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.
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. A more detailed answer follows.
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.
A “going concern” valuation measures the plan assets against the plan liabilities assuming the plan continues operating indefinitely. A “hypothetical wind-up” valuation measures the plan assets against the plan liabilities assuming the plan were wound-up on the valuation date. The July 1, 2018 actuarial valuation report showed the plan’s funded status was 93% on a going concern basis and 91% on a hypothetical wind-up basis.
Although higher funding levels are generally preferable, the funded status of the McMaster Salaried Pension Plan is solid and typical in relation to comparable defined benefit pension plans in Ontario, particularly in light of the current low interest rate environment.
The University remains committed to the long-term success of its pension arrangements. The University’s operating budget fully supports the funding requirements set out in the actuarial valuation report.
It is first necessary to explain what a “guarantee” feature is in relation to a monthly pension. A pension generally commences to be paid upon the member’s retirement and ceases to be paid upon the member’s death (or, in the case of a survivor pension, the survivor’s death). A guarantee feature ensures that, at a minimum, a certain number of payments (i.e., the “guaranteed payments”) having a certain value will be paid from the plan while the plan is ongoing. For example, under a “single life only (guaranteed 7 years)” pension, if the pensioner dies before receiving 84 monthly pension payments, then a lump sum payment equal to the remaining guaranteed payments will be paid to the pensioner’s designated beneficiary (or, absent one, to the pensioner’s estate). Joint and survivor pensions can also include a guarantee feature. The term “guarantee” implies that, irrespective of when a pensioner (and, in the case of a J&S pension, the surviving spouse) dies, the benefits paid from the pension plan will not be less than the aggregate value of the guaranteed payments.
Generally speaking, pension standards legislation (i.e., Ontario’s Pension Benefits Act (“PBA”)) permits monthly pension payments to be paid in full from a pension plan that is less-than-fully funded (doing so avoids having to administer a complex system of catch-up payments to anyone who received a monthly pension payment while a plan is underfunded).
Although the term “guarantee” does not mean that every plan member will receive 100% of his/her benefits if a plan is wound-up, the PBA provides various mechanisms designed to prevent loss of benefits. Among other things, the PBA and its related regulations stipulate minimum requirements with respect to the funding of defined benefit (DB) pension benefits while a plan is ongoing. Furthermore, upon plan wind-up, any wind-up deficit must be funded within a prescribed period of time. In addition, Ontario maintains the Pension Benefits Guarantee Fund (PBGF), which provides limited protection to Ontario members and beneficiaries of privately sponsored, single-employer DB pension plans in the event their plan is wound-up and their employer is insolvent.
How does reducing my hours of work prior to retirement affect my contributions, best average salary and service?
When you reduce your hours of work, it impacts your pension in the following ways:
- Your “Pensionable Service” 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 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”. 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.
 Under the Hourly Pension Plan, the term “Credited Service” is used, rather than “Pensionable Service”.
 Under the Hourly Pension Plan, the term “Best Average Earnings” is used, rather than “Best Average Salary”.
 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 calender 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.
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.
What are my pension options when my contract ends: is this a retirement or is this termination of membership?
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 Advisor.
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.
What is the actual date of deposit into my Group RRSP fund at Desjardins? Why does the deposit date shown on my Desjardins statement differ from the date of my payroll deduction?
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.
For more information you may refer to the Desjardins Financials website. Alternately, you may email Human Resources Services at firstname.lastname@example.org or contact your HR Advisor at extension 222HR.
Post-Retirement Benefits Frequently Asked Questions
Eligibility for post-retirement benefits varies by employee group. Eligibility has been summarized below. If you have had breaks in service or are unsure of your hire date, contact the HR Service Center to confirm your eligibility.
|Employee Group||Hire Date||Years of Service Required at Retirement||Post-Retirement Benefits|
|TMG||Before June 16, 2006||2 years||100% University Paid|
|On or after June 16, 2006||N/A||Not eligible|
|Unifor Local 555, Unit 1||Before June 16, 2006||2 years||100% University Paid|
|Between June 16, 2006 and September 30, 2009||10 years||100% University Paid|
|On or after October 1, 2009||At least 10 years||Co-Pay – % paid depends on years of service|
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. 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.
 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)