Pension Plan FAQs
The information contained on this page is intended as a brief summary of the main provisions of the Pension Plan for Eligible Employees of McMaster University. As it is a summary only, this document is not intended to have legal effect.
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The University’s contributions to the pension plans are not directly related to member contributions. The University is currently contributing substantially more toward the cost of pension benefits than plan members.
The Salaried Pension Plan is a defined benefit (DB) pension plan. With DB pension plans, the level of benefit is defined in the pension plan text. By contrast, the level of contributions needed to pay for members’ benefits will vary depending on a number of economic and demographic factors (e.g., interest rates, investment returns on plan assets, longevity, etc.). The McMaster pension plans are “contributory” DB pension plans, which means that members contribute toward the cost of their benefits. Member contribution levels are set out in the plan rules. The University’s contribution level, however, will vary over time depending on the plan’s funded status, as set out in actuarial valuation reports prepared on a periodic basis. Recent actuarial valuation reports have revealed that the plan is not fully funded, which means that the University must make additional “special payments” over a prescribed period of time to bring the plan back to a fully funded position. These contributions, in addition to the contributions towards benefits currently being earned by plan members, mean that the University is currently contributing substantially more than plan members in the aggregate.
McMaster University is responsible to ensure that there is sufficient money in the pension fund to provide the pension benefits earned by the members, both currently and for the foreseeable future. The most recently filed actuarial valuation of the Plan was as at July 1, 2023. It showed a ratio of Plan assets (market value) to Plan liabilities on a termination basis of 111% (the “Transfer Ratio”). The estimated Transfer Ratio as at July 1, 2024 is 117%. The transfer ratio measures the Plan’s funded status on a termination basis. A transfer ratio of 100% or above means that, if the Plan had been terminated on that date, the fund’s assets would have been sufficient to provide all benefits accrued under the Plan to that date. A transfer ratio below 100% indicates that there would be a wind up shortfall if the Plan were to be terminated on that date.
When you reduce your hours of work, it impacts your pension in the following ways:
- Your “Pensionable Service”[1] for the purpose of calculating the amount of your pension will decrease based on your reduced hours (Ex: Full-time workload would receive 1 year of service. If your workload is reduced to 50% of the full-time workload, then you would receive 0.5 years of Pensionable Service during the relevant period)
- If your rate of pay has not decreased, then there will be no impact to your Best Average Salary[2] since your full-time equivalent salary is used in the calculation of your Best Average Salary. Also, the calculation of Best Average Salary takes into account your highest 48 or 60 months (depending on employee group) of full-time equivalent annual salary. If you have already logged 48 or 60 months of Pensionable Service (as applicable, depending on your employee group), then any decrease in salary at the end of your employment will not be taken into account in any event.
- Contributions are calculated on the basis of full-time equivalent salary then pro-rated according to the hours worked, therefore contributions will decrease with the reduced hours.
Note that reducing your hours of work does not affect your “Pensionable Service” for the purpose of determining your “Special Retirement Date”.[3] For the sole purpose of determining a Member’s Special Retirement Date, the “Pensionable Service” of a Member while he/she is a part-time Employee is determined without proration based on hours worked.
[1] Under the Hourly Pension Plan, the term “Credited Service” is used, rather than “Pensionable Service”.
[2] Under the Hourly Pension Plan, the term “Best Average Earnings” is used, rather than “Best Average Salary”.
[3] Under the Hourly Pension Plan, the term “Special Early Retirement Date” is used, rather than “Special Retirement Date”.
If you are a member of a registered pension plan, your PA represents Canada Customs & Revenue Agency’s estimate of the value of your pension earned in the calendar year. The PA reported on your T4 reduces your RRSP contribution room for the following year.
Once you have made your termination election, and if you transfer your pension value out of the Plan (into a vehicle other than another registered pension plan), you may be issued a “Pension Adjustment Reversal” (“PAR”). Revenue Canada introduced the PAR for pension plan members transferring their pension entitlement out of a registered pension plan after 1996. A PAR restores lost RRSP contribution room and is the amount by which your PA’s exceed the value of your pension earned over that period.
