Employment Changes

Throughout your employment, there may be reasons for your job status to change, which may have an impact on your pension. These changes could be a layoff, a reduction of hourly rates, an unpaid leave of absence, or periods of absence due to illness or injury. Employment changes can impact your credited service and pension earnings. In some cases, your gaps in contribution are protected, and in other cases you may have the option to buy back your credited service to eliminate the gaps in contribution and increase your pension payments in retirement.

Taking time off work

At some time during your career, you may need to take a leave of absence from work. This may be to go back to school, start a family, recover from illness or injury, or for many other reasons. What’s important to understand is the potential impact to your pension these leaves may have. In some categories of leave, your credited service and pensionable earnings are protected. Other categories of leave will not accrue credited service; in these cases, you may have the option to buy back your credited service.

Protected leaves include pregnancy, parental leave, Workplace Safety and Insurance Board (WSIB) leaves and long-term disability. During one of these types of leave, you are not required to make contributions to TTCPP. In these cases, your pensionable earnings will be built up (for the purposes of calculating your pension). This means that they are determined on the base salary you received right before you began your leave. This provision is effective for any period of protected leave of more than two consecutive weeks.

If you take a leave of absence that is not protected under TTCPP Bylaws, you can choose to purchase the applicable credited service, which will help increase the value of your pension when you retire. To purchase your credited service, contact TTCPP and request an estimate of the purchase cost.

Purchasing your credited service for an unprotected leave of absence helps you close any gaps in contributions and increases the value of your pension.

To purchase your credited service, you will need to pay the amount of contributions you would have made to the Plan during the time you were off, plus the amount your employer would have contributed (if applicable). This amount is calculated based on what you would have earned during the leave. Please note that you must contact TTCPP and make the election within 30 days of your return to work from the leave. The amount must be paid in a lump sum within 90 days of the date your original election was made.

You can also elect to purchase other periods of service. The cost of purchasing this service is the full actuarial cost, based on your age and earnings level when you make the purchase. To purchase a period of credited service, you must elect to do so within 180 days from the date on which you became re-enrolled as a member of the Plan. You then have 30 days from the quote date to pay the amount in a lump sum.

If you are considering a leave of absence or are currently taking one and would like to understand how this potentially impacts your pension, or if you want to know what your options and deadlines are for purchasing, we’re here to help. Contact us with any questions.

Giancarlo-Headshot

Example of cost to buy back credited service*

Giancarlo is 41 years old and had 14 years of service when he takes a 10-month leave of absence. His leave of absence was not protected under the Employment Standards Act of Ontario, so he has the option to buy back his 10 months of credited service by paying his contributions plus his employer’s matching share. This example shows that by buying back the 10 months of credited service, Giancarlo has increased his monthly pension by 2.5%.

*This example and calculation are for illustrative purposes only. The example below reflects the 2021 YMPE.

Part 1: Eligible earnings during leave

Salary at end of leave

Leave of absence

1 year

304 days

365 days

Total eligible earnings during leave

$80,000
0.8333
$66,664

Part 2: Member's share of contributions

Percentage
of contribution

Earnings
up to YMPE

9.25%

$64,900

Percentage
of contribution

Earnings
above YMPE

10.85%

($66,664 $64,900)

Total member contribution

$6,003

$191

$6,003
$191
$6,194

Part 3: Cost of buyback

Member contribution

Employer matching contribution

Total cost of buyback

$6,194
$6,194
$12,388

Giancarlo's base monthly pension

With buyback

Without buyback

Retirement age 60 60
Credited service 31.701 years 30.868 years
Monthly pension $3,543 $3,454

What happens if I’m laid off?

If you are laid off and subsequently return to work, unfortunately you will not accrue continuous or credited service for the period of time you were off. This may impact the date you are eligible to retire as well as your pension. Your Annual Entitlement Statement will detail how the period that you were laid off impacts your pension. There is one exception to this rule: if your period of layoff occurred before July 1, 1996, you will be credited for continuous service for this period of layoff only.

What happens if my earnings have been reduced?

At some point, events might happen that cause you to experience a reduced rate of earnings. This could be for reasons such as a job change because of a reduction in staff, reduced earnings due to a role change, or changes in your job evaluation.

In the event that this happens, you can opt to continue making contributions based on your higher rate of earnings, even though your rate of earnings has decreased. When we calculate your pension benefit, it will be based on your higher contributory earnings, not your lower rate of pay, thus increasing the value of your pension.

To qualify for this option, you must be within ten years of eligibility for an unreduced pension and have a minimum of five years of service at the higher salary. Please note that this election must be made within 90 days of your reduction in earnings.

