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This section answers frequently asked questions about what happens to your Defined Benefit (DB) pension when you terminate your employment with Canadian Blood Services.

When will I receive my termination forms?
  • You should receive your termination forms within 5 business days of Morneau Shepell Ltd receiving your notice of separation with all the information required to perform the calculation.

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What termination options are available? Which option is better?
  • Upon termination from the plan, if you are vested, you can elect either a deferred pension, or transfer the present value of your pension (different rules apply depending upon the province of employment). We cannot advise you as to which option is better. You should contact your financial advisor to assist you.

  • You will also receive a refund of your MPF contributions plus Canadian Blood Services corresponding contributions, and the interest they've accumulated.

  • If you are not vested, your contributions plus interest will be returned to you - either in cash or as a transfer to your RRSP.

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What does it mean if I elect a deferred pension?
  • If you elect a deferred pension, you are choosing to leave your pension entitlement in the Plan. This pension is payable at age 65, but may be paid as early as age 55, subject to the applicable reductions outlined in the Plan provisions.

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If I elect a deferred pension, is it indexed to the cost of living?
  • Prior to your retirement, your deferred pension is not indexed. When you actually retire, your pension will be indexed each January 1st to reflect 75% of the annual increase in the Consumer Price Index above 2%, to a maximum of 5.5%. If the cost of living stays the same or goes down, your pension amount will not change.

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How is my commuted value calculated?
  • First, the amount of pension to which you are entitled is calculated at your termination date. This amount is based on your years of pensionable service and your best average earnings.

  • The value of your pension is the amount of money the actuary estimates it will cost, in today's dollars, to purchase the amount of pension you have earned. The calculation is based on your age, using assumptions such as average life expectancy, interest earnings, and other relevant factors.

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I have been getting a pension adjustment (PA) of X dollars every year. Why is my commuted value so low?
  • Your pension adjustment:

    • Represents your pension accrued during the year in question, multiplied by a factor of 9, less an offset of $600

    • This formula is required by the Income Tax Act and is used by all DB pension plans

    • This value reduces the amount of RRSP room in that year.

  • Your commuted value is:

    • The value of your accrued pension at your termination date, multiplied by a factor which is based on your age and other relevant factors

    • This factor differs from the factor of "9" used in the pension adjustment calculation.

    • The commuted value may be transferred into a Locked-In RRSP, but does not affect your RRSP room.

  • If you choose to transfer the commuted value of your pension out of the plan, a Pension Adjustment Reversal (PAR) will be generated which will reinstate the difference between your commuted value and your accumulated Pension Adjustments, to your RRSP contribution room

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Can I transfer my non locked-in benefits into the same account as my locked-in benefits?
  • No. The accounts must be different, since one part of your benefit is locked-in and the other is not.

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When can I unlock my locked-in benefits?
  • You cannot receive the value of your locked-in benefits as a lump sum. When you decide to retire (as early as age 55), you can begin receiving pension payments. If you have transferred the amount into a locked-in vehicle, you can purchase an annuity through an insurance company, or transfer the amount into a LIF or LRIF, and commence payments.

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What happens if I don't return my form in 60 days?
  • You will be given 120 days to elect your option. Morneau Shepell Ltd will follow up with a reminder letter after 90 days. After 120 days, the default option is a cash payment for non-vested terminations and a deferred pension for vested terminations.

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What does the pension adjustment reversal (PAR) mean to me? How is it calculated?
  • If you leave Canadian Blood Services, you may be entitled to a Pension Adjustment Reversal (PAR). This is a new feature of the Income Tax Act that took effect in 1997. Through PARs, you are compensated when your pension adjustments (PAs) are greater than the value you received from the pension plan. You don't receive money; what you get is RRSP contribution room.

  • Your PAR from the DB plan is:

    • the sum of your PAs from the plan since 1990, minus

    • the lump-sum value of the pension you earned for service since January 1, 1990.

A PAR is generated from the plan if you choose to transfer the value of your pension when you leave Canadian Blood Services. You receive a PAR whether your benefits are vested or not.

Here's an example of how the PAR works.

Vic leaves Canadian Blood Services and chooses to transfer the value of his pension to a locked-in RRSP. The sum of the PAs in the DB plan was $55,000. The transfer value for the pension he earned over that period is $40,000. The difference between the PAs and the transfer value is Vic's PAR. He gets back $15,000 in RRSP contribution room.

If you leave Canadian Blood Services and choose a deferred pension, or if you retire, you don't get a PAR.

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What is the difference between a L.I.F., a L.R.I.F., and a L.I.R.A.?
  • A LIRA, or Locked-In Retirement Account is essentially identical to a Locked-In RRSP. Most jurisdictions have replaced the Locked-In RRSP transfer option with the LIRA. A LIRA may be converted to a life annuity or a LIF/LRIF either from age 55 or the Early Retirement Date specified under the RPP from which the transfer was made. The mandatory age at which a LIRA must be converted to a life annuity, or a LIF/LRIF, is no later than age 69.

  • A LIF or Life Income Fund, is a retirement income option for locked-in RRSPs and LIRAs. The purchaser selects the payment schedule, either a minimum one, a maximum one, or a level stream with occasional larger lump sum payments. All payments are taxed as income in the year in which they are received. This must be converted to an annuity at age 80.

  • An LRIF, or Locked-In Retirement Income Fund, is similar to a LIF in terms of minimum and maximum withdrawal limits. It may be converted to a life annuity, but this is not required. Alberta, Saskatchewan, Ontario, Manitoba, and Newfoundland are the only provinces that offer this option.

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