Your pension options on retirement and termination of membership can be different depending on a number of factors, including your age when your contract ends.
You can learn more about the differences between retirement and termination of membership in the following Salaried Pension Plan Highlights summaries listed below:
Faculty Salaried Pension Plan Highlights
TMG Salaried Pension Plan Highlights
UNIFOR Members Hired on or Before April 30, 2010 Salaried Pension Plan Highlights
UNIFOR Members Hired on or After May 1, 2010
You can also learn more about the steps you have to take once you have decided to retire in the “How Do I Prepare for Retirement?” document online.
Finally, 2 to 3 months before your contract is scheduled to end, you should review the Highlights documents to review the difference between retirement and termination of plan membership and the impacts on the options you will have once your contract ends or you can contact your HR Consultant.
For a description of how Commuted Values are calculated, click here.
Yes, for all employee groups except for those hired into Unifor on or after May 1, 2010. For employees hired into Unifor on or after May 1, 2010, you must also attain age 60 before retiring on your Special Retirement Date.
Salaried Pension Plan Members can now run their own pension estimates on the Pension Portal in Mosaic. More information on this tool can be found here.
For those Members who cannot access the Pension Portal, we recommend requesting a pension estimate as close to the time in which you are considering retirement to ensure accuracy of information. There is no charge when requesting a pension estimate.
Your annual pension statement provides information about your earned pension amount as of the Annual Statement date (as at June 30th). The statement shows the annual pension that would be paid as of age 65, assuming you were to leave the University as of the June 30th date.
Once the guarantee period has ended, there is no change to the pension payments for the member.
For members without a spouse at retirement, in the case of death of the member after this guarantee period, no further payments would be made to the beneficiary or estate.
For members with an eligible spouse at retirement, in the case of death of the member after this guarantee period, the pension payments will reduce upon payment to the spouse according to the form of pension elected by the member at retirement.
Ex: Member retires with 50% Joint and Survivor Pension (Guaranteed 7 years) – If the Member dies after the guarantee period and the surviving spouse is still alive, the pension payments to the surviving spouse would be 50% of the amount payable to the Member during his/her lifetime.
However, if the Member dies during the guarantee period and the surviving spouse is still alive, for the remainder of the guarantee period the surviving spouse would receive a monthly pension in the same amount as the Member’s pension. Once the guarantee period ends, the pension payments to the surviving spouse would reduce to 50% of the amount payable to the Member during his/her lifetime.
If the Member dies during the guarantee period and the surviving spouse had predeceased the Member, then a lump sum payment equal to the remaining guaranteed payments would be paid to the Member’s estate.
Group RRSP FAQs
The information contained on this page is intended as a brief summary of the main provisions of the Group RRSP for Eligible Employees of McMaster University. As it is a summary only, this document is not intended to have legal effect.
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The date of deposit into your Group RRSP is based on the date the funds are received at Desjardins and is not the date of your payroll deduction. Funds are remitted to Desjardins on a monthly basis, by the end of each month.
Desjardins will send two statements annually. The statements are sent out at the end of July and December and each statement will show contributions and account information for the preceding six months.
A contribution receipt for the previous year’s contributions will sent out approximately three weeks after year end (e.g., three weeks after December 31st). For any contributions made within the first 60 days of the year, a separate contribution receipt will be sent out for the first 60 days of the year. These receipts are typically sent out the third week of March. Contributions are based on the date the funds are received and deposited into your account at Desjardins.
On the homepage of the Group Plan Member site , click “Rate of Return”. Alternatively, you can click “Financial Statements” and create customized reports based on specific time periods.
If you completed a paper enrolment form, you will be defaulted into the BlackRock LifePath Index Fund based on retirement at age 65. It is a fully managed fund that is rebalanced, and asset allocated automatically to become more conservative as you near retirement. Profits are reinvested back into the fund to promote growth.