Returning to work after leaving the Plan

Welcome back! If you have left and are subsequently rehired as a regular Plan member, you have the option to repurchase your previous pension service to increase the value of your pension. This option is available to you if you meet the following criteria:

  • Your period of absence from the most recent date of leaving was less than 24 months, and
  • Your prior period of credited service was at least 24 months

To repurchase your previous pension service, you have to repay the full amount of any required contributions and interest that were refunded to you on the date you left. This also includes any commuted value that was transferred out plus interest on these amounts to the date of repayment.

Leaving your job before retirement?

Sometimes life or career changes result in changing employers. What happens to your pension in those circumstances?

If you are contemplating leaving your employer, are under age 50, and have less than 29 years of continuous or credited service, you have two options available to you when you leave:

Option 1: Transfer
You can choose to transfer the commuted value (CV)* of your accrued pension. The CV is the current lump-sum dollar value of your future pension benefit and is vested and locked-in. You can either transfer this amount to your new employer’s registered pension plan (RPP) or to a locked-in retirement vehicle, which could be a locked-in retirement account (LIRA), a life income fund (LIF), a locked-in retirement income fund (LRIF) or a life annuity.

Option 2: Defer
You can choose to leave your pension with TTCPP and receive deferred monthly pension payments when you are eligible to retire. Leaving your pension with TTCPP gives you the benefit of knowing you have a secure monthly pension for life. Plus, you enjoy features such as conditional inflation protection and survivor benefits.

Additionally, if applicable, you may be eligible to receive a refund of your excess contributions.

If your total contributions plus interest exceeds 50% of the commuted value, the balance will be refunded to you as follows:

  • If you choose Option 1 and transfer the commuted value* to a locked-in arrangement, the refund of your excess contributions may be transferred to a nonlocked RRSP or refunded to you directly by cheque or electronic funds transfer, less income tax.
  • If you choose Option 2 and leave your pension with TTCPP as a deferred pension, you must take the refund of excess contributions (if applicable) as a direct payment to you, less income tax. You cannot transfer to a nonlocked RRSP.

Note: If you’re considering leaving your employer, you can contact TTCPP to have a termination estimate completed. This estimate does not obligate you to do anything and is strictly confidential.

If you have already left your employer, it’s important to contact us as soon as possible so there will be no delay in processing your benefit. TTCPP will give you an estimate of the value of your pension entitlement and all the necessary forms required to proceed with your termination benefit.

*The Income Tax Act outlines a maximum transfer value, which allows the member to transfer up to a capped maximum of CV to an RPP and the remainder must be taken in cash, less income tax.

Your deferred pension at retirement
If you choose to leave your pension with TTCPP, it becomes payable to you when you turn 60 (unless you apply to receive it earlier). This deferred pension includes the benefits of a regular pension such as survivor benefits (but excludes health and life insurance). Once you start receiving pension payments, your pension also benefits from conditional inflation protection, meaning you will receive periodic cost-of-living increases (conditional on affordability and the long-term health of the Plan). These cost-of-living increases act like a pay increase.

The earliest you can start your pension is at age 50. If you start your pension after age 50 but before you turn 60, your payments will be reduced on an actuarial equivalent basis. This is because it will be paid for a longer length of time than if you had waited to age 60 to start collecting. The reduction is permanent for the length of your life.

When you decide to start collecting your pension, you will need to contact us to receive and complete the appropriate documentation. Also, if you move, you must notify TTCPP immediately so we can continue to send you your periodic statements.

It’s also important to let us know if your contact or beneficiary information changes. See here for how to do this.

Small pension rule
If your annual pension at age 60 is calculated to be less than 4% of the year’s maximum pensionable earnings (YMPE) or the commuted value is less than 20% of the YMPE in the year you terminate your membership, the small pension rule would apply to you.

This generally occurs for members with short credited service in the Plan. If applicable, this rule unlocks the commuted value and allows the pension to be transferred out in cash, less withholding tax, or to a registered retirement savings plan (RRSP), up to the maximum transfer value.

Returning to work after ending your membership

If you previously left your employer and withdrew your pension entitlement but have been subsequently rehired as a regular Plan member, you may have the option to repurchase your previous pension service. This option is available to you if you meet the following criteria:

  • Your period of absence from the most recent date of leaving was less than 24 months, and
  • Your prior period of credited service was at least 24 months

In order for you to repurchase your previous pension service, you would repay the full amount of any required contributions and interest that were refunded to you on the date of you left. This also includes any commuted value that was transferred out plus interest on these amounts to the date of repayment.

If you are interested in repurchasing your previous pension service, contact TTCPP and we will forward the necessary documents to you.

Note: You must elect to do this within 90 days of becoming a regular member of the Plan.

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