This Plan Summary was prepared to explain, in simple terms the principal features of the Manitoba Association of School Trustees (MAST) Pension Plan for Non-Teaching Employees of Public School Boards in Manitoba. The Plan became effective August 1, 1974. Benefits arising from contributions made under the previous pension plan are payable in addition to those described in this Plan Summary. Please read the Plan Summary carefully so that you will fully understand the extent of your pension and other benefits provided by the Plan.
A more detailed description of the Plan appears in the official Plan Text, a copy of which is available for your inspection at the office of your school board or at the office of the Manitoba Association of School Trustees (MAST). In the event of any conflict between this booklet and the Plan Text, the Plan Text will govern.
Effective in June, 1996, Pension Trustees have been appointed to oversee all aspects of administration and investment of the Pension Plan.
Benefits under the MAST Pension Plan are in addition to Canada Pension Plan benefits and Old Age Security benefits. For your information, some basic information about these government benefits, and also personal savings in a registered retirement savings plan, are included as the final sections of this Plan Summary.
As at January 1, 1997, there were 5,308 employees participating in the Plan, representing 46 School Divisions and districts.
(as at January 1, 1998)
The Plan took effect on August 1, 1974. Plan anniversaries fall on each January 1.
As a result of current pension law in Manitoba, the question of eligibility to participate in the MAST sponsored Plan is quite complex. In deciding upon your own eligibility, the first question to be asked is whether or not you are in a class of employment whose members routinely participate. If you are in such a class of employment, then whether you are full-time or part-time does not matter. Part-time employees must be eligible for Plan membership on the same basis as full-time employees if this is the only distinction between them.
For example, if in a particular division there are both full-time and part-time clerical staff, none of whom are organized, then it would not be permissible to exclude part-time clerical staff since no legitimate distinction exists. If, on the other hand, in a particular division some clerical staff are members of a bargaining unit while others are not then this would place them in different classes of employment and as such would be a legitimate distinction.
Once you have established whether or not you are in an eligible class of employment, the second question to be asked is whether or not you were hired before or after January 1, 1984. This date is significant because the eligibility rules changed on that date. For eligible persons who were hired before January 1, 1984 there are two different rules.
Firstly, if the person was full-time then he or she must become a member of the Plan on the earlier of completing 3 years of service or completing 1 year of service and attaining age 25. Secondly, if the person was initially excluded from the Plan on the basis of being part-time then he or she may become a member of the Plan upon completion of 1 year of service.
For eligible persons who were hired on or after January 1, 1984, the rule is simpler. All those who are in this category must become members upon completion of one year of service unless they earn less then 25% of the Yearly Maximum Pensionable Earnings under the Canada Pension Plan. In 2000, this earnings test is $9,400. If an employee earns less than this figure, then he or she may join the Plan if they wish; however, they are not required to join.
In some cases it is possible to join the Plan before the date you are required to join. If this possibility interests you, please contact your school division office to determine whether you might join the Plan at an early date.
One final point concerning eligibility is that if your school division elects to participate in the MAST sponsored Plan after you have already been hired then you can not be forced to join the Plan. Of course you continue to retain an option to join if you are otherwise eligible.
You may begin receipt of your pension upon retirement anytime after age 55 and before the end of the calendar year in which you attain age 69. This is the latest retirement age permitted under the Income Tax Act. In the year in which you attain age 69, you will stop participating and payroll deductions for the Pension Plan will stop by November 1 at the latest, in order to allow time to start your pension income prior to December 31.
Upon attainment of age 65, should you continue employment with your School Division, you will have the right to discontinue contributions and either begin receipt of your pension or defer receipt to a later date. Should you instead elect to continue to contribute after age 65, your School Division will also contribute a matching contribution on your behalf.
