Pension FAQs

I’m a partner in a law firm – not an employee. Can I participate in DBplus?

To be eligible to participate in a registered pension plan, there must be an employer/employee relationship. If you have a Professional Corporation in place and are reporting T4 earnings, you are eligible to join the plan. If not, you can set up a Professional Corporation (“PC”) and become an employee of your own PC. You as the employee and your PC as the employer, would then contribute equally (between 5% to 9% of T4 earnings) to the plan. Find out more.

What happens if I join the plan as an employee of a law firm, but then I become a partner?

If you are enrolled in the plan as an employee of a law firm and then you become a partner, you can no longer participate in the plan as a law firm employee. However, you can continue participating in the plan if you have a Professional Corporation and report T4 earnings. In this arrangement, the PC would act as the employer and you as the employee.

What happens to my pension if I leave my law firm employer, or become a partner in my law firm and do not set up a PC and join the Plan?

If you leave your law firm employer, or do not set-up a PC and join the plan when you become a partner, you enter into an automatic extension of membership (EOM) period for 24-months after you have made your last contribution to the Plan. During the EOM period, your pension continues to grow with conditional annual cost-of-living (AIW) increases, based on the CAAT Pension Plan Funding Policy. During the EOM, you have a number of options with respect to your pension: https://www.caatpension.ca/members/leaving-your-job

About the DBPlus Plan

How are pension benefits calculated in DBplus?

The pension is calculated based on member and employer contributions made to the plan. Those total contributions are multiplied by an annual pension factor (currently set at 9.5%) to determine the guaranteed base pension each year. In addition, the pension includes cost-of-living increases based on the Average Industrial Wage (AIW), which are granted based on the funded status of the plan. 

What is the AIW (Average Industrial Wage)?

Your pension will receive an annual increase based on the Average Industrial Wage (AIW) index, as measured by Statistics Canada. The AIW increase is applied at the start of each year in which the member is a contributing member, subject to the CAAT Pension Plan Funding Policy. The AIW rate over the past 20 years has averaged about 2.2%. AIW enhancements, once added, become a permanent part of the promised pension. That means that the AIW enhancements are cumulative – each year’s enhancement is paid on top of the previous year’s total pension, plus enhancements. 

Is there inflation protection?

Yes. In retirement, conditional inflation protection increases equal to 75% of the Consumer Price Index (CPI) will be applied to pensions based on the CAAT Pension Plan Funding Policy. These enhancements are cumulative, and once granted, cannot be taken away.

As an employee, can I contribute more or less than the established rate?

No. Employer and employee contributions must match, so neither the employee nor the employer can contribute more than the predetermined rate on a monthly basis.

As an employee, can I contribute one-time lump-sum amounts?

Eligible one-time lump-sum amounts are permissible only when purchasing additional pension. Learn more about purchasing additional pension. 

Can the annual pension factor change?

Yes. The annual pension factor is subject to change based on the CAAT Pension Plan Funding Policy. The Plan is currently within Level 5 of the Funding Policy. Learn more about the Funding Policy.

Is my retirement pension secure?

Yes. Under the CAAT Pension Plan, you’ll earn a defined benefit pension that will be payable to you monthly in retirement for your lifetime. Like many large pension plans, your pension will continue to grow after you’ve retired through annual conditional inflation protection increases. Once granted, these increases cannot be taken away.  

As a jointly sponsored pension plan (JSPP), member and employer representatives have an equal say in plan decisions about benefits, contributions, and funding. This joint governance structure is recognized internationally as a model for success in keeping defined benefit pension plans sustainable.

Are there survivor benefits with DBplus?

Yes. Both pre- and post-retirement benefits are available to either your eligible spouse or if there is no eligible spouse, to other designated beneficiaries. Find out more about Survivor Benefits. 

Can I purchase additional pension in DBplus?

Once enrolled in the Plan, members can purchase additional pension for eligible periods of employment with a participating employer, so long as it is permittable under Canadian pension and tax laws. In general, to be eligible: the purchase must be tied to periods of employment (after 1990); the funds must come from a registered retirement vehicle (e.g. LIRA, RRSP, Group RRSP, or Defined Contribution plan); and the amount you can contribute for a purchase is limited by the Income Tax Act to 18% of T4 earnings for the period being purchased. Depending on your earnings, additional limits may apply.

Note that when transferring funds into the CAAT Pension Plan, your financial institution must allow for such a transfer, and purchases for periods of employment in which you may already have an associated defined benefit entitlement will not be permitted.

The purchase process includes: getting an estimate, submitting a pension purchase application, getting your purchase quote, making an election and confirmation from CAAT. Learn more about making additional purchase. 

How does early retirement affect my benefits?

You can retire as early as age 50. However, if you retire before age 65, an early start adjustment will apply to your pension. This permanent reduction reflects the fact that, by starting your pension early, you will receive it for a longer period of time than if you were to start at age 65. In DBplus, the early start adjustment rate is based on the Plan’s Funding Policy. It is a maximum of between 3% and 5% for each year that you are under age 65.

What happens to my pension if I choose to work beyond age 65?

You can continue working and contributing to the Plan past age 65 without any interruption to your membership. You simply continue to work, make contributions to the Plan, and watch your pension grow. However, to comply with the Income Tax Act, by November 30 of the year in which you turn 71, you will have to stop contributing to the Plan and start collecting your pension by December 1 of that year, even if you continue working.

What happens to my pension if I leave my law firm employer?

When you leave a participating law firm employer, and are not eligible to receive an immediate pension, you enter into an automatic extension of membership (EOM) period for 24-months after you have made your last contribution to the Plan. During the EOM period, your pension continues to grow with conditional annual cost-of-living (AIW) increases, based on the CAAT Pension Plan Funding Policy. During the EOM, you have a number of options with respect to your pension: https://www.caatpension.ca/members/leaving-your-job

How do I get an estimate of what my pension benefits would be in retirement?

Your DBplus pension is based on the contributions you make to the plan, the contributions from your employer, and conditional cost-of-living (AIW) enhancements. We encourage you to try the DBplus Value Tool to get an estimate of future contributions in DBplus and see how they result in a valuable lifetime retirement income. The DBplus Value Tool will also allow you to model different retirement scenarios, including custom retirement dates and rates of wage growth. Estimate your pension.

Once enrolled, if I have a question, do I ask my law firm administrator or go to CAAT?

Call the CAAT Plan with questions about your pension. HR questions around payroll, etc. should be directed to your firm’s HR department. 

 

Disclaimer: This FAQ is for informational purposes, and where there is a conflict between this document and the Plan documents, the Plan documents will apply.

CAAT Pension Plan is a trademark of Colleges of Applied Arts and Technology Pension Plan. DBplus is currently not available to residents of Québec.