What happens if I change careers or no longer work through Local 8?
If vested, you will be entitled to termination benefits. Termination occurs after 2 consecutive calendar years pass where you have less than 350 hours of contributions paid to the Pension Plan. When you are eligible for termination benefits, you will receive a Statement of Disclosure.
You will have the option to either:
Please Note: Termination benefits can only occur if the Plan receives less than 350 hours in 2 consecutive calendar Plan years, and not before. This is in accordance with Pension Legislation and the Plan Text.
What is Commuted Value?
The Commuted value of an earned pension benefit is an actuarially-determined amount that represents the present value of the member's future retirement pension. Calculations are only performed following a particular service event such as;
Commuted Values are very sensitive to interest rates at the time of the calculation and vary from one member to another because they use the individual's age, pension earned and expected retirement date.
What is a "Locked-In Retirement Account (LIRA)?
A Locked-In Retirement Account (LIRA) is a Canadian investment account designed specifically to hold locked-in pension funds for former plan members or former spouses or common-law partners. Funds held inside a LIRA will normally only become available (or "unlocked") to holders upon retirement.
If I am eligible to transfer my commuted value, does it have to go to a LIRA? Yes, if your commuted value on termination is more than 20% of the current YMPE (Year's Maximum Pensionable Earnings) you must transfer to a LIRA.
For Example, in 2018:
2018 YMPE = $55,900 (20% = $11,180)
2017 YMPE = $55,300 (20% = $11,060)
How come someone I know received a "Cash Settlement"?
Legislation changed September 1, 2014. Prior to the change if a terminating member had a small earned pension benefit (less than 4% of the YMPE) the fund was allowed to pay the commuted value in cash. As of September 1, 2014 that was eliminated. The size of your earned benefit does not matter. You can only receive a cash settlement if the commuted value of your earned benefit is under $11,180 (in 2018). Therefore, if your commuted value is more than $11,180 your must transfer to a LIRA. A cash settlement can only be made if your commuted value is less than $11,180 and is subject to tax.
What is the difference between a LIRA and RRSP?
The distinction between a LIRA and an RRSP is that, where RRSPs can be cashed in at any time, a LIRA cannot. Instead, the investment held in the locked-in account is "locked-in" and cannot be withdrawn until either retirement or a specified age as outlined in the applicable pension legislation (though certain exceptions exist). Another important distinction between regular RRSPs and LIRAs is that once funds have been transferred from a company pension plan to a LIRA, further contributions cannot be made into said LIRA. Any monetary investment growth in LIRA is considered locked-in.