As employees of Canada Post, RSMCs now participate in the Canada Post Corporation Pension Plan (CPCPP). Canada Post contributes to the pension fund on your behalf and deducts your portion of the contributions from your paycheque.
Canada Post also pays the employer portion of the Canada or Quebec Pension Plans (CPP/QPP) and deducts your portion from your pay. Before being contracted in, RSMCs had to pay the entire CPP/QPP contribution themselves.
What is the CPCPP?
The CPCPP will give you an income after you retire from Canada Post. The plan will also
provide an income for your spouse and/or eligible children if you die. The amount you receive depends on how many years of pensionable service you have worked for the post office. The pension is indexed, which means that the amount that you receive will go up based on increases to the cost of living, as determined by Statistics Canada's Consumer Price Index.
For more information on the Consumer Price Index, see http://www.statcan.ca/english/freepub/62-557-XIB/english.pdf .
In addition to the CPCPP, you will also receive payments from the CPP or QPP, the amount of which depends on how many years you worked before retiring and what your earnings were.
How much does it cost?
Pension premiums and CPP/QPP contributions are deducted from your regular earnings.
The breakdown of deductions is:
· CPP/QPP is 4.95%
· CPCPP is 4.4%
Right now, Canada Post makes contributions to the CPCPP which amount to slightly more than twice what employees pay. Canada Post's share will gradually go down (and your share will go up) until you are paying 40% and the employer is paying 60%.
What is pensionable service for the CPCPP
Pensionable service is the time you work for Canada Post that counts as earnings in the calculation of your pension. The period of time you worked as an independent contractor does not count towards your pension. The date that you started building up pensionable service is January 1, 2004 (the day RSMCs became a CUPW bargaining unit) or the date you were hired, whichever is later.
You need a minimum of two years of pensionable service before you are eligible to collect a pension. You cannot retire on or before January 1, 2006, if you want to collect a pension.
Time spent on some unpaid leaves and unauthorized leave does not count towards pensionable service. This includes absences without leave, suspensions and strike days. If you are suspended, or if the union goes on strike, you will have to make up those days to get the required time to retire. For example, if there were an eight-day strike during your first two years, you would have to work 2 years + 8 days before you could retire. Time spent on vacation, sick, bereavement, maternity, parental or adoption leave counts toward pensionable service.
How is my pension amount calculated?
The amount of benefits you will receive after you retire depends on how long you contributed to the plan, how old you are when you retire, and how much you earned while you were working.
There are two separate parts to the pension:
The "lifetime" pension is paid from the day you retire; the formula to calculate your benefits is this:
1.3% x (years of pensionable service) x (average salary for your 5 highest paid years) = benefit
The "bridge" pension is paid from the day you retire until you turn 65 years of age; the formula to calculate your benefits is:
0.7% x (years of pensionable service) x (average salary for your 5 highest consecutive paid years) = benefit
The maximum number of years you can contribute to the plan is 35. After that, the deduction is reduced to 1% of earnings to pay for future indexing. The minimum number of years you can contribute before collecting is 2. RSMCs who were contracted in by Canada Post on January 1, 2004 will have completed the minimum two-year contribution period on December 31, 2005.
What counts as earnings for the pension calculation?
Your basic salary is all that is included in the pension calculations. That means that special allowances and overtime are not included.
Time spent on unpaid or unauthorized leave, including suspensions and strikes, is not included because you do not make contributions to the plan during that time. If you have a period of unpaid leave during your 5 highest paid years, additional time will be added to make the calculation.
However, time spent on some types of unpaid leaves such as unpaid sick leave, educational leave, maternity, parental or adoption leave does count. You will be required to make up the
pension payments when you return from leave.
Leaving Canada Post
You can retire with the pension benefits you have earned to date ("unreduced" pension benefits), with payments starting immediately, any time after age 60, once you have two or more years of pensionable service, or any time after age 55, once you have 30 or more years of pensionable service. (Because the start date for RSMCs is January 1, 2004, no one will be eligible to retire with a full immediate pension at age 55 until January 1, 2034.)
You can take early retirement if you are less than 55 years old and have at least two years of pensionable service but your pension will be significantly reduced.
Leaving before you retire
If you leave Canada Post with less than 2 years of pensionable service, you will get your pension contributions refunded to you, plus interest. You will not get the portion that the employer paid into the plan. You can get the money as a lump sum, or have it transferred to a registered retirement savings plan (RRSP).
If you leave Canada Post with 2 or more years of service, but before you are eligible for an immediate pension you have two options. You can take a deferred pension, which will start paying you the amount you are eligible for at age 60. Or, you can take the commuted value of your pension and transfer it to an RRSP or life income fund, a new employer's fund, if that's allowed, or an insurance company to purchase an annuity. The commuted value of a benefit is the estimated amount of money you would have to put aside today to grow with investment earnings to provide a retirement income similar to what the CPCPP would have paid you.
What other benefits can I receive?
In addition to CPCPP benefits, you will also be eligible for CPP or QPP benefits. If you have lived in Canada for at least 10 years, you will also be able to collect Old Age Security (OAS).
· For more information about the Canada Pension Plan see http://www.hrsdc.gc.ca/en/gateways/topics/cpr-gxr.shtml .
· For more information about the Quebec Pension Plan see http://www.rrq.gouv.qc.ca/an/rente/11.htm .
· For more information about Old Age Security see http://www.hrsdc.gc.ca/en/isp/oas/oastoc.shtml .