If you were preapproved to enroll online for the Group RRSP and you do not register online and complete the enrollment process, any funds directed to your account will sit in a temporary non-interest bearing, non- registered account until you complete the registration and enrollment process. You will not receive a tax receipt for any contributions until this process is completed. If you do not complete the enrollment process within 90 days of your funds being directed to your account, Desjardins may return the funds back to McMaster.
If you completed a paper enrolment form, your contributions will have been invested in the default fund- BlackRock LifePath Fund. However, you can change your investments on the Group Plan Member site>My Account>My Investments>Investment Options or you can call the Desjardins Customer Contact Centre at 1800-968-3587 for assistance.
The default fund is based on a retirement age of 65. For example, if you will be 65 years in 2047, your investment will be in the BlackRock LifePath 2045 Index Fund.
Ask yourself if you have:
1) the time to analyze and monitor your investments,
2) the understanding of the different investment types and their risks and
3) if you want to select your own investments. If you said “no” to any ONE of these, then the BlackRock LifePath investment may be appropriate for you.
Benefits include:
1) employer contributions (100% match to employee mandatory contributions)
2) professionally managed investment portfolios and
3) Low fees (compared to what you would pay individually at another financial institution
Like any investment, there’s always the possibility of a downturn in your returns. To manage your risk, complete the Investor Profile Questionnaire to gauge your risk tolerance and see what type of investor you are. Based on your investor profile, you’ll be given guidance on what is appropriate for you.
Please contact the Destination Team at 1-800-968-3587. They are non-commissioned, licensed advisors who will work with you to create a retirement plan.
You can contribute to your RRSP until you turn 71. When you turn 71, you must convert your RRSP to a RRIF and make the minimum withdrawals. For more information, click https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-retirement-income-fund-rrif.html
Your money continues to stay invested where they were prior to working part-time. At any time, you can change your investment selections on the Group Plan Member site or by calling the Desjardins Customer Contact Centre at 1-800-968-3587.
Withdrawal of mandatory employee and employer contributions and any investment earnings is not permitted while employed by McMaster. The employee will be able to withdraw their funds when their employment with McMaster ends.
Voluntary contributions can be made either directly to Desjardins or via payroll deductions. Voluntary contributions can be withdrawn by the employee at any time, subject to payment of applicable fees.
You must convert your RRSP to a RRIF no later than December 31st of the year you turn 71.
If you’re in the BlackRock LifePath Index Fund, your RRSP will convert to the BlackRock Retirement Index Fund. If you self-selected your funds, your investments will remain the same when it converts to a RRIF. Depending on your risk tolerance and investment goals, you may want to change your investments to be more conservative.
Yes, contributions over the required amount are called “voluntary” contributions and are not matched by McMaster. Be careful not to exceed your RRSP contribution limits because there are penalties for exceeding your RRSP limit. You can change your contribution amounts on the Group Plan Member site or by calling the Desjardins Customer Contact Centre at 1-800-968-3587.
You will be taxed only on the amount of your withdrawal. Please call the Desjardins Customer Contact Centre at 1-800-968-3587 to get a more accurate estimation of your taxes.
The RRSP limit is 18% of your prior year’s income+ unused contribution. Please refer to your Notice of Assessment from the Canada Revenue Agency to see your exact RRSP limit.
We are not aware of RRSP plans you have outside of your group plan so you will not be given notice that you’ve over contributed. The penalty for over-contributions is 1% per month on your unused contributions that exceed your RRSP deduction limit by more than $2,000. Please contact the Canada Revenue Agency for more information.
You can see your RRSP limit on your Notice of Assessment. Please go to the Canada Revenue Agency website and logon to your account to view your Notice of Assessment.
You can find retirement planning information on the Group Plan Member site>Wellness Centre.
Please refer to the Government of Canada website: https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html
Each individual has their own RRSP limit as stated in their Notice of Assessment from the CRA.
Your remaining balance will continue to earn investment income. Please be aware that there could be taxes (withholding and/or income taxes) on the amount withdrawn. Please contact the Canada Revenue Agency or the Desjardins Customer Contact Centre at 1-800-968-3587 for more details as well as any taxes payable.
