What type of Pension Plan is this?
This Plan is known as a Collectively Bargained Muti-Employer Plan (CBMEP). It is also described as a "defined benefit" plan which means that the amount of income on retirement is known and is specified as a monthly lifetime pension (life annuity). Your Employer remits pension contributions on your behalf which in turn earns you a monthly pension payable on retirement for your lifetime.
Who runs this Plan?
We have a "Joint" Board of Trustees to govern and administer our Plan. Our Board consists of three Employer Trustees, three Union Trustees, and three Pensioner Trustees. Each Trustee serves a 3-year term. The Board hires an Administrator to oversee the day to day administration of the Plan.
Who is eligible to join the Plan?
Each Employee of an Employer, signatory to an agreement with Local Union 8, is eligible to join the Plan.
When do I become a Member of this Pension Plan?
You become an "Active" Plan Member with a vested right when the Plan receives the first pension contributions from your Employer and providing you have completed an Enrollment Form (designation of beneficiary is required) with the Administration Office. You will continue to be an "Active" Plan Member as long as your Employer contributes to the Plan. A vested right means your non-forfeitable right to benefits earned through Employer contributions regardless of your employment status.
When is an Employer required to start remitting contributions on my behalf?
If you work for an Employer signatory to a Provincial Collective Agreement with Local 8, your Employer must remit pension contributions on your behalf based on hours you work/earn.
If you have just started in the trade, the Provincial Collective Agreement provides that your Employer starts submitting contributions after you have worked:
1,425 hours for Sheet Metal Workers, Sheeters and Deckers
What is Beneficiary?
The person(s) you designate to receive any benefits payable by the Plan on your death. If you have a Spouse, your Spouse has full and complete entitlement by law to guaranteed benefits regardless of any other beneficiary you may have appointed. If you have no Spouse, but have a financial dependent(s), their rights are not fully protected by law; it is necessary to name them singularly or equally as your beneficiary(s). The enrollment form you are required to complete to become a plan member requires you to name your Spouse, if applicable, as your beneficiary, but further requires you to name another beneficiary in the event of death of your Spouse, or divorce from your Spouse.
The designation of a beneficiary on your enrollment form is a very important requirement for you and your family. The plan has experienced several cases where a young member has died and benefits were paid to an ex-girlfriend. It is up to you to keep your beneficiary current.
How does the Plan Work?
Your employer will remit contributions to the Plan for every hour you work. Those contributions earn you a monthly pension that is payable for your lifetime on retirement at age 60. The hourly contribution rate that the Employer remits for you is based on their agreement with Local 8.
How do I know how much pension I have earned?
Each February you will receive an Annual Statement indicating the amount of monthly lifetime pension you have accumulated from previous years of membership plus the benefit earned in the current year. You will also receive a breakdown of your hours and the monthly pension contributions remitted on your behalf throughout the year.
How is my monthly lifetime pension calculated?
Your employer remits contributions for every hour that you work based on the hourly rate set in their agreement with Local 8. Because there are so many differing hourly contribution rates, the total dollar amount paid by your Employer is divided by a Standard Contribution Rate (SCR) to provide a number of Standard Contribution Rate Hours (converted hours).
Effective January 1, 2024, your pension benefit will be calculated based on a SCR of $4.44 per hour and you earn 4.14 cents for each SCR hour. The SCR is the cost to provide 4.14 cents of monthly lifetime pension payable at unreduced at age 60. The SCR is reviewed annually by the Board of Trustees.
Example of converting Employer contributions to SCR Hours:
· 1,800 worked hours @ $4.50/hour = $8,100 Employer contributions
· $8,100 Employer contributions less 1% Funeral Benefit = $8,019 in Employer pension contributions
· $8,019 divided by $4.44 SCR = 1,806.08 SCR Hours
· 1,806.08 SCR Hours multiplied by 4.14 cents = $74.77 per month, payable at age 60 for your life.
Why is there one Standard Contribution Rate (SCR) set?
A standard rate must be set because the Plan receives many differing contribution rates. Your Employment hours are converted to one standard rate by dividing the total contributions received by the Standard Contribution Rate. The benefit you earn is calculated on your total converted hours.
How is the Standard Contribution Rate (SCR) set?
Each year the Board of Trustees request the Plan's Actuary to prepare a report on the long term financial health of the Plan. This report, called an Actuarial Valuation, shows whether the fund has a surplus, a shortfall, or the right amount of assets needed to pay for future benefits. The actuary uses assumptions to determine if the plan's assets plus future contributions will meet the liabilities (the amount required to pay promised benefits plus future benefits). Assumptions include future investment returns, the age of membership, age of retirement and life expectancy. The valuation assists the Trustees to determine what Standard Contribution Rate (SCR) is needed to ensure the long-term funding of the Plan.