During each year of membership you will contribute to the plan a percentage of your salary, less your contributions for that year to the Canada Pension Plan. Contributions are calculated on your regular salary or wage, excluding bonuses or other remuneration. The percentage varies according to your age at the beginning of the plan year, in accordance with the following table:
Age at Beginning
of Plan Year
|Percentage of Salary* |
During the Plan Year
|less than 44||7.9%||8.2%||8.6%|
|45 - 49||8.4%||8.7%||9.1%|
|50 - 54||8.9%||9.2%||9.6%|
|55 - 59||9.4%||9.7%||10.1%|
|60 - 64||9.9%||10.2%||10.6%|
|65 - 69||9.0%|
* Income Tax rules limit your contributions, net of your CPP contributions, to 9% of your salary. Prior to age 65, your contribution rate can be more than 9% as long as your CPP contribution reduces your net contribution to the plan to 9% or less. After age 65, your CPP contributions normally cease, in which case your contributions to the plan will be at the maximum 9% rate.
For example, a 56 year old employee earning a salary of $40,000 would make the following contribution in 1998:
9.4% x $40,000 = $3,760
Less estimated CPP (1,060)
Required contributions MAST plan = $2,700
It is important to note that the contribution percentage is increasing each year to reflect the increase in contributions to the Canada Pension Plan so that the rate of contribution to the MAST Pension Plan remains constant. Contribution rates have been determined up to the year 2003.
In addition to your required contributions you may, at your option, contribute additional amounts by payroll deduction to provide extra pension. These additional contributions will not be matched by the School Division.
Your contributions are tax deductible and the maximum you may contribute each year (including any additional voluntary contribution) is limited. The sum of your contributions and the School Division's contributions on your behalf each year are limited to 18% of your salary for the year. Also, these contributions must not exceed the Money Purchase Limit prescribed by the Federal Government.
|Tax Year||Money Purchase Limit|
|1996 to 2002 incl.*||$13,500|
* subject to change by Federal Government
The sum of your contributions and the School Division's contributions on your behalf will be reported on your T-4 slip as your Pension Adjustment (PA) for the year. Your Pension Adjustment is used to determine how much you are permitted to contribute to an RRSP in the following year. For example, your 1997 PA is used to determine how much you are permitted to contribute to an RRSP in 1998.
SCHOOL DIVISION CONTRIBUTIONS
Your required contributions will be matched by equal contributions by the School Division. In addition, the School Division will contribute additional amounts necessary to pay all costs of administration for active members of the plan and to provide the Waiver of Contribution benefit.
INVESTMENT OF CONTRIBUTIONS
Your contributions and those of the School Division on your behalf will be invested in a fund managed by professional investment managers. All investments of the fund are made in accordance with legislation governing the investment of registered pension funds and the MAST Pension Plan "Investment Objective and Policy Statement".
UPDATING YOUR PENSION ACCOUNT
The pension fund's rate of interest is determined at each Plan Year end (Dec. 31) based on the Plan's earnings using the market value of the pension fund. Interest is credited at this rate to the balance in your pension account at the beginning of the Plan Year and to the contributions made to your pension account during the Plan Year from the end of the month in which they were made.
INTEREST FOR PARTIAL YEARS
If it is necessary to determine your pension account at a date other than the Plan Year end, your pension account will be credited with interest for the period from the most recent Plan Year end (Dec. 31) to the date of payment from the pension fund at the greater of the following rates:
(a) 1/2% per month, or
(b) the 91 day Treasury bill rate.
It is important to understand that if you transfer your account balance out of the MAST Pension Plan, either on termination, or to purchase a retirement income, the following will apply.
HOW THE GUARANTEED ACCOUNT WORKS
The "Guaranteed Account" was established January 1, 1994 to provide a guaranteed rate of return for members age 55 and over as they approach retirement. At age 55 (or January 1, 1994 if later), your Guaranteed Account is started. Interest is allocated to this account each year based on 91 Day Treasury Bills, and the balance is reported on your annual pension statement. Upon death, termination or retirement after age 55, you receive the greater of
It is important to understand that the comparison is only done at termination, death or retirement, and is not compared year by year.
EXAMPLE OF GUARANTEED ACCOUNT
|Dec. 31||Age||Gtd. Acc't||Fund Return|
Bold print indicates which amount the member would have received if he or she had retired at the end of each year in the example.
