated employment, you are not eligible to make a pension purchase, unless you are rehired and resume membership in the Plan.
  3. You cannot purchase pension earned before 1992 from another employer’s pension plan if it was in a defined benefit pension plan.
  4. Periods of membership in Group RRSPs and Deferred Profit Sharing Plans are not eligible for purchase in DBplus.
  5. You can use funds from an RRSP, LIRA, Group RRSP, Deferred Profit Sharing Plan, or Defined Contribution plan to make a purchase for a period of employment with an employer that participates in the CAAT Plan, such as a leave.

We suggest you seek independent advice from a financial advisor, particularly around the tax implications of purchases.

Information about COVID-19 related leaves or layoffs

What happens if I can’t work because of a COVID-19 related leave or layoff?

Do you work outside of Ontario?

Some Plan provisions may be impacted by the pension legislation that is applicable based on your jurisdiction of employment. A member’s jurisdiction of employment is based on the location of their employment and specifically, where they report to work.

Forms

Find the forms you need here.

DBplus Purchase Tool

Visit the DBplus Purchase Tool.

Contact Us Image

Questions? Contact Us

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