The BlackRock LifePath Index fund is designed to become more conservative in its investment approach as you near retirement. The fund is professionally managed and its asset mix is continually evaluated for performance and value. This is done automatically for you as you’ll see more of your investments moving from equity to fixed income types as you get closer to retirement. For more information, please see the Group Plan Member site>My Account>Investment Options
You can make investment changes on the Group Plan Member site or by calling the Desjardins Customer Contact Centre at 1-800-968-3587. Any investment changes done before 2 pm will be effective same day. After 2 pm, the change will be done next business day. You can make a maximum of 2 investment changes per month with no fees after which there may be additional fees.
Yes, please complete the Investor Profile Questionnaire on the Group Plan Member site before you make any changes. The questionnaire will determine what type of investor you are and gauge how comfortable you are with risk. Based on your profile, you’ll be given investment guidance that would be most appropriate for you.
If you have questions about your investment plan or its options, please consult the Desjardins Customer Contact Centre at 1-800-968-3587 (Monday to Friday, 8 am to 8 pm ET), and selecting option 1. Please note that they provide guidance only and if you wish to seek advice (e.g., financial planning strategies), it is recommended you contact a Personal Financial Advisor.
The Destination Team is available for those approaching retirement in the next 5 years. They will assist you in seeing what your retirement options are based on the financial information you provide. The Customer Contact Centre (1-800-968-3587) can also assist with questions about your plan, changing contributions/investments and account transfers among other topics.
McMaster offers financial guidance, including Retirement Planning through the Employee and Family Assistance Program (EFAP). It is completely confidential. You can contact EFAP 24/7, as follows: by phone (1-833-366-4544), web or mobile app (Telus-Health-EFAP-Brochure-1.pdf (mcmaster.ca)
Post-Retirement Benefits Frequently Asked Questions
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Benefit plans are specific to each employee group for both active and retiree members. Differences between active and retiree plans vary based on the employee group. Benefit booklets which outline coverage in retiree plans are posted on the Human Resources website to help you understand your entitlements as a retiree.
Post-retirement benefits are administered through Sun Life Financial. Claims can be submitted via. the My Sun Life website or through paper claims. Details on this process can be found here.
To be eligible for health and dental benefits you must be enrolled in your provincial health care plan. Provincial health care plans have specific eligibility criteria should you choose to live outside of Canada.[1] Once you are no longer eligible for health and dental benefits there is no opportunity to reinstate benefits should you become re-eligible for your provincial health care plan in the future. Therefore, you should give careful consideration to potential loss of retiree health and dental benefits before you choose to live outside of Canada for all or part of the year during your retirement.
There is no impact to the life insurance benefit should you choose to live outside of Canada upon retirement.
[1] The Ontario Health Insurance Plan (OHIP) currently states “if you plan to be outside Canada for more than seven months in any 12-month period you can keep your OHIP coverage for up to two years if you: have a valid health card; make Ontario your primary home; will be in Ontario for at least 153 days a year in each of the two years immediately before you leave the country.” This eligibility criteria is subject to change and therefore it is up to the member to confirm eligibility criteria with the provincial health care plan.
If you retire prior to age 65 (collect immediate pension), you are eligible to keep your lump sum coverage or the basic coverage of 175% of salary by paying the full premium which is based on factors such as age, gender, and smoking vs. non-smoking. However, your coverage will reduce to $5,000 as of the date you elect or age 65, whichever is earlier. (Survivor Income Benefit and Optional Life coverage cease at retirement)
If you retire at age 65 (your Normal Retirement Date), you may be eligible for a Term Insurance Policy of $5,000. If you wish to convert your current insurance to a private insurance plan, you must apply within 31 days of your retirement date. Please contact Human Resources Services at extension 222-HR (x 22247) if you wish to proceed with this option. (Note: You can convert your current insurance up to a maximum of $200,000, without a medical examination, however you would be subject to payment of premiums set by Sun Life for outside of a Group Plan)