OPERATING COSTS OF THE PLAN
In addition to matching your contributions to the Plan, each School Division pays 0.8% of payroll to cover:
In the past, this extra contribution from each School Division has been used to cover all expenses of operating the Plan, even for terminated employees who leave their account balance in the Pension Fund. However, effective with the Plan Year commencing January 1, 1998, terminated employees who leave their account balance in the Pension Fund will be charged a portion of the administration costs and investment management fees which will be deducted from their account balance.
The charge will be determined by the Pension Trustees from time to time and has been initially determined as follows:
$30 plus 0.5% of the account
at the beginning of the Plan Year
All members will be advised in writing of this fee, and only deferred accounts still in the Plan on and after December 31, 1998, will be assessed with the annual fee. This fee will be prorated for those account balances in the Plan for a partial year. For active employees, the extra contribution by each School Division will continue to be used to cover all costs of operating the Plan.
At your retirement date, your contributions plus investment income, together with your School Division's contributions made on your behalf, plus investment income, will be applied to purchase a pension on your behalf.
In addition, the value at retirement of any contributions by you and the School Division on your behalf to the prior plan, and the value of any voluntary contributions you may have made or other monies transferred from previous plans will be used to purchase additional pension for you at the best rate then available.
FORMS OF PENSION
The normal form is a pension for life but guaranteed for 120 months (10 years) in any event. A full range of optional forms of pension is available to suit your individual needs. These include, but are not limited to, the following:
(a) a lifetime pension guaranteed for 15 years in
(b) a pension payable for your lifetime and continuing in whole or in part to your Spouse after your death for the lifetime of your Spouse;
(c) a pension integrated with the Canada Pension Plan and Old Age Security to provide you with a total level pension from all sources, should you elect to retire before your government pensions begin.
As a result of provisions in the Manitoba Pension Benefits Act, members who have a Spouse at their retirement date are required to provide a 2/3 survivor benefit for their Spouse. The provision of this additional benefit will normally reduce somewhat the pension that the member would otherwise receive under the normal form of pension. If a given individual and his/her Spouse agree that such a survivor benefit is unnecessary then they may jointly waive this requirement.
Definition of Spouse
Your spouse is defined as any person of the opposite sex who is living with you in a conjugal relationship and is either:
TRANSFER OF PENSION ACCOUNT
In lieu of purchasing a lifetime pension directly from an insurance company at retirement, you may elect to transfer the value of your account to a locked-in retirement account (LIRA). Government legislation does not permit registered pension funds to be invested in a Registered Retirement Income Fund (RRIF). However, the Manitoba Pension Benefits Act permits you to transfer your registered pension funds to a Life Income Fund (LIF), and in 1998, a new retirement option called a Locked-In Retirement Income Fund (LRIF) will be offered.
LIRA's and LIF's are available from authorized financial institutions. Under either arrangement, you direct the investment of your funds; however, investments must comply with those permitted under the Income Tax Act.
Locked-In Retirement Account (LIRA)
A LIRA is essentially the same as a locked-in RRSP, with minor differences. A LIRA is a holding account for locked-in funds to accumulate on a tax sheltered basis and does not provide immediate income. Withdrawals are not permitted.
Funds in a LIRA ultimately must be used to purchase a life annuity or LIF. Funds can be held in a LIRA only up to the end of the calendar year in which you turn age 69.
Life Income Fund (LIF)
A LIF is a retirement income vehicle. You must be paid an income from your LIF fund each year except for the first year of the contract.
The LIF allows some flexibility in the amount of income you receive in a given year up to age 80. Each year you decide how much you wish to withdraw, subject to a legislated minimum and maximum amount. You must purchase a life annuity with the balance in your LIF account no later than the end of the calendar year in which you turn age 80.
Locked-In Retirement Income Fund
The Locked-In Retirement Income Fund (LRIF) will be offered in 1998. This retirement income vehicle is similar to the Life Income Fund described above, except that there is no requirement to purchase a life annuity at age 80, and the payment amounts are somewhat more flexible after the first year of the contract.
DEATH BEFORE RETIREMENT
If you die before retirement and you have no Spouse, your designated beneficiary or estate will receive a lump sum payment of 100% of your contributions and the School Division's matching contributions made on your behalf with all investment income earned on these contributions.
