Details and Plan Text
Details and Plan Text
Saint Mary's University Pension Plan (pdf) **
Retirement is an important part of our lives. Most of us look forward to retiring, especially if we know that our future is financially secure. The University pension plan, together with government pensions, and personal savings will provide employee's with a regular income in retirement.
** The restated plan text documents have been filed with, but not yet approved by, the Superintendent of Pensions for Nova Scotia. The Superintendent may require revisions to the plan documents. As such, these documents are subject to change without notice.
Pension Plan Details
- How the Plan Works
- Withdrawal of Contributions
- While You Are on Sabbatical Leave
- In the Event of Your Death
- When you Retire
- Your Designated Beneficiary
- Basic Financial Concepts
The University pension plan is a money purchase plan - so called because both the University's contributions and the employee's contributions are used to purchase a pension at retirement. Under this type of pension plan, the amount of individual contribution and the University's contribution is specified in advance. The exact amount of pension at retirement will not be known until the individual actually retires.
The University's pension plan are open to full-time employees who are members of the faculty, administrative/professional, or support staff.
Membership in the Plan is compulsory for eligible full-time employees.
Note that once an employee becomes a member of the plan, participation cannot be suspended (as per the Pension Benefits Act) - except for maternity leave or leave of absence without pay.
Pension eligibility for “Non-Permanent Employees” is defined in the Pension Plan text, Section 3.02 as follows:
“Subject to the terms of any applicable collective agreement or contract of employment, an
Employee who is employed on other than a permanent full-time basis may be eligible to become a Member on the first day of the month coincident with or next following the completion of 24 months of Continuous Service, provided the Member has attained at least one of the following:
(1) earnings of at least 35% of the YMPE from employment with the University; or
(2) at least 700 hours of employment with the University,
in each of the two immediately preceding consecutive calendar years.”
The University will contribute to the Plan on behalf of the employee a percentage amount of their basic earnings as indicated below:
- Support Staff--8%
The employee will contribute a percentage amount of their basic earnings by payroll deduction as indicated below:
- Support Staff--6%
The employee may elect to make additional voluntary contributions to the Plan. The total amount of contribution for each year (both required and voluntary) must not exceed the maximum contribution allowed under the terms of the Income Tax Act. The maximum contribution, including individual contributions, both required and voluntary, together with the contributions by the University on the employee's behalf is 18% of earned income, subject to a specified dollar maximum. When contributions reach this limit, employee contributions, both required and voluntary and the University's contributions on the behalf of the employee must cease. Please contact Human Resources if you reach this maximum and have further questions.
CONTRIBUTIONS AFTER JANUARY 1, 1988
If an employee terminates employment before retirement and prior to completing 2 years of Plan membership, they are entitled to withdraw the accumulated value of their own contributions to the Plan (but not the Employer contributions). Alternatively, the employee may elect to leave their funds in the Plan to provide a pension at retirement.
If the employee has completed 2 years of Plan membership, the total accumulated value of their contributions and the University's contributions are locked in. This means that the funds may not be withdrawn in cash but must be used to provide a pension at retirement.
The employee may elect to withdraw all voluntary contributions.
CONTRIBUTIONS PRIOR TO JANUARY 1, 1988
If an employee has completed 5 years of continuous service, they are entitled to the total accumulated value of their contributions and the University's contributions. The employee may withdraw the accumulated value of their required contributions if they terminate employment before retirement and prior to completing 10 years of continuous service or Plan membership and attaining age 45. Alternatively, the employee may elect to leave the funds in the Plan to provide a pension at retirement.
If an employee has attained age 45 and completed 10 years of continuous service or Plan membership, the total accumulated value of their contributions and University's contributions are locked-in and must be used to provide a pension at retirement. The employee may elect to withdraw 25% of the accumulated value of these contributions in cash.
Employees may elect to withdraw all voluntary contributions.
An employee may elect to transfer contributions that are locked in to provide a pension at retirement to another Registered Pension Plan, to a locked-in Registered Retirement Savings Plan or Life Income Fund (subject to limitations), or to purchase a life annuity. The funds transferred must continue to be administered in accordance with the Pension Benefits Act of Nova Scotia.
