Planning for retirement
When you retire, you collect a pension every month for the rest of your life. In the CAAT Plan, retirement dates are flexible, so you can retire when the time is right for you. Plus, your pension includes valuable extra benefits: inflation protection and survivor benefits. These benefits help protect the purchasing power of your pension, and provide peace of mind.
We’re here to help you get ready for retirement. Before the date approaches, be sure to review the process, to make your transition to retirement a smooth one.
How much will your pension be?
Your DBplus pension is calculated using a formula, so you know what your annual pension will be when you retire. Each year you'll receive a Member Statement, showing the pension you have accumulated to the end of the previous year.For more information on how the DBplus pension formula works, click below.
The pension formula is divided into two components:
- Guaranteed annual base pension (payable from age 65) – calculated at the end of each year, and
- AIW Enhancements– applied at the start of each year.
1. Guaranteed annual base pension
- The promised pension earned in the current year, calculated at the end of each year you contribute, using your total contributions, and your employer's matching contributions. The formula uses a pension factor as a multiplier to calculate your pension. It is set based on the Plan’s Funding Policy and is currently 8.5%.
8.5% x year’s total contributions* = your guaranteed base pension
*Note that the year’s total contributions are the member's plus your employer’s contributions, doubling the value of your pension.
2. AIW enhancement
- This is the amount added to the previous year’s total promised pension. It is applied at the start of each year in which you are a contributing member, subject to the Plan's Funding Policy and is based on the announced increase to the Average Industrial Wage (AIW) index.
- The AIW index represents wage inflation in Canada, which has averaged about 2.2% over the past 20 years.
- AIW enhancements, once added, become a permanent part of your promised pension. That means that the AIW enhancements are cumulative – each year’s enhancement is paid on top of the previous year’s total pension, plus enhancements.
DBplus past promised benefits** x AIW enhancement rate
**Past promised benefits accrued to the end of the previous year, including any past AIW enhancements.
Estimate your pension
Simply enter some basic data and let the Estimator show you your projected retirement dates and estimated pension amounts. With the Pension Estimator, you can model any retirement scenario you like.
When can you retire?
Under DBplus, you can retire and start collecting your pension at age 65, or retire as early as age 50, with a reduction. The reduction rate varies from 3% to 5% based on the Plan’s funding level. Initially, the reduction rate for retirements has been set to 3% for each year you are under age 65. The actual rate will depend on the Plan terms in effect at your retirement.
Your pension continues to grow if you keep working after age 65.
Your pension includes valuable additional benefits
Your CAAT Plan pension includes valuable extra benefits: inflation protection and survivor benefits. These benefits help protect the purchasing power of your pension, and provide peace of mind.
- Your pension includes conditional inflation protection, which is calculated based on changes to the previous year’s Consumer Price Index (CPI).
- Inflation protection, when it is granted, is added to your pension on January 1. This new amount becomes your new lifetime pension. As a result, each year’s inflation protection increase is applied to your previous inflation protection, as well as your pension.
- Inflation protection increases are conditional on the Plan’s funded status, granted when the Plan is fully funded. Since being introduced, conditional inflation protection has always been paid. Increases have been granted until at least January 1, 2021.
How is the increase calculated?
Inflation protection increases are based on 75% of the CPI up to a maximum of 8%. In recent years, when inflation has been low, the increase has rarely risen above 2%. If there is no increase in the CPI of a given year, there would be no increase to pensions in the following year.
- Your pension includes a lifetime pension for your surviving eligible spouse, equal to 60% of the lifetime pension you were receiving at the date of your death. The survivor pension receives inflation protection in the same manner as your lifetime pension did.
- If you have an eligible spouse when you retire, you will have the option to choose either the default 60% survivor pension, or a 75% survivor pension. If you choose the 75% survivor pension option, your lifetime pension will be actuarially reduced to reflect the cost of the higher survivor pension, and that reduction is permanent.
- If you do not have an eligible spouse when you retire, but subsequently have one in retirement, that spouse can receive the 60% survivor pension.
In addition to these benefits, the CAAT Plan offers a 60 month minimum guarantee. If you die before your pension payments equal 60 times your first lifetime pension payment (i.e. in less than five years), and you have no eligible spouse or children, the designated beneficiary receives a payment of the balance of 60 times your initial pension payment, minus what has already been paid to you or on your behalf.
Ensure a smooth transition to retirement
When you're ready, contact your employer HR to get the retirement process started.
Avoid delays in starting your pension
Marital separation and divorce is the number one cause of delayed pension starts. If you separated or divorced during your membership, contact the Plan to find out what you need to do before we can process your pension.
Not providing proof of age (and your Spouse’s, if applicable) can delay your pension. Acceptable proof of age includes any government issued identification (federal or provincial) that clearly shows the card holder’s date of birth, excluding health cards, (e.g. passport, birth certificate, citizenship card, driver’s license). Remember: payment will not be made unless proof of age is provided.
Starting your government pensions
You can start your CPP pension any time after age 60, and your OAS when you turn 65. Be sure to apply for these benefits at least six months before you want to start collecting them.
- You must apply directly to Service Canada to receive the necessary information and application forms for your Canada Pension Plan and Old Age Security pensions, and to find out the amount of government benefits you are eligible to receive.
- For more information visit Canada.ca, or call 1-800-O-CANADA.