The Standard Contribution Rate (SCR) is the cost to provide 4.14 cents of monthly lifetime pension.
Effective January 1, 2024 SCR = $4.44
January 1, 2023, SCR = $5.72*
January 1, 2022, SCR = $5.72*
January 1, 2021, SCR = $5.72*
January 1, 2020, SCR = $6.14*
January 1, 2019 SCR = $6.98*
January 1, 2018 SCR = $7.54
January 1, 2017 SCR = $7.60
January 1, 2016 SCR = $7.44
January 1, 2015 SCR = $5.66
* Due of the strong financial position at that time, the Board of Trustees has subsidized the current SCR rate. The subsidized SCR Rate is $5.00 per hour.
I am an Active Plan Member but no longer with an Employer signatory to Local 8. What happens to my pension benefit? Can I withdraw it?
You are entitled to the pension you earn through the Employer contributions regardless of your employment situation or Local 8 membership status.
When you are eligible for termination from Active Membership, you may decide to leave your pension with the Plan or transfer the commuted value lump sum settlement to a Locked-In Retirement Account (LIRA).
When am I eligible for termination from Active Membership?
You are eligible for termination options when the Plan has received less than 350 hours for you during two full consecutive calendar years. (January to December remitting period).
At that time,
Can I increase my Pension Benefit?
Yes, in additional to the pension benefit earned through employer contributions, plan members can optimize their pension benefit throughout their career with Self Payments and/or Past Service Purchases. Both are tax deductible for the year in which the payment is made.
Self-Payments
You can make a self-payment if:
· you have hours of Covered Employment in the immediate previous year, and
· you have never received any retirement benefits from the Plan, and
· your Standard Contribution Rate Hours for the year are less than 2,100 hours.
If eligible, in February or March only, you may elect to make a single lump sum payment to increase your Standard Contribution Rate Hours for the immediate past year. Any payment may only increase the covered hours for the immediate preceding Plan Year. Your self-payment amount would be the number of hours you wish to purchase multiplied by the Standard Contribution Rate.
Your self-payment is tax deductible for the year in which it is paid.
Please note that Canada Revenue Agency will reduce the maximum amount you can contribute to an RRSP for the year in which you make your Self-Payment, by the amount you self-paid. For example, if you self-paid $1,000 in March 2024 to increase your 2023 earned pension benefit, the amount you can contribute to your RRSP for 2024 will be reduced by $1,000. You may roll-in RRSP funds to your Pension Plan to purchase your Self-Payment. In this case no tax deduction is available, nor is your RRSP contribution room reduced.
Past Service Purchases
You can make a Past Service Purchase if:
· you had hours of Covered Employment in the year you apply your past service purchase to, and
· you have never received any retirement benefits from the Plan, and
· you have not earned the maximum lifetime pension benefit for the applicable Plan Year.
Past Service Purchase is distinct from Self-Payments. Past Service Purchase is for previous past years, in which you did not earn the maximum pension of $86.94 per month. It is equal to a cost per hour based on your age at December 31st of the immediate previous year. Past Service Purchase is more advantageous for young members; the younger you are the more benefit you earn per dollar.
The maximum cash Past Service Purchase in any year cannot be more than $3,500. Past Service Purchases can be accepted by the Plan Administrator, for deposit in the Plan, at any time during the calendar year. Cash purchases are tax deductible for the year in which they are paid.
Your Plan Administrator must report a Past Service Pension Adjustment to Canada Revenue Agency if your Past Service Purchase is for 1990 or later. For example, if in 2024 you make a $1,500 purchase to increase your 1991 earned benefit, a Past Service Pension Adjustment of $1,500 must be reported. The amount you would be permitted to contribute to your RRSP in 2024 would be reduced by $1,500. For this reason, we suggest that, if applicable, you concentrate on purchasing Past Service for the years before 1990, if available, so as to not affect your RRSP room.
You may roll-in RRSP funds to Purchase Past Service, however, no tax deduction would occur. The annual maximum RRSP amount you may roll-in to purchase Past Service is subject to Canada Revenue Agency limits.
Contact the Administration Office if you are interested in purchasing Past Service. Calculations are forwarded indicating the Years of Plan Membership available and the amount you are eligible to purchase.
Designation of Beneficiary (pdf)
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100-8905 51 Avenue NW
Edmonton, AB T6E 5J3
Telephone: 780-466-1999
Fax: 780-466-2095
Email: info@absheetmetalpension.com
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