If you have a Spouse, the death benefit must be paid in the form of a lifetime income to comply with Manitoba Pension legislation. Your Spouse may elect to receive an immediate pension or transfer the lump sum value to a locked-in retirement account (LIRA), life income fund (LIF), or locked-in retirement income fund (LRIF), as described in the "Transfer of Pension Account" section. If you name a different beneficiary than your Spouse, then your beneficiary will receive the benefit for service before January 1, 1985 and your Spouse will receive the remainder.
TERMINATION OF EMPLOYMENT
If you leave the Division after age 50 or after completing at least two years of service or membership in the Plan, you are entitled to receive your accumulated contributions, including interest, plus the School Division's matching contributions on your behalf.
The availability of a cash payment of your pension monies upon termination may be restricted by the Pension Benefits Act of Manitoba. Rules restricting cash payouts are designed to protect employees from reaching retirement age without having a pension. Over the years, the rules have changed, however, because the rules represent a restriction on the employee's freedom of choice, they have been applied only with respect to future contributions when a change had been made. As such, there are 3 different rules applicable to various periods of service.
Service Prior to July 1, 1976
Cash refunds are unrestricted with respect to contributions made in this period.
Service from July 1, 1976, to December 31, 1984
For persons who are at least 45 and have completed 10 years of service at termination of employment, cash refunds are restricted to 25% of total member and School Division contributions made in this period. Persons who do not meet this criteria are unrestricted.
Service from January 1, 1985
For persons who have completed at least 2 years of service or membership in the plan, cash refunds of contributions made in this period are unavailable.
It should also be noted that, even though cash refunds may be restricted, an employee who terminates would still retain the right to transfer the monies to another pension plan or to a locked-in retirement account (LIRA). Refer to the "Transfer of Pension Account" section for more details on this option.
Voluntary contributions are not subject to lock-in restrictions and may be taken as a cash refund or transferred to an unrestricted RRSP upon termination.
Each Employee is entitled to receive a written explanation of the terms of the Plan upon becoming a member of the Plan. In addition, within 6 months of the end of each Plan Year, each active member of the Plan will receive a statement of his benefits under the Plan. Such a statement will show the member's contributions as well as the School Division's contributions on his behalf.
In Manitoba, when a legal marriage is dissolved, the pension credits are divided between the Spouses. Therefore, 50% of the value of the benefit earned for service during the relationship will be paid to the Spouse. This payment will be transferred to another registered pension plan to which the Spouse belongs or to a locked-in retirement account (LIRA), a life income fund (LIF), or locked-in retirement income fund (LRIF) as described in the "Transfer of Pension Account" section. In any case, the payment may be used only to provide an annuity for the lifetime of the Spouse.
This division of pension benefits does not apply to a common-law relationship unless you both agree to it in writing, and you make a written declaration of your relationship stating when the relationship began and that the division of pension benefits should apply.
You and your Spouse (either legal or common-law) may opt out of this division of pension benefits if both of you receive independent legal advice, are aware of the value of the pension benefits, and agree in writing not to divide the pension benefits.
If both you and your Spouse are members of pension plans and both of you agree in writing, you may divide just the net difference between your pension benefits, rather than the pension benefits you had earned during your relationship.
GARNISHMENT OF PENSION BENEFITS
Manitoba pension legislation provides that benefits of active and former members of the Plan can be garnished in satisfaction of delinquent support or maintenance payments to a former spouse.
SUMMARY OF DISABILITY PROVISION
Subject to certain qualifications, a member who becomes disabled due to illness or injury will be credited with contributions as if the member had continued working and contributing to the Plan. Contributions under this provision will not be made for an absence due to maternity leave.
Following is a summary of this benefit provision:
All employees who are members of the pension plan and continue their employment with the Division are eligible for this benefit regardless of whether they are also eligible for sickness or disability benefits such as Salary Continuance or Workers Compensation.
In order to qualify for this benefit, a member must be absent from work, for reason of disability due to illness or injury, for a period of 80 consecutive working days, i.e., 16 consecutive weeks.