While an employee is on sabbatical leave, their membership in the Plan continues. The employee and the University continue to contribute. Please refer to the appropriate collective agreement.
If an employee die's before retirement, the total value of their contributions and the contributions made by the University on their behalf, will be payable to the employee's spouse. The spouse may elect to have the death benefit paid as a pension or a lump sum. If the employee does not have a spouse, the death benefit will be paid as a lump sum to their designated beneficiary.
If an employee die's after retirement, their spouse or designated beneficiary, if no spouse exists, will receive the balance of any pension payments that are still due. The amount of these payments will depend on the form of pension the employee had elected at their retirement date.
A faculty member's normal retirement date is the 31st day of August following attainment of 65 years. An administrative or support staff member's normal retirement date is the 30th of June following attainment of 65 years. However, the normal retirement date for support and administrative staff members who turn 65 in June will instead be the 31st day of July.
An employee may choose to retire as early as age 55. If they retire early, their pension funds will have less time to grow and a smaller pension will likely result. No other early retirement penalty would apply to their pension.
An employee may name a beneficiary to receive the amounts payable under the Plan upon their death. The beneficiary may be changed at any time. However, regardless of any beneficiary designation, if the employee has a spouse at the time of death, the spouse shall be the beneficiary for purposes of the Plan. If a beneficiary is not named, and the employee has no spouse at the time of death, amounts payable under the Plan will be paid to the employee's estate.
The retirement plan evolves over an individual's lifetime. The basic financial objective is to accumulate sufficient pension and investment assets so you can retire when, and on the terms that you choose.
There are a number of important investment concepts to be aware of: risk and return, diversification, and asset mix. Understanding these basic concepts will help in making better investment choices.
Risk and Return
When investing contributions, investors expect them to grow - to generate a return on their investment. Risk is the complicating factor. Generally, there tends to be a trade-off between the expected returns offered by an investment and its risk. Investments that offer the expectation of higher returns tend to also have riskier or more potentially variable returns.
Most investors think of risk as the possible loss of some, or all of their money. But, there's another type of risk. This is the risk that investment returns will be lower than inflation and that your money will lose its purchasing power. For example, $1,000 worth of goods at an inflation rate of five percent will cost over $2,500 in 20 years. If your investments aren't growing at least as quickly, you're actually falling behind.
As an individual's investment time frame gets longer, the risk associated with poor returns can become as important as the risk associated with the loss of capital. Because of the inherent long-term nature of pension investments, many financial experts agree on the importance of balancing an appropriate amount of risk in order to increase expected returns.
There's a wise adage known to every smart investor - don't put all your eggs in one basket. If you invest your retirement savings in the stock of one company, the risk is generally quite high. When you diversify between several investments, you can reduce your risk without necessarily reducing your expected returns. This provides a possible exception to the trade-off between risk and expected returns that is described above!
There are at least three different ways to diversify investments:
- Investing in a managed investment: spreading an investment between many different companies in many different industries.
- Level of diversification: can be improved by spreading investments around geographically.
- Diversifying a portfolio will generally include investments in different “asset classes”.
Asset mix is a term used to describe the way investments are allocated to the available investment options.
By allocating investments between the available investment options, you can adjust the portfolio risk-reward characteristics to correspond to your personal situation.
Personal attitude about risk
An important consideration when choosing an asset mix is your (and your spouse's) attitude about risk. Most people can feel comfortable with risk when the market is going up. However the investor that lacks the discipline to stay invested when the market declines will generally do poorly in the long term.
When should you change your asset mix?
Fans of the business news may be tempted to try to increase their returns by regularly changing their asset mix in anticipation of “swings in the market”. You should be aware however, that professional investment managers have difficulty consistently adding value this way.
A more sensible approach may be to take the long-term view. Consider the factors described above in setting your asset mix. By all means adjust your asset mix as the above noted factors evolve but avoid trying to out-guess the market on a day-by-day basis.
Know How Your Investments Are Performing
Every quarter, at March 30, June 30, September 30, and December 31, a statement will be available of your account. This statement will not only contain information about your contributions for the period, but also provide information about how the funds in which you have invested have performed.