Amount of Benefit
Commencing on the 81st working day of disability, the member's pension account will be credited with an amount equal to the contributions that would have been made by the member and School Board had the member continued working during this period. The amount of contributions to be credited to the member's account will be determined based on the member's earnings level immediately prior to the member's date of disability.
Calculation of Benefit
The actual amount to be credited each year to a member's pension account will be determined by the Administrator, William M. Mercer Limited. This would be done annually at the end of the year or at the time of termination or retirement, if applicable.
Duration of Benefit
The benefit will continue up to the earlier of:
(a) the date the member returns to work or
(b) the date the member ceases to be an employee of the School Division, i.e., terminates or retires.
subject to a maximum benefit of 24 months duration for any one disability.
1. Is there any way I can estimate what my retirement income will be?
The MAST Plan is a Money Purchase plan. In this type of plan, your contributions, and the School Division's contributions on your behalf, accumulate with investment income earned by the Pension Fund from year to year. At retirement, the value of your pension account is used to provide retirement income. It is difficult, therefore, to estimate exact retirement income. However, the Licensed Representative will be happy to do certain calculations and estimates but it is suggested that these not be requested more than, say, a year or two before the anticipated retirement date.
2. How do I request an estimate of my pensions and options?
If you are within a year or two before your anticipated retirement date you can request a quotation of your estimated pension and options by calling the Licensed Representative anytime during regular business hours as follows:
in Winnipeg 982-6508 outside Winnipeg tollfree 1-888-258-1186
3. Can I take my accumulated dollars in cash?
In general, the Provincial pension regulations are as follows:
If you terminate employment before age 65, you can take any money to which you're entitled and which was contributed before July 1976.
If you are either under age 45 or have worked for the School Division for less than ten years at the time of your termination, you may also receive in cash the money contributed between July of 1976 and December 31 of 1984.
Any contributions after January 1, 1985, must remain in the Plan to buy you an income commencing no later than the end of the calendar year in which you attain age 69, providing you have at least two years of service.
If you reach age 65 and are still in the employment of the School Division, you must use all of your accumulated contributions to purchase an income for retirement. This must be done prior to the end of the calendar year in which you attain age 69.
4. Is there a penalty for early retirement?
Early retirement is available from age 55 onwards provided you have terminated your employment with the School Division. However, members should remember that when employment stops, contributions cease. Therefore, the accumulated dollars in the Plan are going to be less if you retire early. Also, the cost of monthly income will be higher at a younger age because the payments, presumably, will be over a longer number of years.
5. When do I have to start my pension income?
If you stop working at age 65, you must commence an income with your accumulated account balance by the end of the calendar year in which you attain age 69. However, if you continue to work with a participating School Division, you may continue to contribute if you wish to do so. On the other hand, if you continue working but don't choose to contribute after age 65, then you must start income with your accumulated account balance by the end of the calendar year in which you attain age 69.
However, you may elect to transfer your pension account to a LIRA, LIF, or LRIF in lieu of purchasing a life annuity from an insurance company. These options are described in the "Transfer of Pension Account" section.
6. Do I have to transfer my money out of the Plan if I terminate employment before age 65?
If you leave the School Division before age 65, you may leave your money in the Plan and you will be charged a portion of the administration costs and investment management fees which will be deducted from your account balance. See page 9 for a further description of this fee. If you are over age 55, you can elect to start pension income immediately.
7. If I take an income from the Plan, when will it start?
Your pension income is not paid from the pension fund. Your account balance must be transferred to an insurance company in order to purchase a life annuity. The Licensed Representative will make all transfer arrangements and assist with the necessary paperwork. Your pension payments will generally start one month after the transfer is completed.
8. If I terminate with less than 2 years of service will I be entitled to any of the School Division's contributions on my behalf?
No. You will receive your own contributions with interest if you have not attained age 50.
If you are age 50 or over at date of termination with less than 2 years service, you are also entitled to any School Division contributions made on your behalf.
In addition to the retirement benefits you will receive from the MAST Pension Plan, you may be eligible for payments from two government sponsored programs, the Canada Pension Plan (CPP) and Old Age Security (OAS).
Canada Pension Plan
Your retirement benefit from the Canada Pension Plan (CPP) will depend on your work and earnings history. This retirement benefit is payable monthly for your lifetime, beginning as early as age 60 if your employment earnings have dropped to less than 25% of the YMPE ($8,950 in 1997). If you retire before age 65, your CPP pension will be reduced by 0.5% for each month it begins before age 65. You may also postpone receiving your CPP benefit up until age 70, with a 0.5% increase in your benefit for each month your benefit is deferred after age 65. The benefit is indexed annually to reflect changes in the Consumer Price Index. In 1997, the maximum benefit payable at age 65 is $736 per month.
Old Age Security
If you meet certain residence requirements and income restrictions, you will also receive a monthly benefit from OAS.
Old Age Security benefits are payable monthly for your lifetime beginning at age 65. The benefit is indexed quarterly to reflect changes in the Consumer Price Index. As of October 31, 1997, the maximum benefit payable was $406 per month.
Pensioners with income over $53,000. will have their OAS benefits reduced by 15% of income over $53,000. Pensioners with income of $86,000 will receive no OAS pension. This income test applies individually to married couples and disregards the spouse's income in determining the reduced OAS pension.
Beginning January 1, 2001, the Old Age Security benefit-along with the Guaranteed Income Supplement, the pension income tax credit and the age tax credit -will be replaced by the Seniors Benefit. The Seniors Benefit will be non-taxable and fully indexed to inflation. The amount of the monthly benefit will be based on your and your Spouse's combined income. Families with incomes of less than $35,000 will generally receive higher benefits than under the existing system; families with incomes above $40,000 will generally receive less. The Senior's Benefit is reduced by $.50 for each $1.00 of family income up to $16,200 and an additional $.20 for each $1.00 of family income over $26,000. The benefit is not payable for single seniors with incomes above $52,000 and for couples with incomes above $78,000.
APPLYING FOR GOVERNMENT BENEFITS
Canada Pension Plan and Old Age Security/Seniors benefits are not paid automatically. You must make application at the nearest office of Human Resources Development Canada. If you and/or your Spouse are age 60 or older at December 31, 1995, you will have the choice of receiving Old Age Security payments or receiving the Seniors Benefit shortly before the implementation of the Seniors Benefit in 2001.
Personal savings are an important part of your future retirement security. Although the MAST Pension Plan may be a fundamental part of your retirement savings, it is important to build extra personal savings to supplement your income when you retire.
One of the most popular ways to save extra income for retirement is by contributing to a personal Registered Retirement Savings Plan. Your contributions to a personal or spousal RRSP are tax deductible up to specified limits. Your RRSP contribution limit each calendar year is:
|18% of earned income up to:||1995||$14,500|
|1996 to 2003 inclusive||$13,500|
Pension Adjustment (PA) (total employee and School Division contributions to the MAST Pension Plan in the previous year)
Your PA is reported on your T4 slip every year. The government uses your PA and the information from your previous year's tax return to calculate and confirm your exact RRSP contribution room for the year. You will receive confirmation of your RRSP contribution room on your Notice of Assessment after you file your tax return.
When you retire, you can use the value of your RRSP account to supplement your retirement income from the MAST Pension Plan and government plans.
If you have any questions about the Plan, your
first source of information should always be this Plan Summary. If you need
further information, you should contact your school division office. Additional
assistance is also available from
The Manitoba Association of School Trustees
191 Provencher Boulevard
Winnipeg, Manitoba R2H 0G4
Telephone: 233-1595 or
1-800-262-8836 (Outside Winnipeg)
If you need more assistance because of a termination, death or retirement you can contact
William M. Mercer Limited
1410 - One Lombard Place
Winnipeg, Manitoba, R3B 0X5
For help in planning your retirement benefits contact
Patricia Thorsteinson (Licensed
William M. Mercer Limited
1410 - One Lombard Place
Winnipeg, Manitoba, R3B 0X5
1-888-258-1186 (Outside Winnipeg)
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